小天鹅Ａ(000418)小天鹅2001年年度报告（英文版）

The report is in both Chinese and English versions, and the Chinese version shall prevail in case of different interpretations for the two versions. WUXI LITTLE SWAN COMPANY LIMITED Annual Report of 2001 Important Notice The Board of Directors and its directors guarantee that there are not any false, misleading statement or significant omission in this report and undertake individual as well as implicative liability for the authenticity, accuracy and completeness of this report. Director Peng Zhouhong authorized Mr. Zhu Dekun, the chairman of the Board, to present this meeting and vote on behalf. Director Paul Wolansky and Mr. Lin Jiacong authorized Mr. Liang Bincong to present this meeting and vote on behalf. Jiangsu Gongzheng Certified Public Accounting Co., Ltd. gave a unqualified auditors report with explanation to the Company. The Board of Directors and the Board of Supervisors have issued detailed account for the related issues for the awareness of all investors. Index I Overview of the Company s basic information II Index of accounting data and operational data III Movement of share capital and information of shareholders IV Information of directors, supervisors, senior management and employees V Operational structure of the Company VI Information of shareholders meeting VII Report from the Board of Directors VIII Report from the Board of Supervisors IX Important issues X Financial report XI Reference I. Overview of the Company s Basic Information 1 Official name of the Company in 无锡小天鹅股份有限公司 Chinese Official name of the Company in Wuxi Little Swan Company Limited English 2 Legal representative of the Mr. Zhu Dekun Company 3 Secretary of the board of Mr. Wang Xianping directors: Contact Address 67, Huiqian Rd. Wuxi, Jiangsu Wuxi Little Swan Company Limited Zip code 214035 Tel 0510-3704003-2147 Fax 0510-3704031 Email Address Xpwang@littleswan.com.cn Security representative of the Mr. Cheng Weinong board of directors: Contact Address 67, Huiqian Rd. Wuxi, Jiangsu Security Department of Wuxi Little Swan Co. Ltd., Zip code 214035 Tel 0510-3704003-2022 Fax 0510-3704031 Email Address chenwn@littleswan.com.cn 4 Registered Address of the Company 1, Hanjiang Rd. Natioanl High Tech Development Zone, Wuxi Zip code 214028 Office address of the Company 67, Huiqian Rd. Wuxi, Jiangsu Zip code 214035 Website address of the Company http://www.littleswan.com Email address of the Company: Info@littleswan.com.cn 5 Delegated newspaper for Security Time information disclosure Wen Wei Po Delegated website by the Security Http://www.cninfo.com.cn Supervision Board to disclose annual report of the Company: FiLin location for the annual report of Security Department of the Co the Company mpany 6 Listing location of the Company: Shenzhen Security Exchange Ma rket Initial name for stocks of the Company Little swan A, Little swan B Security code of the Company 000418 200418 7 Other related information Registration modification date of the Dec 28, 2000 Company Registration modification location Business Administration Burea u of Jiangsu Province Business license registration code for 3200001103331 legal entity Tax registration code (state tax 320201134792058 bureau) Tax registration code (local tax 320211704046760 bureau) Name of domestic accounting firm Jiangsu GongZheng Certified Public Accountants Co., Ltd engaged by the Company Office address of the domestic 28, Liangxi Rd. Wuxi accounting firm engaged by the Company Name of oversea accounting firm engaged PricewaterhouseCoopers China Limit ed by the Company Office address of the oversea 18th Floor Beijing Kerry accounting firm engaged by the Company Centre,1 Guang Hua Lu Chao Yang District, Beijing II. Index of Accounting Data and Operational Data 1. Annual major accounting index (In RMB) Description Year of 2001 Total profit 74,262,001.15 Net profit 26,830,095.08 Profit deducting incidental gain/loss 38,467,027.09 Main business operating income 516,068,204.30 Other operating income 18,471,447.51 Operational profit 48,286,820.69 Investment income 14,015,947.06 Subsidiary income 20,000,000.00 Net gain/loss from non-operating -8,040,766.60 activities Net cash flow from operating 96,441,569.84 activities Net increase/decrease of cash and cash -46,857,806.07 equivalent Adjustment on net profit (In RMB 000 yuan ) Description Year of 2001 In accordance with PRC GAAP 26,830 In accordance with IAS Add Bad debt provision 2,704 Deduct Unrecognized investment -9,828 loss Profit after adjustment 19,706 Note: Non-operating gain/loss consists of the following items: Deducting non-operation income as of 2,184,405.98 yuan; deducting investment income on security as of 5,154,627.16 yuan; adding under provision EIT submitted 26,450,088.69 yuan; deducting subsidiary income as of 17,000,000 yuan; adding start-up expenditure as of 5,157,114.50 yuan. 2. Main accounting data and financial index of the prior 3 years by the end of the reporting period Description Year 2001 Year 2000 Year 1999 After Prior to adjustment adjustment Main operating income 205,422.51 272,486.35 272,486.35 265,963.48 (In 0 000) Net profit(In 0 000) 2,683.01 18,963.68 18,821.77 20,939.03 Total assets (In 342,062.60 339,183.81 340,714.94 318,400.25 0 000) Shareholders equity 199,546.77 198,438.23 199,586.58 191,631.80 (excluding minority shareholders equity (In 0 000) Earnings per share 0.0735 0.5194 0.5155 0.5735 (diluted) (In 0 000) Net asset per share(In 5.47 5.44 5.47 5.25 0 000) Net asset per share 5.3408 5.34 5.37 5.14 after adjustment(yuan) Net cash flow from 0.2641 0.5360 0.5360 0.5905 operating activity per share(yuan) Net asset ratio(%) 1.34 9.56 9.43 10.93 3. Index structural analysis of net asset ratio and net earnings per share During this reporting period, no capital movement incurred. Earnings per Net asset ratio(%) Profit of the reporting share(元) period Fully Weighted Fully Weighted diluted averaged diluted averaged Main operating profit 25.86 25.83 1.4135 1.4135 Operating profit 2.42 2.42 0.1323 0.1323 Net profit 1.34 1.35 0.0735 0.0735 Net profit deducting 1.93 1.92 0.1054 0.1054 non-operating gain/loss 4. Stock equity movement during this reporting period (In RMB) Descripti Capital Capital Reserved Retained Investmen Total Stock on Equity Surplus Fund Earnings t Loss Equity Unrecogniz ed Beginning 365103840 1105431937.10 521485306.51 -7638774.22 - 1984382309.39 Balance Increase 1630940.08 11509810.02 26830095.08 39970845.18 during This Reporting Period Decrease 19057018.50 9828453.65 28885472.15 during This Reporting Period Ending 365103840 1107062877.18 532995116.53 134302.36 -9828453.65 1995467682.42 Balance Rationale for movement: 1. Increase in capital surplus during this period is equity investment provision and tax exemption, etc of its subsidiaries proportioned the parent company in light with shares held, which is not included in the consolidated financial report. 2. Increase in reserved fund is statutory common reserve fund, statuary public welfare fund and discretionary common reserve fund as well as statuary common reserve fund, statuary public welfare fund and discretionary common reserve fund provided by subsidiaries included in the consolidated financial report which are proportioned to the parent company according its shares held.3. Increase in retained earnings is net profit realized in this reporting period; decrease in retained earnings is caused by the provision of statuary reserve fund, statuary public welfare fund and discretionary common reserve fund respectively as well as cash dividend issued in year 2001. III. Movement of Share Capital and Information of Shareholders 1. Table of share capital movement 1 Table of share capital movement In per stock Prior to this Increase/Decrease during this movement After this movement movement Stoc Stoc Transfer Suppl Others Sub-total k k red from ement opti divi reserved ary on dend fund Offer ing 一 Unlisted stocks 1 Initiator s stocks 109,622,592 109,622,592 Including State-owned stocks 101,628,864 101,628,864 Stocks held by 7,993,728 7,993,728 domestic legal representative 2 Legal representative 99,481,248 -43,357,248 -43,357,248 56,124,000 stock Including Domestic legal 56,124,000 56,124,000 representative stock Oversea legal 43,357,248 -43,357,248 -43,357,248 0 representative stock Total of unlisted stock 209,103,840 -43,357,248 -43,357,248 165,746,592 二 Circulated stock 1 RMB common stock 72,000,000 72,000,000 Including Stocks 166,800 -26,400 -26,400 140,400 held by senior management 2 B shares listed in 84,000,000 +43,357,248 +43,357,248 127,357,248 domestic market Total circulated stock 156,000,000 +43,357,248 +43,357,248 199,357,248 三 Total stock 365,103,840 365,103,840 2 Overview of stock listing and public offering During the recent 3 years, the Company hadn t issued any stock or derivative security; There was no movement of stock equity or stock structure during the reporting period; There is no internal staff s stock within the Company. 2. Introduction of the shareholders 1 By the end of this reporting period, there were total shareholders as of 78,391, among who there were 57,352 A shareholders and 21,039 B shareholders. 2 Shareholding information of the major 10 shareholders by the end of this reporting period In per stock No. Shareholders Name Shares Ratio(%) Nature of holding the Shares 1 Jiangsu Little Swan Group Co., Ltd. 101,628,864 27.84 State-owned legal repr esentative shares 2 Greater China Development Co., Ltd. 26,014,349 7.13 Circulated B Shares 3 Wuxi Industrial Development Fund 16,496,640 4.52 State-owned shares 4 Wuxi City and Town Industrial United 7,993,728 2.19 Legal repre Committee sentative s hares 5 South Security Co., Ltd. 7,570,900 2.07 Legal repre sentative s hares 6 Xi an Wanguo Real Estate 4,800,000 1.31 Legal Development Co., Ltd. representat ive shares 7 China Galaxy Security Co., Ltd. 2,519,193 0.69 Circulated A shares 8 Shengyang Liangya Industrial 2,160,000 0.59 Legal Development Co., Ltd. representat ive shares 9 China Construction Bank Dalian 1,440,000 0.39 Legal Trust Investment Co., Ltd. representat ive shares 10 Beijing Liancheng Investment 1,440,000 0.39 Legal Consulting Co., Ltd. representat ive shares Note There was no other movement, pledge or frozen for shareholders holding more than 5% shares during this reporting period except that the Greater China Development Co., Ltd. lessened circulated B shares held from 43,357,248 to 26,014,349 which led its shareholding ratio dropped from 11.88% to 7.13%; Total shares held by the 10 major shareholders were 172,063,674 stocks, among which there were 143,530,132 unlisted stocks and 28,533,542 circulated stocks; Among the 10 major shareholders, South Security Co., Ltd. and Xi an Wanguo Real Estate Development Co., Ltd. are related parties of the Company; 3 Information of legal representative holding 10% of the Company s shares Jiangsu Little Swan Group Co., Ltd.: Mr. Zhu Dekun is the legal representative; main business scope of the Company is the manufacture and sales of household appliance, the acquisition of raw materials, secondary materials, equipment and spare parts,etc, economic and financial information consulting, intermediate service, and technical service for household appliance, etc; 4 There is no movement for dominating shareholders of the Company during the reporting period. IV. Information of Directors, Supervisors, Senior Management and Employees 1. Directors, supervisors, senior management Year Educatio Professional Shares Name Title of Sex Service Term nal Level Title Holding Birth Chairman of Senior Zhu Dekun 1944 Male College 2000.5 2003.5 30000 the Board Economist Deputy Xu Senior Chairman of 1945 Male Bachelor 2000.5 2003.5 18000 Zhonglun Engineer the Board Senior Ou Shiyu Director 1944 Male Bachelor 2000.5 2003.5 18000 Engineer Director College Administrato Mao Sujie 1946 Female 2000.5 2003.5 18000 r Xu Yuan Director 1944 Male College Engineer 2000.5 2003.5 18000 Gai Lijin Director 1959 Male Master Economist 2000.5 2003.5 14400 Paul Director Male 1955 Doctor 2000.5 2003.5 0 Wolansky Li Director Male 1948 College 2001.9 2003.5 0 Guodong Liang Director Male 1956 Master 2000.5 2003.5 0 Bincong Lin Director Male Bachelor 1952 CPA 2001.9 2003.5 0 Jiacong Director Male Bachelor Senior Liu Weiju 1938 2000.5 2003.5 0 Accountant Peng Director Male Bachelor 1957 2000.5 2003.5 0 Zhouhong Secretary Male Wang of the 1954 College Economist 2001.12 2003.5 0 Xianping Board Chai General Male Senior 1963 Doctor 2000.5 2003.5 0 Xinjian Manager Engineer Vice Male Vice Li Hong General 1963 Doctor 2000.5 2003.5 0 Professor Manager Vice Male Mao Senior General 1957 Master 2000.5 2003.5 0 Zhiliang Engineer Manager Rao Male Bachelor Financial Zhonglian 1956 CPA 2001.10 2003.5 0 Controller g Chairman of Bachelor the Board Jiang of 1951 Female Accountant 2000.5 2003.5 0 Lanzhen Supervisor s Zhang Male Bachelor Supervisor 1946 Engineer 2000.5 2003.5 24000 Zhizheng Ma Jun Supervisor 1971 Male Bachelor Engineer 2000.5 2003.5 0 Except Mr. Zhu Dekun and other senior management staff engaged by the Company who receive remuneration from the Company, other directors, supervisors (except those who part-take positions in the Company) don t receive any remuneration from the Company. In year 2001, total annual remuneration for the directors, supervisors and senior management staff was 3.33 million yuan, which, if categorized by the remuneration amount, can be divided as follows: 3 personal receiving annual package above 200,000 yuan respectively, 4 personal receiving annual package between 150,000 to 200,000 yuan respectively, 2 personal receiving annual package between 100,000 to 150,000 yuan respectively, 1 personal receiving annual package between 70,000 to 100,000 respectively. Total amount of the highest 3 remuneration package for top management staff is 2.58 million yuan. The resignation and engagement overview for directors, supervisors and senior management during the reporting period is as follows: The 3rd meeting of the 3rd Board Meeting held on March 15, 2001 reviewed and passed: (1) Mr. Zhu Dukun, the Chairman of the Board and General Manager, should no longer part-take the position of general manager. The Board engaged Mr. Chai Xinjian as the General Manager and excused Mr. Chai Xinjian the position of Standing Vice General Manager;(2)Mr. Xu Zhonglun, Mr. Ou Shiyu, Ms. Mao Sujie, Mr. Xu yuan and Mr. Gai Lijin should no longer take the position of Vice General Manager. The title of Mr. Xu Zhonglun as Vice Chairman of the Board and the title of Mr. Ou Shiyu, Ms. Mao Sujie, Mr. Xu Yuan and Mr. Gai Lijin as directors remained unchanged; (3) According to the nomination of Mr. Chai Xinjian, the Board recurred the engagement with Mr. Qiao Li, Mr. Li Hong as the Vice President of the Company and engaged Mr. Lu Hanming as the Vice General Manager and Financial Controller of the Company and engaged Mr. Mao Zhiliang and Mr. Sun Xiyin as the Vice General Manager of the Company; (4) Due to function change, Mr. Guo Yiqing was approved to resign the position of Secretary of the Board. Mr. Qiao Li was engaged to part-take the position of the Secretary of the Board. It was reviewed and approved by the annual shareholders meeting th held on May 7 , 2001 that Mr. Mai Shize resigned the position of director due to function change and Mr. Liang Bincong was selected to be the director of the Company. It was reviewed and approved by the provisional shareholders meeting held on September 14th, 2001 that Mr. Cheng Liwu and Mr. Li Wei resigned the position of director and Mr. Lin Jiacong was selected to be the director of the Company. It was reviewed and approved by the 7th meeting of 3rd Board Conference th held on October 8 , 2001 that Mr. Lu Haoming was exempted from the position of Financial Controller due to post transfer and Mr. Rao Zhong Liang was engaged as the Financial Controller of the Company. On the 3rd meeting of 3rd Board Conference held on March 28th, 2001, > was reviewed and passed. The resignation from the position of supervisor raised by supervisor, Mr. Sun Xiyin, due to oversea study was invariably approved and Mr. Ma Jun was elected to be a member of the Board of Supervisors by the Employees Meeting. 2. Information of employees By the end of the reporting period, there were 945 employees in this Company and could be classified according to profession into the following categories: Production worker as of 541, technician as of 135, accountant as of 10, sales as of 3, management staff as of 97, assistant personal as of 88 and the retired as of 356. If classified by educational level, there is 5 doctors, 9 masters, 77 bachelors and 90 college graduated. V. Operational Structure of the Company 1. Management status of the Company To continuously integrate the legal representative management system and to standardize the operation of the Company, the Company instituted > and reviewed and passed > and > th rd th in the 5 meeting of 3 board conference held on April 25 , 2001 according to >, > and related laws and regulations issued by the China Security Supervision Committee. Main issues are as follows: 1 Regarding shareholders and shareholders meeting The Company institutes a management system to ensure all shareholders, especially average and minority shareholders, to enjoy equal importance and to ensure all shareholders to fully perform their rights. The Company institutes > and is able to convene and hold shareholders meeting strictly following the requirements of >; 2 Regarding related party transaction The Company commits an open and fair principle regarding related party transaction. Agreements should be signed based on the principle equality, willingness, equivalence and profitability. Content of agreements should clear and detailed. Meanwhile, the Company should timely convene board meetings and shareholders meeting according to related laws and regulations and fully disclose related party transactions and pricing principle to ensure the awareness of all shareholders. 3 Regarding the relationship between dominating shareholders and listing company Dominating shareholders are entitled to execute their investor s right according to the laws. However, they shouldn t overlap the shareholders meeting and the board meeting to interfere the policy and operating activity of the Company. The board of directors, the board of supervisors and internal organization can operate independently. 4 Regarding directors and the board of directors The Company elects directors according to the election procedure prescribed by >. Numbers of directors and members of the board should satisfy the requirement of laws, regulations and >. Directors of the Company should be familiar with related laws and regulations and understand the right, liability and responsibility of director as well as ensure due diligence. 5 Regarding supervisors and the board of supervisors Number of supervisors and the constitution of the Board comply with related prescriptions of >. Presently, there are 3 supervisors on the Board, including 1 employee representative. Members of the board of supervisors are all professional familiar with their functions. 6 Regarding performance evaluation and inspiration system The Company has instituted and executed annual remuneration system for top management staff. The remuneration package is discussed and approved by the Board of Directors. The Company adopts open and transparent methods to fully utilize the function of intermediate organization for the selection and engagement of top management staff. 7 Regarding beneficial party The Company fully respects the legal welfare of beneficial parties such as banks, other creditors, employees, consumers, suppliers and society, etc. The Company holds annual employee representative meetings to strengthen direct communication between employees and the board of directors, the board of supervisors and management. Employees can give their feedback on the operation, financial status as well as major decisions involving welfare of employees in the meeting. 8 Regarding information disclosure and openness The secretary of the Board is the due personal responsible for information disclosure and receipt of shareholder visitors. The Company gives effective support on the work of the secretary of the board according to prescription in >. Regarding issues needed to be disclosed according to related laws, regulations and >, the Company discloses them based on the disclosure principle of authenticity, accuracy, completeness and timeliness to ensure all shareholders enjoy the same opportunity for information awareness. 2. The performance status of independent director: During the reporting period, the Company didn t institute independent directors. Presently, the Company is efficiently selecting qualified candidates for independent directors to ensure the institution of independent directors before June 30th, 2002 according to the requirement of > issued by the China Security Supervision Board. During the reporting period, the Company didn t constitute a special committee for board of directors. The Company will decide on the constitute proceedings of special committer for board of directors according to actual status in the future. VI. Information of The Shareholders Meeting 1. Convening and holding status of the shareholders meeting of year 2000 The board of directors of the Company sent out notification of the opening of shareholders meeting of year 2000 on April 4th, 2001. Notifications were published in >, >, Wen Wei Po, and Da Gong Po of that date. The shareholders meeting of year 2002 was held in conference room 301 at Wuxi Little Swan Company limited on May 7th, 2001. A total of 28 shareholders and authorized shareholders representative presented the meeting, which accounted for 172,018,757 shares (including 33,443,325 B shares) and stood a 47.12% of total share equity of the Company. Thus it complied with > and related prescriptions in the Article of Association. The resolutions passed on the meeting were valid. The meeting was presided by Mr. Zhu Dekun, the Chairman of the Board. Resolutions passed on the meeting are as follows: 1 Financial settlement report of year 2000 was approved; 2 Annual appropriation scheme of year 2000 was passed; 3 Profit appropriation policy of year 2000 was passed; 4 Performance report of the board of directors for year 2000 was approved; 5 Performance report of the board of supervisors for year 2000 was approved; 6 Proposal to amend part of the codes in the Article of Association of the Company was passed; 7 Proposal to account for the operating status of recent fund raising was passed; 8 Proposal of the feasibility study of supplement issuance of A shares for investment fund was passed; 9 Proposals of supplemental issuance of no more than 50 million A shares was reviewed and passed one by one; 10 Proposal to solicit the shareholders meeting to authorize the board of directors for the detailed proceeding of the supplemental issuance was passed; 11 Proposal to replace Mr. Mai Shize with Mr. Liang Bincong to the post of director was passed; 12 > was reviewed and passed; 13 Proposal to solicit the shareholders meeting to authorize the board of directors a investment limit under 10 million (including 10 million) was passed; 14 Proposal to solicit the shareholders meeting to confirm and review significant related party transactions with Wuhan Little Swan Co., Ltd. was passed; Announcement for the above resolutions from the shareholders meeting of year 2000 was published in the >, >, Wen Wei Po, and Da Gong Po on May 8th. 2. Information of the provisional shareholders meeting of year 2001 During the reporting period, the board of directors issued notification in >, >, Wen Wei Po, and Da Gong Po on August 11, 2001 for the convening of the provisional shareholders meeting of year 2001. The provisional shareholders meeting of year 2001 was held at 2 pm on September 13, 2001. The meeting reviewed and passed the replacement proposal for two directors. Mr. Lin Jiacong was elected to replace Mr. Cheng Liwu as the director of the Company and Mr. Li Guodong replaced Mr. Li Wei as the director of the Company. Their service term will be expired till May, 2003. Resolutions of the provisional shareholders meeting of year 2001 was published in >, >, Wen Wei Po, and Da Gong Po on September 14. VII. Report from the Board of Directors 1. Operating status of the Company 1 Industry of the Company and Its Industry Ranking Main business of the Company is the manufacture and sales of white household appliance and spare parts. The Company holds a domestically famous trademark Little Swan . Sales turnover of wash machine of the Company during year 1998 to year 2001 kept to be biggest in China. The Company sold a total of 2,011,500 wash machines, 10,900 dishwasher machines, 63,600 refrigerators, 514 industrial wash machine and 86 dry wash machine in year 2001. 2 Main business scope and its operating status Main business of the Company is the manufacture and sales of household appliance and its spare parts. The composition of main business income and profit of year 2001 can be classified as follows according to products categories: Description Main Business Income Main Business Profit In 0 000 yuan In 0 000 yuan Wash Machine 161,036 38,959 Dishwasher 1,925 284 Machine Industrial Wash 3,925 1,464 Machine Refrigerator 8,810 1,392 3 Operating status of its major wholly owned enterprises and shareholding subsidiaries Jiangsu Little Swan San Jiang Electric Appliance Manufactory Co., Ltd. is a shareholding company of the Company. It realized a sales turnover of 136.38 million yuan with a profit of 10.57 million yuan in year 2001. Wuxi Jiake Electronic Co., Ltd. is a shareholding company of the Company. It realized a sales turnover of 140.55 million yuan with a profit of 11.79 million yuan in year 2001. Wuxi Little Swan Mei Maloni Dishwasher Co., Ltd. is a shareholding company of the Company. It realized a sales turnover of 19.25 million yuan with a loss of 20.07 million yuan in year 2001. Wuxi Little Swan High-Grade Casting Co., Ltd. is a shareholding company of the Company. It realized a sales turnover of 78.31 million yuan with a profit of 16.52 million yuan in year 2001. 4 Problems and difficulties as well as solutions incurred during operating With the fasten of international economy integration and especially with China s entry of WTO, international brands are entering the market of China, which makes the competition of household appliance more fierce, lowers prices further, and diminish profit margin again. Meanwhile, due to the implementing of new accounting standard, the Company provided depreciation for part of the idle assets of its subsidiaries which led to a 27% drop of its main operating profit from 2000 to 2001. Besides, significant loss of some joint venture greatly impacted the development of the company. Therefore, the Company will improve its operating quality and lower its cost further through the integration of supply chain, domestic sales and international sales. The Company will also strengthen international technology and production cooperation to improve its core competitive edge and strengthen the instruction and supervision to its subsidiaries as well as supply qualified management staff to improve its profit capacity effectively. 2. Financial status of the Company Major fluctuation of financial index during the reporting period and its rationale (In 0 000 yuan) Description Year 2001 Year 2000 Fluctuation Ration Total assets 342,062.60 339,183.81 0.85% Long-term 106.81 106.81 - liability Shareholders 199,546.77 198,438.23 0.56% equity Main business 51,606.82 70,294.83 -27% profit Net profit 2,683.01 18,963.68 -86% Fluctuation rationale 1 The decrease of main operating income and net profit is mainly caused by fierce marketing competition of this year which led to the drop of the gross margin of household appliance. 2 The new accounting principle requires additional provision of depreciation that impact the profit of the Company too. 3. Investment status of the Company 1 Operating status of fund raised The Company issued A shares in 1997 and collected a total of 720 nd million yuan. An optimization scheme was reviewed in the 2 meeting of board conference held on March 4, 1998 and was approved in the annual shareholders meeting of year 1997 held on May 29, 1998. The Company disclosed operating status of fund raised in the announcement of Account th of Operating Status of Recent Raised Fund issued on April 4 , 2001. By th the end of December 12 , 2000, a total of 674.37 million fund had been utilized with a remaining amount as of 46.46 million yuan. Jiangsu Gongzheng Certified Public Accounting Co., Ltd. issued Operating Report of Fund Recently Raised by Wuxi Little Swan Co., Ltd. on April 3rd, 2001. The board of directors issued Supplementary Report Regarding the Operating Status of Recently Raised Fund on April 27, 2001 for the final investment decision on remaining fund as of 46.46 million that 9 million should be continually invested in the double tub wash machine project and the remaining 37.46 million should be supplement working capital. Jiangsu Gongzheng Certified Public Accounting Co., Ltd. issued Individual Report for the Operating Status of the Fund Raised Recently by Wuxi Little Swan Co., Ltd. . Actual operating status of the remaining fund by the end of December 31, 2000 during this reporting period is as follows: Investment Project Investment Actual Budget Investment Double tub wash machine project 900 900 Supplementary to the working capital fo 3746 3746 the Company Total 4646 4646 The operating status of the above investment project is as follows Double tub wash machine project: The execution of above project integrated the product categories of double tub wash machine and realized a sales turnover of 783,200 yuan. 2 Operating status of non-raised fund To reasonably organize and fully utilize the sales network of the Company, to lower sales expenditure and to improve brand value, the Company established a shareholding company Jiangsu Little Swan Marketing and Sales Co., Ltd. the total investment to the Marketing and Sales Co. is of RMB 19.5 million including 51% shares held by the Company as of a 9.945 million yuan; The Company increased investment of 540,000 dollars to Little Swan Palama Industrial Co., Ltd. to acquire shares of the foreign party and to run the Company independently; The Company invested 9.82 million to implement the 2nd phase renovation project of wash machine case production line; The Company invested 22.5 million yuan to implement the expanding and renovation project of Wuxi Little Swan High-Grade Casting Co., Ltd.; The Company invested an additional 1 million to take shares of Hengtai Insurance Co. Ltd.; The Company invested an additional 2 million to take shares of Guangzhou Antaida Logistic Co. Ltd. 4. Significant impact of fluctuation of operating status, national policy, laws and regulations to the Company After the entry of WTO, the competition of household appliance is becoming fiercer. Besides, the new accounting principle requires the additional provision of depreciations which impact the profit of the Company in certain degree. 5. Regarding the explanation to the unqualified auditor s report on the annual financial report of year 2001 by Jiangsu Gongzheng Certified Public Accounting Co., Ltd. Jiansu Gongzheng Certified Public Accounting Co., Ltd. audited the financial report of year 2001 of the Company and issued unqualified auditor s report with explanation. The issues are accounted as follows: 1 Regarding the submit of under provision tax In year 2001, the Company conducted a self-review of the tax submission status during year 1994 to year 2001 and noted that VAT input as of 25,283,480.35 was over calculated through the over issuance of processing invoice by the assistant parties. According to the result of self-review, the Company initiatively submit the under provision VAT as of 25,283,480.35 yuan in June 5, 2001 (recognized in cost of production). Jiangsu Wuxi State Tax Bureau Censor Bureau issued a sanction letter No. 0433 (2001) and decided a penalty of 2,618,690.61 yuan. The Company submitted this penalty in August 2001 (recognized in non-operating income). In December, 2001, the Company submitted under provision EIT 26,450,088.69 yuan due to the above reason (recognized in EIT). 2 Regarding subsidiary income In December 2001, Wuxi Little Swan Co., Ltd. received an innovation fund from Wuxi Finance Bureau as of 20 million. By the approval of Wuxi Finance Bureau, the income was recognized as subsidiary income. 6. Operating development plan in the new period To further improve operation, to increase the key competitive edge of the Company and to surpass historical achievement, the Company conducted thorough analysis to the operating environment of year 2002 and raised operating scheme and approach in the new year focusing on the development trend of household appliance after the China s entry to WTO and the actual status of the Company. The operating principle of the Company in year 2002 is to base on the ground and focus on innovation for the transform of a domestic household appliance manufacturer to an international manufacturer . And the main approaches are as follows: To realize profit through management, to integrate system, to construct a concrete base and to form strong enterprise cooperation edge; To realize Liuxigema management and to fully improve quality management capability for the increase of consumer satisfaction; Based on the integration of sales and marketing, to strengthen marketing and sales management further, to realize marketing and sales innovation, and to rapidly constitute an orderly and efficient modern marketing and sales model; To strengthen and integrate the existing technology innovation system, to strengthen international technical cooperation and to establish a domestically leading as well as satisfying international standard technical platform; To strengthen information management and to fully execute SAP management software; To strengthen supply chain management, to improve quality of raw material and to lower purchase price; To expand export market and pursue international marketing shares by defining main competitor as first tie company of the world; To strengthen the introduction and training of human resource for the constitution of a young, educated, and professional top management team; to fully execute performance linked payroll system and to perform performance linked payroll scheme progressively for the final realization of close linkage of performance and payroll. 7. Routine working report of the board of directors 1 Meeting minutes and resolutions of the board of directors during the reporting period During the reporting period, 9 meetings were held by the board of directors of the Company. The 3rd meeting of 3rd board of directors of Wuxi Little Swan Co., Ltd. was held on March 15th, 2001 in Wuxi. 8 directors of the 12 directors presented the meeting while the other 4 authorized other directors to vote. The following resolutions were passed in the meeting: a The working report of General Manager was approved; b The financial settlement report of year 2000 was approved; c The annual appropriation scheme of year 2000 was approved Reviewed by the Jiangsu Gongzheng Certified Public Accounting Co., Ltd. according to PRC GAAP, the net profit of year 2000 is 188,217,652.50 yuan (after the adjustment of PricewaterhouseCoopers China Co., Limited according to IAS, the net profit of year 2000 is 193,973,000 yuan. The following appropriation was planned in the following sequence: 10% of the net profit as of 18,821,765.25 yuan should be provided to statuary common reserve fund; 8% of net profit as of 15,057,412.2 yuan should be provided to statuary public welfare fund 20% of the net profit as of 37,643,530.50 yuan should be provided discretionary common reserve fund According to the principle of taking the lower profit amount between domestic and oversea audited profit and loss account, the total distributable profit should be 111,308,805.91 yuan adding the ending retained earnings of year 1999 as of 5,559,599.37 yuan and deducting provision for statuary common reserve fund and statuary public welfare fund as of 10,945,738.01. Calculated on the total 365.10384 million shares by the end of December 31, 2000, it was suggested to appropriate 3.0 yuan(including tax) cash dividend per 10 shares to the shareholders of the Company, which made the total cash dividend as of 109,531,152 yuan. The bonus for B shares would be paid in HK dollars according to the intermediate exchange rate on the first working date of the People s Bank of China after the resolution date of the shareholders meeting; The remaining amount as of 1,777,653.91 yuan should be carried as retained earnings to the subsequent year for appropriation. The above appropriation scheme should be executed only after the review and approval of the shareholders meeting of the Company. d The profit appropriation policy draft of year 2000 was passed The Company proposed to carry on a profit appropriation in year 2001. the Company proposed to use 30% to 60% net profit realized in year 2001 as dividend. All retained earnings by the end of 2000 was proposed to all be used in the dividend appropriation in year 2001. The appropriation scheme would adopt approach of either cash dividend or stock dividend or combined of the above two. e The report of the board of directors was approved; f Proposal regarding the review of annual report and its debrief of year 2000 was passed; g Proposal to adjust top management staff was passed; h Proposal regarding the modification of part of the codes in the Article of Association was passed; i Proposal regarding the adjustment and transfer of part of its subsidiary s shares was passed (some directors evaded the voting); j Proposal regarding the engagement of auditor of year 2001 was passed; k Proposal regarding the annual remuneration package in year 2000 of the General Manager was passed. A pre-meeting for the 4th meeting of 3rd board of directors of Wuxi Little Swan Co., Ltd. was held in Wuxi on March 28, 2001. 10 of the 12 directors presented the meeting, while the other 2 authorized other directors to present. The following resolutions were passed via voting on April 2, 2001. The resolutions are as follows: a The proposal to account for the operating status of fund recently raised by the Company was reviewed and passed; b The proposal to supplementary issue no more than 50 million A shares was reviewed and passed; c Proposal of the feasibility study of supplement issuance of A shares for investment fund was reviewed and passed; d Proposal to solicit the shareholders meeting to authorize the board of directors for the detailed proceeding of the supplemental issuance was reviewed and passed; e Proposal of the convening of the shareholders meeting of year 2000 was reviewed and passed; f Proposal to reward Mr. Zhu Dekun for the operating achievement during his service term as the General Manager as reviewed and passed. 5th meeting of the 3rd board of directors of Wuxi Little Swan Co., Ltd. passed the following resolutions via mail voting on th April 25 , 2001: a Proposal of the supplemental account of the operating status of fund recently raised by the Company was passed; b Proposal to temporary cease the project of 1.2 million/year non-florin transducer air condition compressor was passed; c > was reviewed and passed; d > was reviewed and passed and would be submit to the shareholders meeting for a further review; e Proposal to solicit the shareholders meeting to authorize the board of directors a investment limit under 10 million (including 10 million) was reviewed and passed; 6th meeting of the 3rd board of directors of Wuxi Little Swan Co., Ltd. was held in conference room 208 of Wuxi Little Swan th Co., Ltd. at 14:00 on August 10 , 2001. 10 of the total 12 directors presented the meeting while the other 2 directors authorized other directors to vote on behalf. The following resolutions were passed on the meeting: a The interim annual report and its debrief of year 2001 was reviewed and passed; b The proposal to increase investment on Little Swan Palama Industrial Co., Ltd. was reviewed and passed; c The proposal to replace 2 directors and convene a provisional shareholders meeting was reviewed and passed. 7th meeting of the 3rd board of directors of Wuxi Little Swan Co., Ltd. passed the one resolution via mail voting as follows: Mr. Rao Zhongliang was engaged as the financial controller of the Company with his service term from October 18, 2001 to May 2003. Meanwhile the title of financial controller was exempted from Mr. Lu Haoming. 8th meeting of the 3rd board of directors of Wuxi Little Swan Co., Ltd. was held in conference room 208 of Wuxi Little Swan th Co., Ltd. at afternoon of December 10 , 2001. 9 of the total 12 directors presented the meeting while the other 3 directors authorized other directors to vote on behalf. The following resolutions were passed on the meeting: a The proposal to constitute Jiangsu Little Swan Sales and Marketing Co., ltd. was passed; To reasonably organize and fully utilize the sales network of the Company, to lower sales expenditure and to improve brand value, the Company established a shareholding company Jiangsu Little Swan Marketing and Sales Co., Ltd. The total investment to the Marketing and Sales Co. is of RMB 19.5 million including 51% shares held by the Company, 2% shares held by Wuxi Little Swan Maloni Dishwasher Machine Co., Ltd. a subsidiary of the Company, and 41% shares held by Jiangsu Little Swan Group Co., Ltd and its subsidiaries. Related directors of this resolution didn t attend the voting. Announcement for related party transaction would be separately issued after the signature of the joint venture agreement. b Proposal to sign > with Wuhan Little Swan Wash Machine Co., Ltd. was passed; c Proposal to expense under provision depreciation and modify the internal control system of the company was passed; d Proposal to authorize the Chairman of the Board to carry on part of the duties of the board of directors during the closing period of the board meeting was passed; e To exempt Mr. Qiao Li, Mr. Lu Haoming, and Mr. Sun Xiyin the title of vice General Manage of the Company and to nominate Mr. Wang Xianping to the assistant to the General Manager of the Company; f To engage Mr. Wang Xianping to replace Mr. Qiao Li as the secretary of the Board; g Proposal regarding investment was passed. 9th meeting of the 3rd board of directors of Wuxi Little Swan Co., Ltd. passed the following resolution via mail voting. 10 of the 12 directors presented the meeting, while the other 2 authorized other directors to vote on behalf. The resolutions are as follows: a Proposal to sign sales and marketing integration agreement between Jiangsu Little Swan Sales and Marketing Co., Ltd. and the Company was reviewed and passed; b Proposal to sign sales and marketing integration agreement between Jiangsu Little Swan Sales and Marketing Co., Ltd. and Wuxi Little Swan Maloni Dishwasher Co., Ltd. and Wuxi Little Swan Freezer Co., Ltd. was passed; c Proposal to sign sales and marketing integration agreement between Jiangsu Little Swan Sales and Marketing Co., Ltd. and Wuxi Little Swan Boerka Air Conditioner Co., Ltd. and Wuxi Little Swan Dry Wash Machine Co., Ltd. was passed; d Proposal to sign > with Wuhan Little Swan Wash Machine Co., Ltd. was reviewed and passed; e Proposal to expand capacity and innovation project of Wuxi Little Swan High-Grade Casting Co., Ltd. was reviewed and passed. The above resolutions were validated from December 31, 2001. In December 19, 2001, Jiangsu Little Swan Sales and Marketing Co., Ltd. was officially established. According to internationally shared operational model, the Sales and Marketing Co. focused on its main brand Little Swan and were fully responsible to improve the image of Little Swan with the wholesome benefit of shareholders always in the first consideration. 2 Execution status of the resolution from the shareholders meeting by the board of directors During the reporting period, the board of directors of the company diligently carried out all resolutions of the shareholders meeting and implement all tasked submitted by the shareholders meeting in-timely. In May 7th, 2001, the board of directors of the Company execute profit appropriation scheme of year 2000 settled by the shareholders meeting that a cash dividend of 3.0 yuan (including tax) was appropriated to each 10 shares. 8. Profit appropriation draft scheme of year 2001 Audited by Jiangsu Gongzheng Certified Public Accounting Co., Ltd. in accordance with PRC GAAP, the net profit of year 2001 for parent company of the stock company is 24,394,340.36 yuan. (After the adjustment of PricewaterhouseCooper China Limited Co., Ltd. in accordance with IAS, the net profit of year 2001 and retained earnings were both adjusted to 19,706,000 yuan), the appropriation sequence is proposed as follows: 1 10 of net profit as of 2,439,434.04 yuan is to be provided as statuary common reserve fund 2 8 of net profit as of 1,951,547.23 yuan is to be provided as statuary public welfare fund 3 According to the principle of the Article of Association, taking the lower figure between PRC and IAS audit report, the distributable retained earnings after consolidation is 5,245,756.12 yuan by adding ending balance of retained earnings of year 2000 as of 1,777,653.91 yuan, deducting decrease in beginning balance of retained earnings as of 9,416,428.13 yuan of fixed assets depreciation due to modification on accounting principle, deducting statuary common reserve fund and statuary public welfare fund provided by the Company as of 808,461.06 yaun, reserved fund as of 2,626,206 yuan, and enterprise development fund 3,684,161.69 yuan. Calculated on the base of 365.10384 million shares by the end of December 31, 2001, it is suggested to appropriate a cash dividend as of RMB 0.14 yuan (including tax) per 10 shares to qualified shareholders with a total cash dividend as of 5,111,453.76 yuan. Cash dividend on B shares will be paid in HK dollars on the intermediate exchange rate issued by the People s Bank of China on the 1st working date after the resolution passed in the shareholders meeting. 4 Remaining amount as of 134,302.36 yuan will be carried to the subsequent year as retained earnings for appropriation. 9. Profit appropriation policy of year 2002 In response to the development strategy of the Company and annual report disclosure requirement, the Company proposes the following draft policy of profit appropriation in year 2002: 1 The Company will hold one profit appropriation in year 2002; 2 The Company proposed to use 30% to 60% of the net profit realized in year 2002 to profit appropriation; 3 The appropriation adopts either cash dividend or stock dividend or combined approach of the above two. The above appropriation scheme is only a draft one. The board of directors retains the right to adjust the appropriation policy according to the actual need of the Company. VIII. Report From the Board of Supervisors 1. Information about supervisors meeting The Company held 4 meetings during the reporting period. 2nd meeting of the 3rd board of supervisors held on March 15th, 2001 reviewed and passed > and cautiously reviewed the annual report of 2000 as well as the annual profit appropriation scheme of 2000. The Board of Supervisors considered the operational result of the Company in year 2000 satisfying and the investment return to shareholders agreeable. 3rd meeting of the 3rd board of supervisors held on March 28, 2001 reviewed and passed >. It was invariably agreed that Mr. Sun Xiyin resigned from the position of supervisor due to oversea study. After the election held by employee representatives meeting, Mr. Ma Jun was elected member of the board of supervisors. The meeting cautiously reviewed all resolutions th rd reviewed and passed in the 4 meeting of the 3 board of directors of the Company. 4th meeting of the 3rd board of supervisors held on August 10, 2001 reviewed and passed the interim annual report of year 2001. The meeting thoroughly reviewed all resolutions passed on the 6th meeting of the 3rd board of directors of the Company. 5th meeting of the 3rd board of supervisors held on December 11, 2001 thoroughly reviewed all resolutions passed on the 8th meeting of the 3rd board of directors of the Company. 2. Operation status of the Company During the reporting period, all members of the board of supervisors performed their due diligence in the operating activity of the Company via supervision and review according to > and >. The following opinions are formed: 1 The board of directors diligently executes the resolutions from the shareholders meeting. The review and approval procedure fully complies with laws, regulations and the Article of Associations of the Company. The management team diligently executes resolutions from the board of directors and has established an integral internal control system. Directors and managers of the Company are loyal to their functions and never commit actions violating laws, regulations, the Article of Association or impairing the benefit of the Company. 2 The audit reports issued by Jiangsu Gongzheng Certified Public Accounting Co., Ltd. and PricewaterhouseCoopers China Limited Co., Ltd. fairly, objectively and accurately reflect the financial status and operational result of the Company; 3 During the reporting period, investment to projects via fund raised completed agreed with committed amount. 4 All related party transactions of the Company were priced based on the fair and equivalent principle. There is no concern noted that may impair the benefit of the listing company during year 2001. IX. Important Issues 1. Significant suit and arbitration 2. There is no significant suit or arbitration during the reporting period. 3. Significant acquisition and merge There is no significant acquisition or merge during the reporting period. 4. Significant related party transaction Besides those disclosed in financial report, there is no other significant related party transaction during this reporting period. 5. Significant contract and its execution status During the reporting period, the Company neither stored, contracted, leased assets of other company nor trusted, contracted, leased assets of its own. 6. Significant guarantee During the report period, there is no significant guarantee for other parties. 7. Other significant issues during the reporting period The 5th meeting of the 3rd board of directors held on April 25, 2001 reviewed and passed the authorization form shareholders meeting for an investment limit fewer than 10 million yuan (including 10 million yuan) for external investment. The resolution was published on the > on April 27, 2001. th 8 meeting of the 3r board of directors held on December 10, 2001 passed the resolution to establish Jiangsu Little Swan Sales and Marketing Co., Ltd. The Company proposed to sign a sales and marketing integration agreement with the proposed sales and marketing company. The proposed sales and marketing company will sign sales and marketing integration agreement with Little Swan Boerka Air Conditioner Co., Ltd. and Little Swan Dry Wash Machine Co., Ltd. respectively. The Company will sign a > with Wuhan Little Swan Wash Machine Co., Ltd. The proposal to additionally provide 4 depreciations was passed also. The above issues were published in > on December 14, 2001. During this period,25.2835 million yuan under provision VAT was submitted together with a penalty amount as of 2.6187 million yuan and a supplemental EIT as of 26.4501 million yuan. During this reporting period, a subsidiary income as of 20 million yuan was received from Wuxi Financial Bureau. X. Financial Report 1. Auditor s report The financial reports of the Company are audited by Jiangsu Gongzheng Certified Public Accounting Co., ltd. and PricewaterhouseCoopers China Limited Co. Jin Zhangluo, Ma Huilan and PricewaterhouseCoopers China Limited Co. issued unqualified auditor s report. During the reporting period, audit fee of RMB 800,000 yuan and RMB 1.2 million was paid to the above accounting firms respectively excluding travelling expenditure and other expenditure. Please refer to Appendix 1 for auditor s report. 2. Financial report Please refer to Appendix 2. 3. Notes to financial report Please refer to Appendix 3. XI. Reference 1. Annual report with the signature of Chairman of the Board 2. Financial report with the chop of legal representative, financial controller and chief accountant 3. Original copy of auditor s report with chop of accounting firm and signature of CPA 4. All documents disclosed in >, >, Wen Wei Po, and Da Gong Po. During the reporting period. Wuxi Little Swan Company Limited April 9, 2002