*ST本实B(200041)深本实Ｂ2001年年度报告（英文版）

SHENZHEN BENELUX ENTERPRISE CO., LTD. 2001 ANNUAL REPORT Important: Board of Directors of SHENZHEN BENELUX ENTERPRISE CO., LTD. (hereinafter referred to as the Company) hereby confirms that there are no any important omissions, fictitious statements or serious misleading information carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Being on business trip, Director Zheng Huili was absent from the recent Board meeting. Contents . Company Profile…………………………………………………………………1 . Financial Highlight and Business Highlight……………………………………2 . Particulars about the Changes in Capital Shares and Shareholders…………3 . Particulars about Director, Supervisor, Senior Executive and staff ………….6 . Administrative Structure………………………………………………………..7 . Brief Introduction to the Shareholders’ General Meeting …………………..10 . Report of the Board of Directors………………………………………………13 . Report of the Supervisory Committee…………………………………………19 . Important Events………………………………………………………………..19 . Financial Report………………………………………………………………...20 . Documents for Reference………………………………………………………20 I. COMPANY PROFILE 1. Legal name of the Company In Chinese: 深圳本鲁克斯实业股份有限公司 In English: Shenzhen Benelux Enterprise Co., Ltd. 2. Legal Representative: Mr. Huang Xianfeng 3. Secretary of the Board of Directors: Mr. Shen Yanlei Liaison Address: Building No. 11, Nanyou Zhongxing Industry Village, Nanshan District, Shenzhen Tel: (86) 755-6068614 Fax: (86) 755-6068031 E-mail: szshbshi@public.szptt.net.cn 4. Registered Address of the Company: Building No. 11, Nanyou Zhongxing Industry Village, Nanshan District, Shenzhen Office Address of the Company: Building No. 11, Nanyou Zhongxing Industry Village, Nanshan District, Shenzhen Post Code: 518062 E-mail: szshbshi@public.szptt.net.cn 5. Newspapers Chosen for Disclosing Information of the Company: Securities Times and Ta Kung Pao Internet Web Site Designated by CSRC for Publishing the Annual Report: http://www.cninfo.com.cn The Place Where the Annual Report is Prepared and Placed: Secretariat of Board of Directors of the Company 6. Stock Exchange Listed with: Shenzhen Stock Exchange Short Form of the Stock: SHEN BENELUX-B Stock Code: 200041 7. Other Information Concerned Initial Registered Date of the Company: Dec. 10th, 1990 Initial Registered Address of the Company: Building No. 11, Nanyou Zhongxing Industry Village, Nanshan District, Shenzhen Registration Number of Enterprise Juristic Person’s Business License: QGYSZZ No. 101951 The tax registration number: National Revenue: No. 440301618853267 Local Revenue: No. 440305618853267 Name and Address of the certified public accountant engaged by the Company: Domestic: Zhongtian Huazheng (Shenzhen) Certified Public Accountant Address: 16F Aihua Building, Shennan Middle Road, Shenzhen Note: The certified public accountant is the Shenzhen branch of Beijing Zhongtian Huazheng Certified Public Accountant Co., Ltd. Overseas: Hong Kong Glass Radcliffe Chan Certified Public Accountants Address: 12th floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road, Central, Hong Kong II. FINANCIAL HIGHLIGHTS AND BUSINESS HIGHLIGHTS 1. Major accounting data and business indexes as of the year 2001 (Unit: In RMB) Total profit 13,789,750.53 Net profit 8,016,384.21 Net profit after deducting non-recurring gains and losses 7,995,796.77 Profit from main business lines 28,711,831.97 Profit from other business lines 15,807.85 Operating profit 13,638,505.27 Investment income 130,657.82 Subsidy income - Net income / expenditure from non-operating 20,587.44 Net cash flows arising from operating activities (2,493,087.54) Net increase in cash and cash equivalents 427,917.59 Note: (1) Net profits as calculated under different accounting standards and regulations and the causes of the difference: Net profit as of the year 2001 calculated based on International Accounting Standards (“IAS”) is RMB 8.416 million, which is different from the amount as audited under Chinese Accounting Standards (“CAS”) stated above. The cause of the difference is stated in the following table: (Unit: RMB’000) Adjustment to IAS Net profit calculated Net profit calculated based on CAS based on IAS Adjustment of fixed assets Adjustment of foreign currency exchange rate 8,016 206 194 8,416 (2) Items of deduction of non-recurring gains and losses and the amounts involved: Income from non-operating: RMB 42,849.28. Expenditure of non-operating: RMB 22,261.84. 2. Major accounting data and financial indexes over the past three years ended the Report period: (Unit: In RMB) 2000 Items 2001 After Before 1999 adjustment adjustment Income from main business lines 66,713,870.35 10,460,444.01 10,460,444.01 14,137,888.57 Net profit 8,016,384.21 3,634,940.90 3,634,940.90 (11,446,567.18) Total assets 271,071,401.50 250,272,484.06 260,477,037.23 236,437,343.47 Shareholders’ equity (excluding minority 131,065,924.79 123,055,400.69 133,494,065.83 130,210,739.01 shareholders’ interest) Earnings per share 0.13 0.06 0.06 (0.19) Net assets per share 2.17 2.03 2.21 2.15 Net assets per share after adjustment 2.02 1.99 2.16 1.21 Net cash flows per share arising from (0.04) 0.08 0.08 0.03 operating activities Return on equity (%) 6.12 2.95 2.72 -8.79 Weighted average earnings per share in 0.13 0.06 0.06 -0.19 monthly Earnings per share after deducting 0.13 0.03 0.03 non-recurring gains and losses Note: 1. According to the relevant regulations of Ministry of Finance, the Company implemented new Accounting System of Enterprise from the year 2001. The Company withdrew fixed assets, intangible assets, construction in progress and provision for devaluation of trust loan; and conducted the transaction on the debts reforming and non-monetary transaction based on the regulations of Accounting System of Enterprise. Meanwhile, the Company adopted the retroactive adjustment for changing of accounting system, so as to the relevant data of the year 2000 were adjusted. 2. According to Regulations on the Information Disclosure of Companies Publicly Issuing Shares (No. 9) released by CSRC, return on equity and earnings per share as of the year 2001 are calculated based on the fully diluted and weighted average: Profit as of the report period Net assets-income ratio (%) Earnings per share (RMB) Fully diluted Weighted average Fully diluted Weighted average Profit from main business lines 21.91 22.60 0.47 0.47 Operating profit 10.41 10.73 0.23 0.23 Net profit 6.12 6.31 0.13 0.13 Net profit after deducting 6.10 6.29 0.13 0.13 non-recurring gains and losses 3. Changes in shareholders’ equity in the report year Difference in Statutory Total of Capital public Surplus Retained conversion of Items Share capital public shareholder’s reserve public reserve profit foreign welfare fund equity currency Amount at the year-begin 60,500,000.00 29,847,220.25 31,276,749.13 7,539,369.38 (9,336,262.73) 10,767,694.04 123,055,400.69 Increase in the report year - - - - 8,016,384.21 - 8,001,524.10 Decrease in the report year - - - - - 14,860.11 - Amount at the year-end 60,500,000.00 29,847,220.25 31,276,749.13 7,539,369.38 (1,319,878.52) 10,752,833.93 131,056,924.79 Cause Offsetting Change in Offsetting deficit exchange rate deficit III. CHANGE IN SHARE CAPITAL AND PARTICULARS ABOUT SHAREHOLDERS (I) Particulars about the changes in share capital (Unit: share) Increase/decrease of this time (+, - ) Before the After the Items Bonus Capitalization of Additional Others Sub- change Share change shares public reserve issuance total Allotment I. Unlisted Shares 1. Promoters’ shares 43,318,000 43,318,000 Including: State-owned share Domestic juristic person’s shares 28,031,078 28,031,078 Foreign juristic person’s shares 15,286,922 15,286,922 Others 2. Raised juristic person’s shares 3. Employees’ shares 1,452,000 1,452,000 4. Preference shares or others Including: Transferred / allotted shares Total Unlisted shares 44,770,000 44,770,000 II. Listed Shares 1. RMB ordinary shares 2.Domestically listed foreign shares 15,730,000 15,730,000 3. Overseas listed foreign shares 4. Others Total Listed shares 15,730,000 15,730,000 III. Total shares 60,500,000 60,500,000 2. Issuance and listing 1) The Company has not issued the share over the previous three years ended the report period. 2) In the report year, there was neither change in the total number of the shares or the structure of the shares capital. 3) Employee’s shares presently were issued at a issuance price of RMB 3.67 in March 1994, and totally 1,200,000 shares have been issued. In 1995, the Company implemented profit distribution at the rate of 1 bonus share for every 10 shares; in 1997, the Company profit distribution at the rate of 1 bonus share for every 10 shares. Therefore, the Company has 1,452,000 employee’s shares. By the end of the report year, the said shares are not listed for trading. 3. About shareholders 1) Ended Dec. 31, 2001, the Company has 64 shareholders of A-share, 5,053 shareholders of B-share. 2) Ended Dec. 31, 2001, particulars about shares held by the top ten shareholders Shares held at Increase / Name of Shareholders Type Quality of share end of the year decrease Shekou Hansheng Electronic Co., Ltd. 19,558,077 0 A-share Promoters’ shares Hong Kong Jiali Precision Manufacturing Co., Ltd. 14,247,290 0 B-share Promoters’ shares Wuhan Huaxing Electronic Co., Ltd. 8,473,001 0 A-share Promoters’ shares MASTER UNIVERSE FUND LIMITED 1,323,030 1,323,030 B-share Shares in circulation Jieli (Hong Kong) Sound Equipment Industry Co., Ltd. 1,039,632 0 B-share Promoters’ shares WEI HUI PING. 770,000 770,000 B-share Shares in circulation WANG YAN 303,330 303,330 B-share Shares in circulation KOTO TRANSPORT LTD 200,000 -526,000 B-share Shares in circulation CHEN ZE WEI 148,786 148,786 B-share Shares in circulation ZHANG HAN XING 130,000 130,000 B-share Shares in circulation Note: a. Of the above top ten shareholders, legal representative of Shekou Hansheng Electronic Co., Ltd. and legal representative of Wuhan Huaxing Electronic Co., Ltd. is the same person, and there exist no association relationship among the said other shareholders. b. Of the above top ten shareholders, there existed no state-owned shareholders. Shekou Hansheng Electronic Co., Ltd. and Wuhan Huaxing Electronic Co., Ltd. are Chinese shareholders, while the others are foreign ones. c. According to the known situation, Shekou Hangsheng Electronic Co., Ltd. mortgaged its 19,558,077 shares of the Company for a loan from Yitian sub-branch of a Bank, Shenzhen Branch, Huaxian Bank; Wuhan Huaxing Electronic Co., Ltd. mortgaged its 8,473,001 shares of the Company for a loan from Guangzhou Branch, Huaxia Bank; ant the other shareholders have not pledged and frozen. 3) About controlling shareholder of the Company Shekou Hansheng Electronic Co., Ltd. (“Shekou Hansheng”) is the controlling shareholder of the Company. By the end of the report year, Shekou Hansheng holds 19,558,077 promoter’s shares of the Company in total, and taking 32.33% of the total share capital. Shekou Hansheng has established on Dec. 11, 1984; and is a Chinese-foreign joint venture company; legal representative: Zhao Congzhao; registration capital: RMB 1 million. Chinese shareholder of Shekou Hansheng is Wuhan Huaxing Electronic Co., Ltd. (taking 75% of shares of Shekou Hansheng), foreign shareholder of Shekou Hansheng is Hong Kong Huabo Industrial Co., Ltd. (taking 25% of shares of Shekou Hansheng). At present, Shekou Hansheng invests in long-term equity investment of the Company, and the other operation activities have been stopped. 4) Particulars about the controlling shareholder of Shekou Hansheng: Wuhan Huaxing Electronic Co., Ltd. (“Wuhan Huaxing”) is the controlling shareholder of Shekou Hansheng. By the end of the report year, Wuhan Huaxing holds 75% of shares of Shekou Hansheng. Wuhan Huaxing has established in 1984, and is an enterprises owned by the whole people. Wuhan Huaxing is a subsidiary company of Wuhan Huazhong Information Technology Group Co., Ltd.. Its legal representative is Zhao Congzhao; registration capital: RMB 1.966 million; business scope: recording equipment for special use in broadcast; manufacture equipment of broadcast controlling and video program; retail and wholesale of computer and its fittings, hardware, AC, construction material and decoration material. 5) Particulars about juristic person’s shareholders holding over 10% (including 10%) of shares of the Company Besides Shekou Hansheng and Wuhan Huaxing, the juristic person’s shareholder holding over 10% of shares of the Company is Hong Kong Jiali Precision Manufacturing Co., Ltd. (Hong Kong Jiali), who has established in May 1980; legal representative: Zhong Ruiqin; business scope: manufacture and trading of the magnetism products; sales of whole construction equipment. IV. DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES AND EMPLOYEES Shares held Shares held Change in Name Gender Age Title at the at the the year year-begin year-end (+,-) Zhao Congzhao Male 61 Original Chairman of the Board 12,100 12,100 0 Chairman of the Board, Huang Xianfeng Male 52 24,200 24,200 0 General Manager Zhou Jiachen Male 49 Vice Chairman 0 0 0 Zhou Jiaping Male 51 Director 0 0 0 Lin Bingjun Male 52 Director 0 0 0 Zheng Huili Female 42 Director 1,210 1,210 0 Original Chairman of the Zeng Zhaosen Male 66 0 0 0 Supervisory Committee He Xiaojuan Female 35 Original Supervisor 0 0 0 Chairman of the Supervisory Hui Shujian Male 46 500 500 0 Committee Li Lingling Female 37 Supervisor 1,210 1,210 0 Zhou Jiaqing Male 38 Supervisor 0 0 0 Shen Yanlei Male 32 Secretary of the Board 0 0 0 Notes: 1) The Company reelected the Board of Directors and the Supervisory committee in Shareholders’ General Meeting dated Juan 15, 2001, so as to the Company had two the Board of Directors and the Supervisory Committee in the report period, the details are as follows: Before June 15, 2001 After June 15, 2001 Name Title Name Title Zhao Congzhao Chairman of the Board Huang Xianfeng Chairman of the Board, General Manager Huang Xianfeng Vice Chairman of the Board, Zhou Jiahen Vice Chairman of the Board General Manager Zhou Jiahen Vice Chairman of the Board Zhou Jiaping Director Zhou Jiaping Director Lin Bingjun Director Lin Bingjun Director Zheng Huili Director Zeng Shaosen Chairman of the Supervisory Hui Shujian Chairman of the Supervisory Committee Committee He Xiaojuan Supervisory Li Lingling Supervisory Hui Shujian Supervisory Zhou Jiaqing Supervisory 2) Particulars about directors or supervisors holding the position in Shareholding Company Mr. Zhao Congzhao took the position of Chairman of the Board of Shekou Hansheng Electronic Co., Ltd. and Wuhan Xing Hua Electronic Co., Ltd. (Mr. Zhao Congzhao no long took the position of director and chairman of the Board of the Company in order to perfect the administrative structure of the Company.); Mr. Huang Xianfeng took the position of director of Shekou Hansheng Electronic Co., Ltd.; Mr. Lin Bingjun took the position of chairman of the Board of Hong Kong Jieli Sounds Industrial Co., Ltd.. 3) The total annual salary of directors, supervisors and senior executives is RMB 102,000; of them, one person enjoys his annual salary from RMB 40,000 to RMB 50,000; three persons enjoy their annual salary from RMB 100,000 to RMB 200,000 respectively. 4) Among the above directors, supervisors and senior executives, Mr. Huang Xianfeng, Mr. Hui Shujian and Ms. Li Ling Ling draw their annual salary from the Company, and the other receive no pay from the Company. Directors, supervisors and senior executives received from Shareholding Company and associated company: Mr. Lin Bingjun (draw his annual salary from Shareholding Company Hong Kong Jieli Sounds Industrial Co., Ltd.), Ms. Zheng Huili (draw her annual salary from associated company Wuhan Huazhong Information Technology Group Co., Ltd.). Mr. Zhou Jiahen, Mr. Zhou Jiaping and Mr. Zhou Jiaqing draw pay neither from the Company nor the other associated company. 2. Directors, supervisors and senior executives leaving the office and the reason in the report year During the report year, there are three directors, supervisors and senior executives leave the position, and they are original chairman of the Board Mr. Zhao Congzhao, original chairman of the Supervisory Committee Mr. Zeng Shaosen and original supervisor Ms. He Xiaojuan. Of them, Mr. Zhao holds the position of director of the Company and concurrent chairman of the Board of Shekou Hansheng Electronic Co., Ltd. and Wuhan Huaxing Electronic Co., Ltd.. In order to perfect the administrative structure of the Company, Mr. Zhao no longer holds the position of director and chairman of the Board of the Company after the term of office has expired. Mr. Zeng and Ms. He no longer hold the positions of chairman of the Board and supervisor respectively after the term of office has expired. Except for that, the other directors, supervisors and senior executives of the Company have not leave their position in the report year. 3. The Company has totally 325 employees. Of them, production personnel: 127 persons; salesperson: 41 persons; technicians: 87 persons; financial personnel: 10 persons; administration personnel: 60 persons. Persons graduated from 3-years regular college or above take 53.09% of the total employees. In the report year, the Company has no retirees. V. ADMINITRATIVE STRUCTURE 1. In the report year, the Company operated according to the PRC Company Law, the Articles of Association as well as relevant normative documents regarding administration of listed company as released by CSRC, and established rather perfect internal control system. In the light of requirements of the Administrative Rules for Listed Company as released by CSRC and State Commission of Economy and Trade on January 7, 2002, the Company’s major administration situations are as follows: 1) Shareholders and the Shareholders’ General Meeting: The Company could ensure all shareholders, especially those medium and small shareholders, enjoy equal status, and ensure all shareholders fully implement their own rights; The Company could convene and hold Shareholders’ General Meeting strictly according to the normative opinions for the Shareholders’ General Meeting and the requirements of Articles of Association. 2) Controlling Shareholder and Listed Company: The controlling shareholder behaviors in a standardized way: The controlling shareholder has implemented obligations of being honest and reliable towards the Company and other shareholders. The controlling shareholder has implemented the capital provider’s right to the Company according to law, and has neither taken advantage of assets reorganization to damage the legal rights and interests of the Company and other shareholders, nor used its special status to seek extra benefits. The controlling shareholder nominated candidate of director and supervisor strictly in compliance with relevant regulations of laws, legislations and the Articles of Association. The candidates of director and supervisors nominated by the controlling shareholder all possess professional knowledge as well as decision-making and superintendence capability. The controlling shareholder hasn’t directly or indirectly interfered in the Company’s decision-making and production and management activities carried out according to law, and hasn’t damaged the rights and interests of the Company and other shareholders. The Company pursues the “Five Separations” in respect of personnel, organization, business, assets and finance: a. In respect of personnel: The Company has established a complete and independent set of systems for management of labor, human affairs and salary, and has an independent employees’ team, who have all signed labor contact with the Company. The Company’s general manager, vice general manager, the secretary of the Board of Directors and other senior executives all receive salary in the Company. All staffs of the Company haven’t taken position in Shekou Han Sheng Electronic Co., Ltd. – the controlling shareholder except that Mr. Huang Xianfeng - the Company’s Board chairman and general manager concurrently is acting as director of Shekou Han Sheng Electronic Co., Ltd. concurrently. Electing and removing of directors and supervisors are fully in line with the Articles of Association, namely, the nominations of candidates of director and supervisor are submitted to the Shareholders’ General Meeting for examination by means of proposal, and it is the Shareholders’ General Meeting that elects and changes directors and supervisors and decides on their salaries. General manager and the secretary of Board of Directors are engaged or removed by the Board of Directors; Other senior executives are nominated by general manager, engaged or removed by the Board of Directors, and their salaries, encouragement and punishment are decided by the Board of Directors as well. b. In respect of organization: The Company’s offices are completely separated from those of the large shareholder. The establishment and operation of organizations are absolutely independent and autonomous. No functioning department of the Company has binding relationship with the large shareholder as well as its functioning department. c. In respect of business: The Company carries out operation and management in an absolute independent and autonomous manner. Significant management activities have been fully discussed in Board meeting, decisions on which were made by the Board of Directors independently. Activities that should be decided by the Shareholders’ General Meeting were submitted to the Shareholders’ General Meeting. The large shareholder has never interfered in the Company’s significant decision-making and production and management activities. d. In respect of finance: The assets held by the Company have nothing to do with those of shareholders, and Company hasn’t used intangible assets of shareholders’ companies including industrial property right, non-patent technologies and land use right etc. e. In respect of finance: The Company has independent financial department, has established and improved the independent financial settlement system and financial accounting system according to relevant requirements of laws and administrative legislation, has independent bank account, makes external settlement independently, and pays taxes according to law. 3) Directors and the Board of Directors The Company elected directors strictly according to the election and engagement procedures as stated in the Articles of Association; The number of Board members and the personnel formation are in accordance with requirements of relevant laws and legislations; The Board of Directors could seriously implement its obligations as stated in relevant laws, legislations and the Articles of Association; Every director could attend Board meeting and Shareholders’ General Meeting with a responsible attitude. 4) Supervisors and the Supervisory Committee The Company elected supervisors strictly according to the election and engagement procedures as stated in the Articles of Association; The number of the Supervisory Committee members and the personnel formation are in accordance with requirements of relevant laws and legislations, and the Supervisory Committee could seriously implement its obligations as stated in relevant laws, legislations and the Articles of Association; In the spirit of being responsible to shareholders, supervisors implemented supervision on the Company’s finance and performance of obligations of directors, managers and other senior executives in terms of compliance with laws. 5) Performance Evaluation, Encouragement and Binding Mechanism: The Company is positively setting about establishment of fair and transparent performance evaluation and binding mechanism for directors, supervisors and senior executives. 6) Relevant Stake Holders The Company could fully respect and safeguard the legal rights and interests of bank, other creditors, employees, consumers and other parties of related interests, created good internal and external operation environment, and tried hard to achieve benefits of multi-sides for the common development of the Company and relevant stake holders. 7) Information Disclosure and Transparency: The Company assigned the secretary of the Board of Directors to take charge of information disclosure work as well as reception of visits and inquiries of shareholders; The Company could disclose relevant information in a real, accurate, complete and timely manner and ensure equal opportunity for all shareholders to obtain information in accordance with stipulations of relevant laws, legislations and the Articles of Association. 8) Shortages Compared with relevant regulations of the Administrative Rules for Listed Company, there is still a certain gap between the Company’s current administrative structure and the Rules. For instance, the Company hasn’t implemented independent director system and hasn’t established various committees in the Board of Directors etc. The Company shall standardize operation according to the requirements of the Administrative Rules for Listed Company, further revise and improve relevant systems, establish independent director system, set up special committee of the Board of Directors in the light of the Company’s actual situation, raise scientific decision-making level, constantly improve legal person administrative structure, try hard to seek maximum profits, and practically safeguard the interests of all shareholders. 2. Performance of Independent Directors: In the report year, the Company didn’t engage independent directors. In order to further improve the administrative structure, the Company plans to engage independent directors in 2002. VI. BRIEFINGS ON THE SHAREHOLDERS’ GENERAL MEETING 1. Notifying, convening and holding of the Shareholders’ General Meeting in the report year: In the report year, the Company held Shareholders’ General Meeting for once, namely the 2000 Shareholders’ General Meeting dated June 15, 2001. Particulars about notifying, convening and holding of this Shareholders’ General Meeting are as follows: The Public Notice on Resolution of the Meeting of the Board of Directors and on Holding 2000 Shareholders’ General Meeting was announced in Securities Times and Hong Kong Ta Kung Pao dated May 15, 2001, and the Shareholders’ General Meeting was held in the meeting room of the Company’s 6/F on June 15, 2001. 2. Resolutions passed or rejected in the Shareholders’ General Meeting, newspapers for disclosing resolutions and date of disclosure: The following resolutions were passed in the Shareholders’ General Meeting: 1) Reviewed and passed 2000 Work Report of the Board of Directors; 2) Reviewed and passed 2000 Work Report of the Supervisory Committee; 3) Reviewed and passed the 2000 Profit Distribution Plan proposed by Shekou Han Sheng Electronic Co., Ltd. (meanwhile, reviewed and rejected 2000 Profit Distribution Plan); 4) Reviewed and passed 2001 Profit Distribution Policies; 5) Reviewed and passed 2000 Financial Report of Actual Budget; 6) Reviewed and passed the proposal on nominating Mr. Huang Xianfeng to be director; 7) Reviewed and passed the proposal on nominating Ms. Zheng Huili to be director; 8) Reviewed and passed the proposal on nominating Mr. Zhou Jiachen to be director; 9) Reviewed and passed the proposal on nominating Mr. Zhou Jiaping to be director; 10) Reviewed and passed the proposal on nominating Mr. Lin Bingjun to be director; 11) Reviewed and passed the proposal on nominating Mr. Zhou Jiaqin to be supervisor; 12) Reviewed and passed the proposal on nominating Ms. Li Lingling to be supervisor; 13) Reviewed and passed the proposal on nominating Mr. Hui Shujian to be supervisor; 14) Reviewed and passed the proposal on revising the Articles of Association; 15) Reviewed and passed the proposal on applying for issuing additional Renminbi ordinary A shares of no more than 30,000,000 shares item by item; 16) Reviewed and passed the proposal on application feasibility of publicly raised capital; 17) Reviewed and passed the explanation of application of funds raised last time expressed by the Board of Directors. The public notice on the resolutions of the Shareholders’ General Meeting was published in Securities Times and Hong Kong Ta Kung Pao dated June 16, 2001. 3. Particulars about electing and changing of directors and supervisors: The Company reelected and changed the Board of Directors in the report year. Except the chairman Mr. Zhao Congzhao, whose office term expired and who wouldn’t take the post as director, all other members of the last Board of Directors including Mr. Huang Xianfeng, Mr. Zhou Jiachen, Mr. Zhou Jiaping and Mr. Lin Bingjun became member of the new Board as reviewed and passed in the Shareholders’ General Meeting. Ms. Zheng Huili was elected to be new member of the Board of Directors, which was reviewed and passed in the Shareholders’ General Meeting. In the report year, the Company reelected and changed the Supervisory Committee. Except the chairman Mr. Zeng Zhaosen and the supervisor Ms. He Xiaojuan, whose office term expired and who wouldn’t take the post as supervisor, the other supervisor of the last Supervisory Committee Mr. Hui Shujian became member of the new Supervisory Committee as reviewed and passed in the Shareholders’ General Meeting. Ms. Li Lingling and Mr. Zhou Jiaqin were elected member of the new Supervisory Committee. 4. Daily Work of the Board of Directors: 1) About meetings and resolutions of the Board of Directors in the report year: In the report year, the Company held altogether six meetings of the Board of Directors, particulars about the meetings and resolutions are as follows: The Company held the meeting of the Board of Directors on April 26, 2001, which reviewed and passed the following resolutions: a. 2000 Work Report of the Board of Directors; b. 2000 Profit Distribution Plan; c. 2001 Profit Distribution Policies; d. 2000 Financial Report of Actual Budget; e. 2000 Annual Report; f. Proposal on reelecting and changing the Board of Directors; g. Proposal on reelecting and changing the Supervisory Committee; h. Proposal on revising the Articles of Association. The Company held the meeting of the Board of Directors on May 15, 2001, which reviewed and passed the following resolutions: a. The Proposal on Application of Issuing Additional Renminbi Ordinary A Shares of no more than 30,000,000 Shares; b. The proposal on feasibility of the planned raised capital investment projects; c. The explanation of the Board of Directors on application of funds raised last time; d. The proposal on revising 2000 Profit Distribution Plan as put forward by the Company’s first large shareholder Shekou Han Sheng Electronic Co., Ltd.; e. The proposal on holding 2000 Shareholders’ General Meeting. The Company held the meeting of the Board of Directors on June 15, 2001, in which Mr. Huang Xianfeng was elected chairman of the new Board of Directors and Mr. Zhou Jiachen vice chairman. The Company held the meeting of the Board of Directors on August 11, 2001, which reviewed and passed the following resolutions: a. The proposal on allocation of provision for devaluation of shareholders’ assets and intangible assets; b. The proposal on implementing new accounting system and rules against which the Company’s accounting policies shall be adjusted accordingly and the financial indexes of previous years shall be traced back and adjusted; c. 2001 Interim Report and Summary; d. 2001 Interim Distribution Plan. The Company held the meeting of the Board of Directors on September 20, 2001, which reviewed and passed the following resolutions: In respect that the business license of Zhong Tian Qin Certified Public Accountants was revoked and thus there was a vacancy of Certified Public Accountants, according to Article 164 of the Articles of Association, the Board of Directors decided to engage Shenzhen Peng Cheng Certified Public Accountants to be in charge of the Company’s domestic auditing work and Glass Radcliffe Chan Certified Public Accountants Hong Kong to be in charge of overseas auditing work so as to make up the vacancy. This proposal is to be submitted to the next Shareholders’ General Meeting for examination. The Company held the meeting of the Board of Directors on September 24, 2001, which reviewed and passed the Report on Qualified Self-inspection in the 2000 Auditors’ Report. 2) Implementation of resolutions by the Board of Directors: The Company held one Shareholders’ General Meeting in the report year, resolutions of which were implemented according to their contents in the report year. The public notice on dividend distribution of 2000 regarding profit distribution plan was published in Securities Times and Hong Kong Ta Kung Pao dated August 9, 2001, and the dividend distribution work of 2000 was smoothly completed by August 15, 2001. 5. The preplan of profit distribution and transferring of capital public reserve to share capital Since the Company carried out new accounting policies to trace and adjust the previous indexes, the Company’s profit of 2000 available for distribution became negative. In order to make up losses of previous years, the Board of Directors suggested the Company should neither distribute bonuses and dividends nor transfer public reserve to share capital, and should make up losses with all profits available. 6. Other events VII. REPORT OF THE BOARD OF DIRECTORS 1. Operation Summary The year 2001 was the first year after the Company had successfully conducted assets reorganization in big scale. Through the assets reorganization at the end of December, 2000, the Company stripped a big quantity of bad assets while being filled with new and high quality assets. The Company has got improved on overall basis in assets structure and product structure. The Company’s objective of strategic transfer of industry has been realized. At present, the Company’s principal products have been turned into blood products and medical equipment products with high added value and high technology from the electromagnetic products with weak earning power. In the report period, the profit from the principal businesses grew by a big margin over the same period of the previous year. In the report year, the profit from the principal businesses was RMB 28.7118 million while it was only RMB 95,900 in the same period of the previous year. The growth is remarkable. The net profit also grew with the total amount RMB 8.0164 million while it was RMB 3.6349 million in the same period of the previous year. We can see from the above data that after the reorganization, a happy change has taken place in the Company’s operation. Through the assets displacement, the Company now has good industrial foundation and market foundation, has powerful market competitiveness and ability of sustainable operation. No doubt, this practice has laid a good foundation for the development in the coming several years. The operation in the report period and the plan of the next year are summarized as follows: 1) Blood products: Wuhan Ruide Biological Products Co., Ltd. (hereinafter referred to as Wuhan Ruide), a controlled subsidiary of the Company, is a company with limited liabilities, engaged in producing biological products (blood products), with registered capital of RMB 45.84 million, total assets of RMB 152.85 million. The Company holds 99% equity of Wuhan Ruide). In the report period, Wuhan Ruide’s income from the principal business was RMB 41.67 million, a 7.59% growth over the same period of the previous year (which was RMB 38.73 million). The net profit was RMB 9.55 million, a 33.94% growth over the same period of the previous year (which was RMB 7.13 million). Although the unit price of the human serum albumin, Wuhan Ruide’s principal product, was lower than last year, the input-output rate of the produce increased by 3.6% over the previous year because Wuhan Ruide enlarged the investment in technology, the production process and technology have been improved in different levels, and as a result, the production cost has dropped by 7.4%. In addition, after the Company had been granted the production license for new products, intravenous injection human serum albumin and intravenous injection immunity globulin issued by China National Pharmaceutical Regulatory Bureau, the company started small batch production in succession in the report year. At present, the production and sales volume of intravenous injection immunity globulin reached more than 60,000 bottles. Since this product belongs to the byproduct of human serum albumin, the costs only contain auxiliary materials with no raw materials, its profit rate is quite high. Therefore, although the total sales income did not grow significantly this year, the profit increased greatly. In the report period, the Company’s income from the principal business was RMB 41.67 million, costs of the principal businesses were RMB 27.41 million and profit was RMB 14.26 million. The major suppliers of Wuhan Ruide are the three designated mono blood collecting stations approved by Hubei Provincial Department of Public Health, namely Jingzhou Mono Plasma Collecting Station, Yuanxian Mono Plasma Collecting Station and Luotian Mono Plasma Collecting Station. The total amount of Wuhan Ruide’s purchase from the three plasma collecting stations took 85% of the total purchase amount in 2001. Wuhan Ruide’s major customers are the three principal distributors selected in Southwest China, Northeast China and Central China, which are Chongqing Shanyou Biological Products Co., Ltd., Liaoning Pharmaceutical Materials Corporation New and Special Drug Business Department and Hubei Tongkang Co. The turnover in 2001 to these three customers was RMB 33.42 million, taking 75% of the total turnover of Wuhan Ruide in the whole year. Since the company is prosperous in both production and marketing at present and the blood product market has good prospect, Wuhan Ruide plans to increase the output of human serum albumin by 30% in 2002 and start to produce in batches two new products, namely intravenous injection gamma-globulin and immunity globulin for hepatitis B. Meanwhile, the company has enhanced the sales work and focused on the sales of “intravenous injection human immunity globulin” and “immunity globulin for hepatitis B” so as to expand the market share as soon as possible. It is believed that as the two new products are put into production in batches, the company’s earning capacity shall be further improved over the year 2001. With a view to further improve the company’s competitiveness in the sector and earning power, Wuhan Ruide has devoted every effort in developing new products. At the present, the Company has developed another two new products of blood products (which is going to be submitted to the National Pharmaceutical Regulatory Bureau for examination and approval). The two new products, just as muscle injection gamma globulin and intravenous injection gamma globulin and immunity globulin for hepatitis B, are all byproducts of HAS. In this way, the company shall not only invest fund for developing new products which shall bring about remarkable profit to the Company, the costs shall not increase significantly. It may be predicted that as these new products are put into production and sales, Wuhan Ruide’s earning power shall be continuously improved. 2) Medical equipment: Shenzhen Houyuan Medical Instrument Co., Ltd. (hereinafter referred to as Shenzhen Houyuan), one of the Company’s controlled subsidiaries is a company with limited liabilities engaged in production and sales of national Class-C medical instruments (with ultrasonic lithotriptor as the main product), with registered capital of RMB 6 million, and total assets of RMB 36.17 million. The Company hold 75% of its shares. Shenzhen Houyuan’s leading product, YC9200 external lithotriptor, is a new generation based on the advanced technology of the domestic and international lithotriptors. Models YC-9200XC, YC-9200BC and YC-9200XBC external lithotriptors are the newly created product in China, which represent the latest level of the domestic external lithotriptors. These up-to-date lithotriptors have well solved the problems of control the energy density of the shock wave and positioning accuracy from the machine into body so that the external shock wave of the lithotriptor may be used to treat the gall stones. The safety can also be improved when the machine is used to treat the stones in urethra. That’s why once this lithotriptor was launched, it immediately evoked great repercussions in the market and enjoys great market potential. In addition, Shenzhen Houyuan has developed a series of small operation apparatuses by making use of its own superiority in technology and filled domestic gap in the sector. After they were put into production in small batches and on sale on trial basis, the products have enjoyed good comments from the customers. While continuously developing new products, the company has actively established good relations with foreign famous manufacturers and made full use of its own improved sales channels and acted as agent in China for marketing their products in China. In the report period, the Company distributed a number of well-known foreign products for treating pain as agent. These products have attracted high attention from the domestic medical circle and various AAA hospitals. Meanwhile, the Carbon 13 respiration mass spectrum distributed by the company as agent has very high market potential as well. By selling self-made products and the products distributed as agent, in the report period, Shenzhen Houyuan realized a sales income amounting to RMB 10.1779 million and realized net profit amounting RMB 4.013 million. In 2002, Shenzhen Houyuan plans, while producing in batches a new generation of external lithotriptor and small operation apparatuses (it was trial production in small batches in 2001), to continue to expand the varieties and scale of the products distributed as agent. It is believed that with the sales of these products, Shenzhen Houyuan shall further increase the sales income and profit. 3) Simulation Company: Shenzhen Benelux Simulation & Control Ltd. (hereinafter referred to as the Simulation Co.), one of the Company’s subsidiaries, is mainly engaged in production simulation equipment, with registered capital of RMB 9 million, total assets of RMB 14.69 million. The Company 91.11% of the company’s equity. In the report period, the Simulation Co. had completed in succession the project Multi-dimensional Simulation Museum of Hangzhou Oriental Cultural Park, C3I System Simulation Improvement Project of Shenzhen Minsk Aircraft Carrier, Air Force Engineering College Project (Soviet-27 Airplane Dynamic Simulation Model) and has achieved a certain efficiency. Meanwhile, the Company developed 3-freedom pneumatic movement platform is unique in China, developed the sample machine of simulated entertainment airplane 3-freedom pneumatic movement platform (national initiation), entertainment type aircraft simulator (air battle) and UFO simulator etc., completed the research work of the software and hardware of county/city tap water IC card reading system which enjoy a good market potential. In 2002, the Simulation Co. plans to undertake the simulation improvement works of Tianjin KIEV Aircraft Carrier, Minghua Ship Entertainment Paradise Project, car simulator project, military parachute jumping simulator project, space physical training/testing project, etc. 4) Head Office In the report period, the head office continued to produce mini-recording tape. In addition, the head office, through cooperation with a Hong Kong company, made use of the Company’s existing equipment for producing correctors and double-faced adhesive tape. Since most of such products in the market are imported and there almost no manufacturers of such products in China. The Company seized this opportunity and made full use of the existing equipment. These products have brought about profit to the Company. At present, more and more orders have been placed for such products. The Company plans, while keeping producing mini record tapes in the new year, to further expand the production output of correctors and double-faced adhesive tape, trying to achieve greater economic efficiency. 2. Investment The net long-term investment in the report period increased by RMB29 million over the same period of the previous year. Names of the investees and proportion of the equity held by the Company are described in Note .7 to the accounting statements. 3. Financial position and operation results in the report period In RMB Items 2001 2000 Proportion of Reason for change increase / decrease Total assets 271,071,401.50 250,272,484.06 8.31% Increase of profit Long-term liabilities - - - -- Shareholders’ equity 131,056,924.79 123,055,400.69 6.50 Increase of profit Profit from principal business 28,711,831.97 95,925.02 29831.54 Profit-making capacity on principal buisness was enhanced after reorganization. Net profit 8,016,384.21 3,634,940.90 120.54 Profit-making capacity on principal buisness was enhanced after reorganization. 4. Routine Work of the Board of Directors 1) Board meetings and resolution In the report period, the Board held altogether six meetings. The board meetings and the resolutions are summarized as follows: . A board meeting was held on April 26, 2001. The meeting examined and adopted the following resolutions: a. 2000 Work Report of the Board of Directors; b. 2000 Profit Distribution Proposal; c. 2001 Profit Distribution Policy; d. 2000 Financial Settlement Report ; e. 2000 Annual Report; f. Proposal on Election for the New Board of Directors g. Proposal on Election for the New Supervisory Committee h. Proposal on Amendment of the Articles of Association . Another board meeting was held on May 15, 2001. The meeting examined and adopted the following resolutions: a. Proposal on Application for Additionally Issuing no More than 30 Million RMB Based Ordinary Shares (A Shares); b. Proposal on Feasibility of the Projects to be Invested with the Proceeds Raised through Public Offering; c. Notes to Application of the Proceeds Raised through Previous Share Offering d. Resolution on Revision of 2000 Profit Distribution Plan Proposed by Shekou Hansheng Electronics Co., Ltd., the Company’s biggest shareholder; e. Proposal on Holding 2000 Shareholders’ General Meeting. On June 15, 2001, the newly elected Board held a meeting. Directors present at the meeting unanimously recommended Mr. Huang Xianfeng as Chairman of the new Board and Mr. Zhou Jiachen as vice Chairman. On August 11, 2001, the Board held another meeting. The meeting examined and adopted the following resolutions: a. Proposal on Making Provision for Devaluation of the Shareholders’ Assets and Intangible Assets; b. Proposal on Corresponding Changes to be Made on the Company’s Accounting Policy to Comply with the New Accounting System and Standards and the Adjustment of the Financial Data of the Previous Years Based on Retroactive Method; c. 2001 Interim Report and the Summary; d. 2001 Interim Distribution Plan. On September 20, 2001, the Board held a meeting, where the following resolutions were examined and adopted: Since Zhongtianqin Certified Public Accountants’ business license was to be revoked, the Company had no certified public accountants for time being. In accordance with Article 164 of the Articles of Association, the Board decided to entrust Shenzhen Pengcheng Certified Public Accountants to work as the Company’s domestic auditor and Hong Kong Zhengfeng Certified Public Accountants to work as the Company’s international auditor so as to fill the gap of the certified public accountants. The proposal is submitted to the next shareholders’ general meeting for examination. On September 24, 2001, the Board held a meeting, where the Report on Self-inspections Based on the Reserved Auditors’ Opinions as Stated in 2000 Auditors’ Report. 2) Implementation of the resolutions of the Shareholders’ General Meeting: In the report period, the Company held a shareholders’ general meeting. The Board had finished implementation of all the resolutions of the Shareholders’ General Meeting in the report period. About 2000 Profit Distribution Plan, the Board published the Announcement on 2000 Dividend Distribution on Securities Times and Hong Kong Ta Kung Pao respectively dated August 9, 2001 and successfully finished the dividend distribution work of the year 2000 by August 15, 2001. 5. 2001 Profit Distribution Proposal or the Proposal of Converting Capital Public Reserve into Share Capital After the retroactive adjustment to comply with the new accounting policy in force, the Company’s profit available for distribution in the year 2000 turned to be negative. In order to make up the deficits, the Board suggested to neither conduct dividends distribution nor convert the public reserve into share capital for the report year and all the profit should be used for making up the deficits. VIII. REPORT OF THE SUPERVISORY COMMITTEE 1. Work of the Supervisory Committee The Company held altogether four meetings of the Supervisory Committee in the report year, and particulars about the meetings and resolutions are as follows: 1) The Company held the meeting of the Supervisory Committee on April 26, 2001, which reviewed and passed the following resolutions: 2000 Work Report of the Supervisory Committee; 2000 Profit Distribution Plan; 2000 Financial Report of Actual Budget; 2000 Annual Report. 2) The Company held the meeting of the new Supervisory Committee on June 15, 2001, in which Mr. Hui Shujian was elected to be chairman of the new Supervisory Committee. 3) The Company held the meeting of the Supervisory Committee on August 11, 2001, which reviewed and passed the following resolutions: 2001 Interim Report and Summary; 2001 Interim Distribution Plan. 4) The Company held the meeting of the Supervisory Committee on September 24, 2001, which reviewed and passed the Report on Qualified Self-inspection in the 2000 Auditors’ Report. 2. Independent Opinions Expressed by the Supervisory Committee 1) Operation according to law: The Supervisory Committee believed that the Company made decisions in legal procedures, established rather perfect internal control system, and the directors and managers hadn’t violated laws, legislations and the Articles of Association or damaged the interests of the Company. 2) Financial inspection: The Supervisory Committee believed that the auditors’ reports issued by Beijing Zhongtian Huazheng Certified Public Accountants and Hong Kong Glass Radcliffe Chan Certified Public Accountants truly reflected the Company’s financial status and business results. IX. SIGNIFICANT EVENTS 1. Material lawsuits and arbitration: In the report period, the Company had never been involved in any material lawsuits or arbitration. 2. Assets acquisition, purchase, absorption or combination: In the report period, the Company had never been involved in any activities of assets acquisition, purchase, absorption or combination. 3. Material related transactions: The Company had never been involved in any material related transactions in the report period. 4. Important contracts and implementation: In the report period, the Company had no important contracts. 5. Engagement and disengagement of certified public accountants: In the report period, as the business license of Zhongtianqin Certified Public Accountants, the Company’s domestic auditor engaged, had been revoked, the Company decided to engage Zhongtian Huazheng Certified Public Accountants to replace Zhongtianqin Certified Public Accountants and engaged Hong Kong Zhengfeng Certified Public Accountants to replace Horwath China (Shenzhen) Certified Public Accountants as the Company’s international auditor. 6. Other Significant Events: 1) In the report period, the Company suggested a Proposal on Additionally Issuing no More than 30 Million RMB based ordinary shares (A shares). Through approval by the Shareholders’ General Meeting. For this purpose, the Company did a lot of preparation work. At present, the preparations are still in process. 2) In the report period, the Company received the notice from Mr. Shao Liheng, a liquidator from Hong Kong Jiali Precision Manufacture Co., Ltd. (hereinafter referred to as Jiali Co.). Mr. Shao signed equity transfer agreement with Chuangxin International Investment Co., Ltd. on December 5, 2001. Mr. Shao transferred 14,247,290 promoter’s shares of Shenzhne Benelux Enterprise Co., Ltd. (taking 23.5% of the total shares) held by Jiali Co. at the transfer price of HK$ 28.5 million. Since Jiali Co. is one of the Company’s foreign promoter shareholders, the equity transfer belongs to the equity transfer resulting in change of the promoter’s shareholders of the Sino-foreign joint venture. According to the relevant provisions of the state, the proposed equity transfer is subject to the unanimous consent of the Company’s promoter shareholders of the Sino-foreign joint venture and approval by the original examination and approval authority through application by the Company. Ended the date when this report was completed, Mr. Shao Liheng, the said liquidator, had not provided sufficient relevant information and all the procedures could not proceed further. Therefore, in our opinion, the said equity transfer agreement bears no legal force before approval by the relevant authorities. X. FINANCIAL REPORT 1. Auditors Report (refer to attachment) 2. Audited Financial Statements (refer to attachment) 3. Notes to Financial Statements and relevant Supplementary Materials (refer to attachment) XI. DOCUMENTS AVAILABLE FOR REFERENCE 1. Accounting statements carried with personal signatures and seals of legal representative, person in charge of the financial affairs and person in charge of accounting affairs. 2. Original of Auditors’ Report carried with the seal of Certified Public Accountants as well as personal signatures and seals of certified public accountants; 3. Originals of all documents and manuscripts of Public Notices of the Company disclosed in public on the newspapers designated by CSRC in the report period; 4. Other Annual Report disclosed in other Stock Exchange. This report has been prepared in Chinese version and English version respectively. In the event of difference in interpretation between the two versions, the Chinese report shall prevail. Board of Directors of Shenzhen Benelux Enterprise Co., Ltd. April 27, 2002 SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED Audited Financial Statements For the year ended 31 December 2001 AUDITORS’ REPORT TO THE SHAREHOLDERS OF SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED (Incorporated in the People’s Republic of China with limited liability) We have audited the consolidated accounts on pages 2 to 14 of Shenzhen Benelux Enterprise Company Limited (the “Company”) and its subsidiaries (together with the Company referred to as the “Group”) for the year ended 31 December 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 the directors, as well as evaluating the overall account’s presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated accounts give a true and fair view of the state of affairs of the Group as at 31 December 2001 and of the profit and 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, 26 April 2002 SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2001 Notes 2001 2000 HKD’000 HKD’000 Turnover 4 62,938 9,838 Cost of sales (35,851) (9,748) Gross Profit 27,087 90 Less: Selling expenses (1,093) (2) General and administrative expenses (11,248) (850) Operating profit/(loss) 14,746 (762) Net finance (expenses)/income 5 (1,516) 3,033 Investment income 123 - Other income 34 1,524 Profit before taxation 7 13,387 3,795 Taxation 8 (4,441) (214) Profit after taxation 8,946 3,581 Minority interests (1,006) 31 Net profit 7,940 3,612 Earnings per share 9 HKD0.131 HKD0.060 There were no other recognised gains and losses arising during the year ended 31 December 2001 (2000: nil) apart from the profit as shown above. Accordingly, a statement of recognised gains and losses is not presented. SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2001 ASSETS Notes 2001 2000 HKD’000 HKD’000 NON-CURRENT ASSETS Fixed assets, net 10 76,571 87,873 Construction in progress 1,283 - Land use rights 11 41,942 42,750 Goodwill 12 (1,109) (1,233) Franchise rights 13 15,989 17,876 Proprietary technology 528 603 Long term investments 14 27,245 - Deferred assets 15 1,541 2,195 Total non-current assets 163,990 150,064 CURRENT ASSETS Inventories 16 14,238 10,507 Accounts receivable and other receivables, net 17 73,706 71,699 Advances to suppliers 1,180 10,804 Cash and bank balances 1,871 1,465 Deferred and prepaid expenses 174 120 Total current assets 91,169 94,595 CURRENT LIABILITIES Accounts payable and other payables 23,629 33,550 Short term loans 18 101,465 80,278 Taxes payable 2,560 2,386 Total current liabilities 127,654 116,214 Net current liabilities (36,485) (21,619) Net assets 127,505 128,445 SHAREHOLDERS’ EQUITY Share capital 19 79,078 79,078 Reserves 20 43,992 45,888 Total shareholders’ equity 123,070 124,966 Minority interests 4,435 3,479 Total shareholders’ equity and minority interests 127,505 128,445 Approved by the Board of Directors on DIRECTOR DIRECTOR SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED CONSOLIDATED CASHFLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2001 2001 2000 Notes HKD’000 HKD’000 NET CASH (OUTFLOW)/INFLOW FROM OPERATING 22(a) (11,376) 70,057 ACTIVITIES Interest income 1,967 5,595 Dividend paid (221) - Taxation paid (4,267) (194) (2,521) 5,401 INVESTMENT ACTIVITIES Acquisition of fixed assets (1,958) (24,007) Proceeds from disposal of fixed assets 43 - Negative goodwill - 1,233 Acquisition of land use rights - (43,018) Acquisition of franchise rights - (19,091) Acquisition of proprietary technology - (754) Acquisition of deferred assets (28) (2,067) Payment for construction in progress (1,283) - NET CASH OUTFLOW FROM INVESTING ACTIVITIES (3,226) (87,704) NET CASH OUTFLOW BEFORE FINANCING (17,123) (12,246) ACTIVITIES FINANCING ACTIVITIES Interest paid (3,658) (2,106) Increase in short-term loans 21,187 14,773 NET CASH INFLOW FROM FINANCING ACTIVITIES 17,529 12,667 INCREASE IN CASH AND CASH EQUIVALENTS 406 421 CASH AND CASH EQUIVALENTS AT BEGINNING OF 1,465 1,044 THE YEAR CASH AND CASH EQUIVALENTS AT END OF THE 1,871 1,465 YEAR SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 1. COMPANY BACKGROUND The Company was established on 25 September 1990 as a Sino-foreign joint venture company as approved by the Shenzhen Municipal Government. Pursuant to the approval granted by the Shenzhen Municipal Government on 31 August 1993, the Company was reorganized from a Sino-foreign joint venture company to a company limited by shares and changed its name to Shenzhen Benelux Enterprise Co. Ltd. (深圳本 鲁克斯实业股份有限公司). It was then listed on the Shenzhen Securities Exchange for its “B” shares on 30 May 1994. The principal activities of the Company and its subsidiaries (together with the Company referred to as the “Group”) are the sales and manufacture of medical equipment, clinical products, biological and blood products, cassettes and videotapes and development of the technology. 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 which were prepared in accordance with the generally accepted accounting principles and the relevant financial regulations in the PRC (“PRC GAAP”). Adjustments have been therefore made for compliance with IAS but will not be recognised in the books of the companies within the Group. As at 31 December 2001, current liabilities exceed current assets by HKD36,485,000 (2000: HKD21,619,000). The continuation of the business of the Group largely depends on continuing financial support from the bankers. The bankers have acknowledged their intention to extend the banking facilities to the Group. Accordingly, the directors believe that the Group will continue as a going concern and consequently have prepared the financial statements on the going concern basis. SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 3. PRINCIPAL ACCOUNTING POLICIES Basis of consolidation The group accounts comprise the accounts of the Company and its subsidiaries made up to 31 December 2001. 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. B. Fixed assets and depreciation Fixed assets are stated at cost or valuation less accumulated depreciation. Depreciation is provided to write off the cost or valuation of fixed assets less their estimated residual values over their estimated useful lives on a straight-line basis as follows: Estimated residual value as Useful lives a percentage of cost Buildings 20-30 years 10% Plant and machinery 5-15 years 10% Electronic equipment 5-6 years 10% Motor vehicles 5-8 years 10% Furniture, fixtures and office equipment 5-10 years 10% C. Construction in progress Construction in progress represents plant and properties under construction and includes the costs of construction plus interest charges arising from borrowings used to finance the construction during the construction period. D. Inventories Inventories are valued at the lower of cost and net realisable value. Costs of finished goods and work in progress include cost of raw materials, direct labour and an appropriate portion of production overheads, calculated using the weighted average method. Net realisable value is calculated as the actual or estimated selling price less all further costs of production and the related costs of marketing, selling and distribution. E. Taxation PRC income taxation is provided at the rates applicable to the enterprises in the Shenzhen Special Economic Zone, the PRC, on the income for financial reporting purposes adjusted for income and expense items, which are not assessable or deductible for income taxation purposes. 3. PRINCIPAL ACCOUNTING POLICIES - CONTINUED SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 F. Foreign currency translation The financial records of the Company are maintained in Hong Kong dollars. Transactions in foreign currencies are translated into Hong Kong dollars at the rates of exchange ruling at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Hong Kong dollars at the rates of exchange ruling at the balance sheet date. Exchange differences arising are dealt with in the profit and loss accounts. The financial statements of subsidiaries expressed in Renminbi are translated at the rates of exchange ruling at the balance sheet date. Any differences arising on exchange are dealt with as movements in reserve. G. Land use rights Land occupancy rights are amortised using the straight-line method over a period of 50 years. H. Goodwill Goodwill represents the excess of the purchase consideration over the fair value ascribed to the Group’s share of the separable net assets at the date of acquisition of a subsidiary and is amortised using the straight-line method over its estimated useful life. Any impairment of the goodwill will be charged as an expense in the profit and loss account in the period when it is incurred. Negative goodwill, which represents the excess of the fair value ascribed to the group’s share of the separable net assets at the date of acquisition of a subsidiary over the purchase consideration is credited to profit and loss account using the straight-line method over its estimated useful life. I. Franchised rights Franchised rights are amortised using the straight-line method over a period of 10 years. J. Deferred assets Deferred assets are amortized using the straight-line method over a period of 5 years. K. Long term investments Long term investments are stated at cost less provision for permanent diminution in value, if any. SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 L. Deferred taxation Deferred taxation is provided, using the liability method, on all significant timing differences, which are expected with reasonable probability to crystallise in the foreseeable future. SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 4. PRINCIPAL ACCOUNTING POLICIES – CONTINUED M. Accounts receivable and other receivables Accounts receivable and other receivables are carried at original invoice amounts less an estimate made for doubtful debts based on a review of all outstanding amounts at the year-end. Bad debts are written off when identified. N. Retirement benefit cost 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. O. Revenue recognition Revenue from the sale of goods is recognized when: (i) the significant risk and rewards of ownership of the goods are passed to the customers; (ii) the amount of services can be measured reliably; (iii) the revenue has been received or is certain to be received; (iv) the Company no longer retains effective control over the goods. P. 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. 4. SEGMENT INFORMATION An analysis of the Group’s turnover by principal activities for the year ended 31 December 2001 is as follows: 2001 2000 HKD’000 HKD’000 By activities: Videotapes and cassettes 9,094 8,910 Technology development 4,507 928 Medical equipment and clinical products 10,020 - Biology and blood products 39,317 - 62,938 9,838 All sales were made in the PRC during the year. SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 5. NET FINANCE (EXPENSES)/INCOME 2001 2000 HKD’000 HKD’000 Interest income 1,967 5,595 Net foreign exchange gain/(loss) 186 (450) Interest expenses (3,658) (2,106) Others (11) (6) (1,516) 3,033 6. PRIOR YEAR ADJUSTMENT During the year, certain idle fixed assets were revalued by a local independent valuer, Shenzhen Zhongqinxin Asset Valuation Co., Ltd. resulting in impairment provision of HKD9,615,000. The loss has been accounted for as a prior year adjustment. 7. PROFIT BEFORE TAXATION 2001 2000 HKD’000 HKD’000 Profit before taxation is arrived at after charging/(crediting): Depreciation 3,617 1,263 Interest expenses 3,658 2,106 Provision for bad debts 1,471 (1,899) Interest income (1,967) (5,595) 8. TAXATION The Company is subject to income tax rate of 15% on its assessable profit. Shenzhen Benelux Simulation & Control Ltd., a subsidiary of the Company, is subject to income tax rate of 15% on its assessable profit. In accordance with the relevant income taxation laws applicable to enterprises in Shenzhen Special Economic Zone, the PRC, Shenzhen Houyuan Medical Instrument Co., Ltd., a subsidiary of the Company, is exempted from income taxation for the current year. Wuhan Rui De Biological Products Co., Ltd., a subsidiary of the Company, is subject to income tax rate of 33% on its assessable profit. No deferred taxes have been provided in the financial statements, as there are no material timing differences. 9. EARNINGS PER SHARE The calculation of earnings per share is based on the profit after taxation of HKD7,940,000 (2000: HKD3,612,000) and the 60,500,000 shares (2000: 60,500,000 shares) in issue at the end of the year. SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 10. FIXED ASSETS 2001 2000 HKD’000 HKD’000 Cost/Valuation Buildings 65,403 63,764 Plant and machinery 42,508 52,005 Electronic equipment 1,173 1,083 Motor vehicles 2,238 2,236 Furniture, fixtures and office equipment 5,227 5,147 116,549 124,235 Accumulated depreciation Buildings 17,653 15,711 Plant and machinery 17,824 16,483 Electronic equipment 486 438 Motor vehicles 1,449 1,219 Furniture, fixtures and office equipment 2,566 2,511 39,978 36,362 Net book value 76,571 87,873 As at 31 December 2001, land and buildings with net book values of HKD28,351,000 (2000: HKD31,331,000) have been mortgaged to banks to secure general banking facilities for the Company and its subsidiaries (Note 18). 11. LAND USE RIGHTS 2001 2000 HKD’000 HKD’000 Original cost 43,018 43,018 Less: Accumulated amortisation (1,076) (268) Net book value 41,942 42,750 12.GOODWILL 2001 2000 HKD’000 HKD’000 Wuhan Rui De Biological Products Co., Ltd. (4,940) (5,489) Shenzhen Houyuan Medical Instrument Co., Ltd. 3,831 4,256 (1,109) (1,233) SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 13. FRANCHISED RIGHTS 2001 2000 HKD’000 HKD’000 Original cost 19,091 19,091 Less: Accumulated amortisation (3,102) (1,215) Net book value 15,989 17,876 14. LONG TERM INVESTMENT Long term investment represents an investment in a property construction project developed by Beijing Ronglida Real Estate Development Co. Ltd. This investment was made through the transfer of other receivables, a due from a company related to Beijing Ronglida Real Estate Development Co., Ltd. 15. DEFERRED ASSETS 2001 2000 HKD’000 HKD’000 Original cost 3,096 3,068 Less: Accumulated amortisation (1,555) (873) 1,541 2,195 16. INVENTORIES 2001 2000 HKD’000 HKD’000 Raw materials 1,397 1,254 Work in progress 7,652 1,367 Finished goods 3,740 6,928 Spare parts 1,449 958 14,238 10,507 17. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES, NET 2001 2000 HKD’000 HKD’000 Amounts due from shareholders Shekou Hansheng Electronic Co., Ltd. 10,469 39,955 Others 63,237 32,284 73,706 71,699 Amounts due from Shekou Hansheng Electronic Co., Ltd. are unsecured, interest free and have no fixed terms of repayment. Included in the other receivables balance is an amount of HKD15,385,000 that is guaranteed by a major shareholder. SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 18. SHORT TERM LOANS 2001 2000 HKD’000 HKD’000 Guaranteed loans 37,482 21,496 Mortgaged loans 24,165 21,371 Credit loans 39,818 37,411 101,465 80,278 The above loans to the extent HKD9,050,000, US$130,000 and RMB9,000,000 are secured on certain of the Company’s properties and production facilities with book values totalling HKD12,615,000 and HKD15,736,000 respectively. In addition, loan amounting to HKD18,868,000 is secured by a charge over the ‘A’ shares held by one of its shareholders, Shekou Hansheng Electronic Co., Ltd. 19. SHARE CAPITAL 2001 2000 Registered capital RMB’000 RMB’000 29,483,078 ‘A’ shares at RMB1.00 each (Unlisted) 29,483 29,483 31,016,922 ‘B’shares at RMB1.00 each (Listed) 31,017 31,017 60,500 60,500 Paid-up capital RMB’000 HKD’000 29,483,078 ‘A’ shares at RMB1.00 each 29,483 42,576 31,016,922 ‘B’shares at RMB1.00 each 31,017 36,502 60,500 79,078 ‘A’ shares and ‘B’ shares rank pari passu in all respects. 20. RESERVES Share Revaluation Exchange Surplus Accumulated premium reserve differences Fund oss/Retained Total earnings HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 Balance as at 1 January 2001 26,066 7,819 (10,220) 22,023 200 45,888 Prior year adjustment (Note 6) ---- ---- ---- ---- (9,615) (9,615) As restated 26,066 7,819 (10,220) 22,023 (9,415) 36,273 Profit for the year ---- ---- ---- ---- 7,940 7,940 Dividends ---- ---- ---- ---- (221) (221) Balance as at 31 December 2001 26,066 7,819 (10,220) 22,023 (1,696) 43,992 SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 21. SUBSIDIARIES Particulars of the Company’s subsidiaries at 31 December 2001 are as follows: Nominal value Percentage of Country of of issued capital held by Names incorporation capital the Company Principal activities RMB’000 Shenzhen Benelux Simulation PRC 9,000 91.11% Technology & Control Ltd. Development Shenzhen Houyuan Medical PRC 6,000 75.00% Distribution of Medical Instrument Co., Ltd instruments and clinical products Wuhan Rui De Biological PRC 45,840 99.00% Manufacture of Products Co., Ltd. biological and blood products 22. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (a) Reconciliation of profit before taxation to net cash (outflow)/inflow from operating activities 2001 2000 HKD’000 HKD’000 Profit before taxation 13,387 3,795 Adjustment for: Minority interests (50) 2,773 Interest expenses 3,658 2,106 Interest income (1,967) (5,595) Depreciation 3,617 1,263 Amortisation of land use rights 808 268 Amortisation of goodwill (124) - Amortisation of franchised rights 1,887 1,215 Amortisation of proprietary technology 75 151 Amortisation of deferred assets 682 257 Provision for bad debts 1,471 (1,899) Gain on disposal of fixed assets (15) - Increase in inventories (3,731) (6,288) (Increase)/Decrease in accounts receivable and other (30,723) 80,510 receivables Decrease/(Increase) in advances to suppliers 9,624 (10,804) Increase in deferred and prepaid expenses (54) (120) (Decrease)/Increase in accounts payable and other payables (9,921) 202 Increase in taxes payable - 2,223 Net cash (outflow)/inflow from operating activities (11,376) 70,057 SHENZHEN BENELUX ENTERPRISE COMPANY LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 23.NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) (b) Analysis of changes in financing during the year Bank loans HKD’000 Balance as at 1 January 2001 80,278 Additions during the year 49,817 Repayments during the year (28,630) Balance as at 31 December 2001 101,465 24. RELATED PARTY TRANSACTIONS During the year, the Company had the following transactions with shareholders: 2001 2000 HKD’000 HKD’000 Shekou Hansheng Electronic Co., Ltd. - 2,140 Wuhan Huaxing Electronic Company Ltd. - 133 Jingloong Investments Company Ltd. - 3,318 During the year, Shekou Hansheng Electronic Co., Ltd. bore interest expenses of Rmb887,000 for the loans borrowed by the Company. 25. NET IMPACT OF IAS ADJUSTMENTS ON THE RESULTS AND NET ASSETS Profit after Net assets taxation for the at year ended 31 31 December December 2001 2001 HKD’000 HKD’000 As reported in the ‘A’ share statutory financial statements prepared under PRC GAAP 7,563 128,002 Adjustments to align with IAS: Exchange difference 183 - Fixed assets 194 (497) As reported in the ‘B’ share financial 7,940 127,505 statements in accordance with IAS 26. COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with the current year’s presentation.