佛山照明(000541)粤照明Ｂ2001年年度报告（英文版）

佛山电器照明股份有限公司 FOSHAN ELECTRICAL AND LIGHTING CO. LTD 2001 年年度报告 Annual Report of 2001 Chairman of the Board of Directors: Mar. 27, 2002 Annual Report of 2001 of Foshan Electrical & Lighting Company Limited Important Hints: The Board of Directors of our company and its directors guarantee that there is no false account, misleading statement or significant omission existing in the information contained in this report, and shall bear the individual and joint liabilities for the truthfulness, accuracy and completeness of its content. This summary of annual report is extracted from the full text of the annual report. To understand the content in details, the investor shall read the full text of the annual report. The accounting data and financial report in this report have been audited by KPMG in Hong Kong, and respectively made in Chinese and English. In case of any misunderstanding between the two versions, the Chinese text will be prevailing. I. Brief Introduction to the Company. II. Summary of Accounting Data and Business Data III. Change of Capital Stock and Shareholders VI. Directors, Supervisors, Senior Management Personnel and Employees. V. Administration Structure of the Company VI. Brief Introduction to the General Meeting of Shareholders VII. Report of the Board of Directors VIII. Report of the Board of Supervisors IX. Significant Events X. Financial Report XI. Reference Documents. ２ 2 I. Brief Introduction to the Company 1. Legal Name in Chinese: 佛山电器照明股份有限公司 缩 写 : 佛山照明 Legal Name in English: Foshan Electrical and Lighting Co. Ltd. Abbr.: FSL 2. Legal representative: Zhong Xincai 3. Secretary of the Board of Directors: Lin Yihui Address: No. 15 Fenjiang North Road, Foshan City, Guangdong Province. Tel: (0757) 2813838-282, 2814805 Fax: (0757) 2816276 E-mail: gzfsligh@pub.foshan.gd.cn 4. Registered and office address: No. 15 Fenjiang North Road, Foshan City, Guangdong Province Zip code: 528000 Internet web: www.chinafsl.com E-mail: gzfsligh@pub.foshan.gd.cn 5. Company information disclosed in: China Security, Security Times, Foshan Daily and Ta Kung Pao (in Hong Kong) Internet web site publishing the annual report designated by China Securities Supervision Committee: http:// www.cninfo.com.cn Annual report prepared in: Secretariat of the Board of Directors in the office building of the company at 15 Fenjiang North Road, Foshan City. ３ 3 6. Listing place of shares: Shenzhen Security Exchange. Abbr. of shares: Foshan Electrical & Lighting (A Share) Yue Electrical & Lighting (B Share) Code of shares: 000541 (A Share) 200541 (B Share) 7. Other information concerned: Date and place of first registration: registered with the Industrial and Commercial Administration Bureau of Guangdong Province on Oct. 20, 1992 Legal entity business license No.: 19035257-5 Tax registration No.: YWZ 440601190352575 Name and office of accountants firm appointed by the company: Domestic: Zhengzhong Zhujiang Certified Public Accountants, Guangdong (the former Guangzhou Certified Public Accountants Firm) 27/F Yuehai Group Building, 555 Dongfeng E Road, Guangzhou Tel: (020) 83859808 Fax: (020) 83800977 Foreign: KPMG (the former KPMG Peat Marwick) 8th Floor, Prince’s Building, 10 Chater Road, Central, HK Tel: (00852) 2826 7126 Fax: (00852) 2845 2588 ４ 4 II. Summary of Accounting Data and Business Data 1. Main accounting data and business data of this year. Unit: RMB Total profit 215,682,086.00 Net profit 189,354,006.00 Main business profit 282,088,977.00 Operating profit 203,389,147.00 Investment return 4,223,250.00 Net cash flow from business activities 267,193,026.00 Net increase of cash and cash equivalent 123,203,800.00 2. Net profits calculated by two different accounting standards and the difference: (1) Net profits calculated according to two different accounting standards: the net profit of the company of this year audited by the domestic accountant is RMB 173,348,748.33, while the net profit of the company of this year audited by the foreign accountant is RMB 189,354,006.00, RMB 16,005,258.00 more than the net profits audited by the domestic accountant. (2) Reason for the difference between net profits: it is mainly due to the different domestic and foreign accounting standards for treating the income tax. The foreign accountant has offset the reserves excessively withdrawn in previous years. (3) Detailed items for difference between net profits Unit: RMB Legal accounting statements made according to the 173,348,748.00 Accounting Law of the People’s Republic of China Adjustment made according to the International Accounting Standards Reserve for bad loan 85,131.00 Investment reserve -6,361,228.00 Inventory reserve 2,377,833.00 Research and development reserve excessively counted 4,394,365.00 Suspense payment reserve 5,790,438.00 Income tax excessively calculated / (less withdrawn) 1,491,913.00 Deferred tax assets confirmed 9,831,084.00 Consolidated adjustment -2,363,183.00 Others 758,905.00 Listed according to the International Accounting Standard 189,354,006.00 ５ 5 3. Main accounting data and financial targets of three years immediately prior to the report period(consolidated) Unit: RMB Target items 2001 2000 1999 Main business income 827,662,639.00 688,923,295.00 602,956,779.00 Net profit 189,354,006.00 180,128,651.00 135,267,769.00 Total assets 2,243,581,689.00 2,236,030,001.00 1,438,160,758.00 Shareholder equity (excluding the shareholder 2,048,633,195.00 1,995,489,527.00 1,244,955,527.00 equity of minority shareholders) Proceeds per share (fully amortized) 0.53 0.50 0.49 Proceeds per share (weighted average) 0.53 0.58 0.49 Net assets per share 5.72 5.57 4.51 Net cash flow per share from business activities 0.75 0.74 0.61 Return rate of net assets % (fully amortized) 9.24 9.03 10.86 4. Profit data calculated according to the requirements of the “Rules for Information Disclosure and Preparation for Companies with Public Issue of Securities” (No. 9) issued by the China Securities Supervision Committee. Profit of the report 2001 2000 period Return rate of net Proceeds per share, Return rate of net Proceeds per share, assets (%) RMB assets (%) RMB Fully Weighted Fully Weighted Fully Weighted Fully Weighted amortized average amortized average amortized average amortized average Main business profit 13.77 14.49 0.79 0.79 10.71 15.58 0.596 0.693 Operating profit 9.93 10.45 0.57 0.57 8.29 12.04 0.462 0.537 Net profit 9.24 9.73 0.53 0.53 9.03 13.10 0.503 0.585 5. Change of shareholders equity during the report period. Unit: RMB Item Capital stock Capital surplus Earned Legal welfare Undistributed Total surplus funds profits At beginning of the 358,448,259.00 1,199,480,017.00 176,816,972.00 73,051,533.00 187,692,746.00 1,995,489,527.00 period Increase in this period 17,334,875.00 8,667,437.00 189,354,006.00 215,356,318.00 Reduce in this period 162,212,650.00 162,212,650.00 At end of the period 358,448,259.00 1,199,480,017.00 194,151,847.00 81,718,970.00 214,834,102.00 2,048,663,195.00 Reasons of change -- -- Profit Profit Profit distribution distribution of distribution of of this year this year this year ６ 6 III. Change of Capital Stock and Shareholders 1. Change of capital stock (1) Table on change of capital stock Unit: share Before Change (increase or reduce) (+ or -) After change Ration Grant Surplus Increase Other Total change transfer issue I. Uncirculating shares 1. Founder’s share 88,397,100 88,397,100 Including: National share 85,922,100 85,922,100 Domestic corporate share 2,475,000 2,475,000 Foreign corporate share Other corporate share 2. Raised corporate share 40,515,750 40,515,750 3. Internal staff share 4. Preferred share or others Total uncirculating shares 128,912,850 128,912,850 II. Circulation shares listed 1. RMB ordinary shares 147,035,409 147,035,409 Including: share held by directors 193,380 193,380 and supervisors. 2. Foreign share listed at home 82,500,000 82,500,000 3. Foreign share listed abroad 4. Others Total circulating shares listed 229,535,409 229,535,409 III. Total shares 358,448,259 358,448,259 Note: The 193,380 shares held by the directors and supervisors of our company have been frozen according to the relevant regulations. (2) Issuing and listing of shares All Previous Issuing and Listing of Shares (RMB, 10000 shares) Year Type of shares Issuing Issuing Issuing Listing Listing Total capital date price quantity date trade stock volume 1993 A share issuing 93.10 10.23 1930 93.11.23 1930 7,717.0 1994 A share granting 94.04 --- 3858.5 (5 94.5.11 965 11,575.5 (after for 10) granting) ７ 7 1995 A share rationing 95.01 8.00 1815.3036 95.2.22 481.1946 13,390.8036 (3 for 10) (after rationing) B share issuing 95.07 HK5.61 5000 95.8.8 5000 18,390.8036 RMB6.02 (after issuing B share) Listing of shares held 92.08 4.00 1157 95.9.29 1157 18,390.8036 by internal shares 1996 A, B shares, capital 96.09 --- 9195.4018 96.9.20 5278.3 27,586.2054 stock transferred from (5 for 10) (after transfer public surplus and increase) 1997 A, B shares --- --- --- --- --- 27,586.2054 1998 A, B shares --- --- --- --- --- 27,586.2054 1999 A, B shares --- --- --- --- --- 27,586.2054 2000 Listing of transferred 95.01 8.00 31,9554 00.4.14 31.9554 27,586,2054 and rationed shares (including listing of transferred rationed shares) A, B shares, capital 2000.06 --- 2758.6205 00.6.23 2758.6025 30,344.8259 stock increased by (1 for 10) (after transfer transfer and increase) Increase issue of A 2000.12 12.65 5500 00.12.23 5500 35,844,8259 shares (after increase) 2001 A, B shares --- --- --- --- --- 35,844,8259 (3) When the company transformed its system as an internal stock company in Aug., 1992, it issued 11,570,000 shares to its internal staffs at the price of RMB 4.00 yuan/share, which were handed over to the Security Department of Foshan International Trust & Investment Company for trust in Apr., 1993. On Sep. 29, 1995, the shares held by internal staffs were granted to be listed in Shenzhen Security Exchange at the expiration of three years, with 11,570,000 shares approved to be listed. At that time, the 143,000 shares for internal staffs held by the directors and supervisors were frozen by Shenzhen Security Registration Company. There were 193,380 shares (including the rationed and granted shares) for internal staffs held by the directors and supervisors still frozen by the end of 2001. 2. Introduction to shareholders. (1) Up to Dec. 31, 2001, the company totally has 93,900 shareholders. Among them, there are 77,646 shareholders for A share (Foshan Electrical and Lighting 000541), including 5 shareholders of senior management shares, and 16,254 shareholders for B share (Yue Electrical and Lighting 200541) ８ 8 (2) Shares held by the top ten shareholders (as at Dec. 31, 2001) Unit: share No. Names of shareholders Listed share Unlisted Percentage in held share held total capital stock (%) 1 State-owned Assets Office of Foshan City (corporate A share) 85,922,100 23.97 2 Youchang Lighting Equipment Trading Co., Ltd. (corporate A share) 7,002,641 1.95 3 Alfred K.N. Chong (B share) 2,133,700 0.59 4 MTBC/CHINA STOCK DIVIDEND YIELD FD2001-11 (B share) 1,412,000 0.39 5 Tongqian Security Investment Funds (A share) 1,387,045 0.39 6 Foshan Official Service Dep. (corporate A share) 1,361,250 0.38 7 Fengxin Industrial Co., Foshan (corporate A share) 1,237,500 0.35 8 Wuzhuang Color Glazed Tiles Factory, Nanhai (corporate A share) 1,237,500 0.35 9 MTBC/CHINA STOCK DIVIDEND YIELD FD2001-10 (B share) 1,160,365 0.32 10 Foshan Financial Development Co. (corporate A share) 1,113,750 0.31 Total 6,093,110 97,874,741 29.00 Note: l There is no joint relationship between the top 10 shareholders. l Change and mortgage of shares for shareholder with over 5% of shares during the report period: State-owned Assets Office of Foshan City (national corporate share, A share) has 85,922,100 shares in the initial period, which has no change during the report period. No share held by it has been mortgaged or frozen. l ARRAN INVESTMENT PTE LTD. (B share) has 18,175,362 shares in the initial period, which was reduced to 654,090 shares at the end of the report period. (3) The first shareholder of the company is the State-owned Assets Office of Foshan City. As one of the promoters, it currently has 85,922,100 shares of the company, making up 23.97% of the total capital stock. The company has no other corporation shareholder with over 10% of shares of the company. ９ 9 IV. Directors, Supervisors, Senior Management Personnel and Employees (I) Directors, supervisors and senior management personnel. 1. General. Name Sex Age Position Office term Shares held (share) Year beginning Year end Zhong Xincai M 59 Chairman of Board of Directors 2001.6-2004.6 74,250 74,250 General Manager Alfred K.N. Chong M 50 Deputy general manager 2001.6-2004.6 2,352,350 (B share) 2,133,700 Ou Muben M 52 Managing Director 2001.6-2004.6 33,000 33,000 Deputy general manager Liu Xingming M 39 Managing Director 2001.6-2004.6 21,780 21,780 Deputy general manager Ma Yijun M 33 Managing Director 2001.6-2004.6 --- --- GM Assistant Liang Weidong M 39 Director 2001.6-2004.6 --- --- Shen Weiqiang M 52 Director 2001.6-2004.6 --- --- Ye Zaiyou M 46 Director 2001.6-2004.6 --- --- Liang Zhen M 64 Independent Director 2001.6-2004.6 --- --- Huang Yazheng M 59 Chairman of Board of Supervisors, 2001.6-2004.6 31,350 31,350 Chairman of Trade Union Tan Shengzhi M 53 Supervisor 2001.6-2004.6 33,000 33,000 Mai Kanglin M 29 Supervisor 2001.6-2004.6 --- --- Zhang Chaoyang M 37 Supervisor 2001.6-2004.6 --- --- Chen Guanbiao M 53 Supervisor 2001.6-2004.6 --- --- Guo Jieming M 52 Deputy general manager --- --- Li Dehua M 60 GM Assistant --- --- Liang Weiqiang M 44 GM Assistant --- --- Lin Yihui M 48 Secretary of Board of Directors --- --- Wang Shuqiong F 39 Financial Chief --- --- １０ 10 Ye Zaiyou, the director of the company, is the Chairman of the Board of Directors of Wuzhuang Color Glazed Tiles Factory, Nanhai, one of the promoter of the company. This factory is a popularly-run enterprise. 2. Annual remuneration. (1) The remuneration of the directors, supervisors and senior management personnel of the company shall be determined according to the program set out by the Board of Directors based on their positions, posts and completion of tasks. The total annual remuneration of the present directors, supervisors and senior management personnel is RMB 1,355,000, and the total remuneration for the top three directors with most remuneration (also the senior management personnel) is RMB 650,000. (2) Liang Zhen, the independent director of the company, took his post in Jun., 2001. During the report period, he has received no subsidy and any other pay from the company, except the transportation expenses and accommodation expenses for attending the Board Meeting of the company. In the new year, the company will arrange his pay and conditions as the independent director well according to the relevant regulations and actual situations. (3) Annual remuneration levels for directors, supervisors and senior management personnel of the company: one of RMB 350,000 380,000, three of RMB 100,000 150,000, and eight of 50,000 90,000. (4) The Vice Chairman Alfred K.N. Chong, the directors Liang Weidong, Shen Weiqiang and Ye Zaiyou, and the supervisors Zhang Chaoyang and Chen Guanbiao have received no remuneration and subsidy from the company. Except Ye Zaiyou who receives the remuneration from the shareholding unit as a shareholder director, no other director or supervisor has received the remuneration and subsidy from the shareholding unit and other affiliated units, but the remuneration from his own work unit. 3. Directors and supervisors leaving their posts during the report period. Name Former post Reason for leave Li Dehua Managing Director Lost the election as the term of office expired Chen Benxian Managing Director Retired as the term of office expired Lin Yihui Director Lost the election as the term of office expired Zhang Jiancheng Supervisor Lost the election as the term of office expired Pang Haijin Supervisor Lost the election as the term of office expired １１ 11 For the business development of the company, Guo Jieming is appointed the Deputy general manager of the company nominated by the General Manager. Because secretary of the Board of Directors, Chen Benxian has retired, Lin Yihui is appointed the secretary of the Board of Directors nominated by the Chairman of the Board of Directors. (II) Company employees. Company employees and professional structure: the company has 7970 employees, including 7315 production workers, 75 salesmen, 310 technical personnel, 19 financial personnel, and 20 administrative personnel. It has 375 professional personnel graduated from universities and colleges and 205 retired staff. V. Administration Structure of the Company 1. Administration of the company. The company has constantly perfected its legal entity administration structure according to the relevant regulations and requirements of the “Company Law”, the “Securities Law” and the China securities supervision committee after its listing, standardized the operation of the company, and set out the relevant rules and management systems. According to the requirements in the “Administration Rules for Listed Companies” issued by the China Security Supervision Commission and the National Economic and Trade Committee on Jan. 7, 2002, the administration conditions of the company comply with the regulations concerned. (1) Shareholders and Shareholders’ General Meeting: the company has made the “Articles of Association” of the company and the “Rules of Debate of Shareholders’ General Meeting”, to guarantee the legal rights and interests and equality of all shareholders, especially the medium and minority shareholders, strictly notify the shareholders’ meeting at the request, convene the Shareholders’ General Meeting, enable the shareholders to exercise their right to vote, and ask the attorney to present the meeting for witness. (2) Controlling shareholder and listed company: the first shareholder of the company is the State-owned Assets Office of Foshan City, which has not overstepped the rights and duties of the Shareholders’ General Meeting and the Board of Directors, nor directly or indirectly interfered the decision-making, production and business operation of the company. The Board of Directors, Board of Supervisors and internal organizations of the company have all carried out the independent operation in personnel, assets, business, finance and organizational structure, separated from the first shareholder. １２ 12 (3) Directors and Board of Directors: the nomination and election of the directors shall comply with the “Articles of Association” of the company. The number and member constitution of the Board of Directors shall meet the requirements of relevant laws and regulations, and the directors can faithfully, sincerely and diligently perform their duties. The company has worked out the “Rules of Debate of the Board of Directors”, to guarantee the high-efficient operation and scientific decision-making of the Board of Directors. The company has appoint an independent director during the report period, and will appoint an independent director more in Jun., 2002, to bring the initiative of the independent director into full play. (4) Supervisors and Board of Supervisors: the company has set up the “Rules of Debate of the Board of Supervisors”, and the number and member constitution of the Board of Supervisor shall meet the requirements of relevant laws and regulations. The supervisors shall perform their duties, and independently and effectively make the supervision and inspection conscientiously. (5) Performance evaluation, and incentive and restriction system: the company shall appoint the managers in any open and democratic way, which complies with the provisions of laws and regulations. It will establish the open and democratic performance evaluation standard and incentive and restriction system, to attract more talents and stabilize the managers. (6) Parties at interest: the company and its parties at interest including the creditors, employees, consumers and suppliers complement to each other for mutual promotion and development. The company can fully respect and maintain the legal rights and interests of its parties at interest, and actively cooperate with them, to promote the constant and health development of the company. (7) Information disclosure and transparency: the company shall designate the special personnel to disclose the information, receive the shareholders and answer their questions. In such a way, the company will truly, accurately, completely and timely disclose the information concerned, making sure that all shareholders shall have the equal opportunities for the information. 2. Performance of duties of the independent director. Liang Zhen, the independent director of the company, has carefully performed his duties as an independent director since he took the post on Jun., 2001. He has attended all three Board meetings held this year, made the preparations and studies before hand, and put forward his personal opinions, to earnestly maintain the overall interests of the company. １３ 13 3. Relationship between the company and the first shareholder. The company has been separated from its first shareholder, State-owned Assets Office of Foshan City in business, personnel, assets, organization and finance. The company has the independent and complete business and autonomous operation ability, and has the well-distributed supply and sales channels. All employees are recruited by the company itself, and there is no employee of the first shareholder taking any post in the company. With complete assets, clean legal properties, and independent organization, the company is an integrated legal entity. As for the finance, the company has set up the account of its own, and carries out the independent operation and independent auditing. 4. Examination and evaluation for senior management personnel during the report period and the execution of the incentive system. The company has ever considered and discussed the incentive system for senior management personnel during the report period, and put forward some ideas and programs, which have not been implemented for some reasons. In the new year, the company will enlarge its strength to establish the incentive system for senior management personnel as soon as possible according to the relevant policies, to promote the constant development of the enterprise. VI. Shareholders’ General Meeting The Shareholders’ General Meeting of 2000 was convened in the conference room on the third floor in North Area of the company on Jun. 12, 2001. 1. Announcement for convening the Shareholders’ General Meeting. The announcement for convening the Shareholders’ General Meeting of 2000 of the Board of Directors of the company was published 30 days in advance on the China Security, Security Times, Foshan Daily and Ta Kung Pao (in Hong Kong) on Mar. 29, 2001. The Board of Directors of the company shall be responsible for convening the Shareholders’ General Meeting of 2000. There are 160 shareholders and proxies of shareholders attending the meeting, representing 100,384,862 shares, making up 28% of total capital stocks. Among them, there are 38 shareholders of B share, representing 3,002,701 shares of B share, making up 0.84% of total capital stock and complying with the relevant provisions in the “Company Law” and the “Articles of Association” of the company. １４ 14 2. Resolution of Shareholders’ General Meeting. The Shareholders’ General Meeting of 2000 passed 12 resolutions one by one by voting. The announcement for the resolution of the Shareholders’ General Meeting was published on China Security, Security Times, Foshan Daily and Ta Kung Pao (in Hong Kong) on Jun. 13, 2001. Director Chen Ziyun, the lawyer from Tianjue Law Firm, Guangdong present the shareholders’ meeting on that day, and declared on the spot that the entire course of this Shareholders’ General Meeting and the reports and resolutions passed by the meeting are all legally effective. (1) To review and pass the Operation Report of the Board of Directors in 2000. 100,358,862 votes for, making up 99.97% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 26,000 votes abstention. (2) To review and pass the Business Report of the General Manager in 2000. 100,358,862 votes for, making up 99.97% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 26,000 votes abstention. (3) To review and pass the Operation Report of the Board of Supervisors in 2000. 100,358,862 votes for, making up 99.97% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 26,000 votes abstention. (4) To review and pass the Financial Report and the Profits Distribution Plan in 2000. 100,301,862 votes for, making up 99.92% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 57,000 votes against and 26,000 votes abstention. The Profits Distribution Plan in 2000 is: According to the provision of the China securities supervision committee that the profits distribution must be made based on the profit statement audited with less profits, the net profit audited by Zhengzhong Zhujiang Certified Public Accountants is taken. The minimum net profit realized by the company in 2000 is RMB 161,153,528.61, and the profit available for distribution to shareholders this year after deducting 10% of legal surplus and 5% of public welfare funds is RMB 201,496,353.54 (including RMB 64,515,854.22 as the undistributed profits of last year) Based on 358,448,259 shares of capital stock at the end of 2000, the company will distribute RMB 3.80 (including the tax. Dividends for B share shall be paid after being converted into HK dollar) as the cash dividend for every 10 shares to all shareholders. The total dividend actually paid is RMB 136,210,338.42, and the remaining RMB 65,286,015.12 will be carried forward to the next year. There will be no increase of capital stock transferred from surplus in 2000. １５ 15 (5) To pass the resolution on adjusting the limit of authority for investment amount decided by the Board of Directors from RMB 50 million (making up 5% of net assets) to 10% of the net assets of the company. 100,351,978 votes for, making up 99.97% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 32,884 votes abstention. (6) To pass the resolution on authorizing the Board of Directors to handle the relevant issues for the runner of the company to implement the double/option (such resolution must be implemented only upon the approval of the China securities supervision committee) 100,342,764 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 2,995,201 shares of B share, 0 vote against and 34,598 votes abstention. (7) To pass the resolution on cease of implementation of two resolutions passed in the last Shareholders’ General Meeting on E-commerce investment and development of spark plug products. 100,352,467 votes for, making up 99.97% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 32,395 votes abstention. The company has received the programs for investment of E-commerce since this resolution was passed in the last Shareholders General Meeting. However, it is found that the actual result of this program is not so good even with so much investment. meanwhile, we found that some enterprises already making investment in E-commerce have not achieved the satisfactory results. Therefore, the Board of Directors thought it is better to deal with concrete matters right now, and to think about it when both the opportunity and the conditions become matured. The resolution on developing the spark plug products for igniters of motor vehicles by investment was passed in the Shareholders’ General Meeting held last year. It is because that the company was negotiating with an enterprise for spark plug products about the acquisition of its production workshops and imported equipment, to make the renovation and production on the spot. However, the acquisition failed after many times of negotiations. In such circumstance, if the company sets up the workshop and imports the equipment for production, the investment will be much more, and the investment recovery period will be much longer. So, the Shareholders’ General Meeting decided to cease the execution of this resolution. (8) To elect Zhong Xincai, Alfred K.N. Chong, Ou Muben, Liu Xingming, Ma Yijun, Liang Weidong, Ye Zaiyou and Shen Weiqiang as the directors of the 3rd Board of Directors of the company, and elect Liang Zhen as the independent director. １６ 16 l To elect Mr. Zhong Xincai as the director of the 3rd Board of Directors of the company. 100,327,862 votes for, making up 99.94% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 57,000 votes against and 0 votes abstention. l To elect Mr. Alfred K. N. Chong as the director of the 3rd Board of Directors of the company. 100,367,712 votes for, making up 99.98% of the shares represented by the shareholders attending the meeting, including 2,991,051 shares of B share, 0 vote against and 17,150 votes abstention. l To elect Mr. Ou Muben as the director of the 3rd Board of Directors of the company. 100,340,762 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 44,100 votes abstention. l To elect Mr. Liu Xingming as the director of the 3rd Board of Directors of the company. 100,340,762 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 44,100 votes abstention. l To elect Mr. Ma Yijun as the director of the 3rd Board of Directors of the company. 100,340,762 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 44,100 votes abstention. l To elect Mr. Liang Weidong as the director of the 3rd Board of Directors of the company. 100,340,762 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 44,100 votes abstention. l To elect Mr. Ye Zaiyou as the director of the 3rd Board of Directors of the company. 100,335,662 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,997,601 shares of B share, 0 vote against and 49,200 votes abstention. l To elect Mr. Shen Weiqiang as the director of the 3rd Board of Directors of the company. １７ 17 100,340,762 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 44,100 votes abstention. l To elect Mr. Liang Zhen as the independent director of the 3rd Board of Directors of the company. 100,337,662 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,997,601 shares of B share, 0 vote against and 47,200 votes abstention. (9) Elect two shareholder representatives, Zhang Chaoyang and Chen Guanbiao, as the supervisors of the 3rd Board of Supervisors of the company. l To elect Mr. Zhang Chaoyang as the supervisor of the 3rd Board of Supervisors of the company. 100,357,362 votes for, making up 99.97% of the shares represented by the shareholders attending the meeting, including 3,002,701 shares of B share, 0 vote against and 27,500 votes abstention. l To elect Mr. Chen Guanbiao as the supervisor of the 3rd Board of Supervisors of the company. 100,349,512 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 2,995,951 shares of B share, 0 vote against and 35,350 votes abstention. (10) To pass the “Rules of Debate for Shareholders’ General Meeting of Foshan Electrical & Lighting”. 100,335,778 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,993,301 shares of B share, 0 vote against and 49,084 votes abstention. (11) To pass the resolution on appointing Zhengzhong Zhujiang Certified Public Accountant in Guangdong and KPMG in Hong Kong as the financial accounting institutes of the company in 2001. 100,335,778 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,993,301 shares of B share, 0 vote against and 49,084 votes abstention. (12) To pass the resolution on amending the relevant articles in the “Articles of Association” of the company. 100,337,412 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,993,301 shares of B share, 0 vote against and 47,450 votes abstention. １８ 18 3. Change and replacement of directors and supervisors. At the expiration of the 2nd Board of Directors and Board of Supervisors, the new boards are elected on the Shareholders’ General Meeting of 2000. There are totally 9 in the 3rd Board of Directors and as the independent director newly elected: Zhong Xincai, Alfred K. N. Chong, Ou Muben, Liu Xingming, Ma Yijun, Liang Weidong, Shen Weiqiang, Ye Zaiyou and Liang Zhen (independent director) Among them, Ma Yijun, Liang Weidong and Liang Zhen are the new directors and independent director, taking the places of the former directors Li Dehua, Chen Benxian and Lin Yihui who have left their posts at the expiration of their office term. There are two directors in the 3rd Board of Supervisors newly elected: Zhang Chaoyang and Chen Guanbiao, who are both new supervisors taking the places of the former supervisors Pang Haijin and Zhang Jiancheng who have left their posts at the expiration of their office term. Besides, the staff representatives of the company, Huang Yazheng, Tan Shengzhi and Mai Kanglin have been elected the supervisors of the 3rd Board of Supervisors of the company by the Staff Representative Assembly before hand. The experiences of the above nine directors and independent directors and the two supervisors representing the shareholders were published on the China Security, Security Times, Foshan Daily and Ta Kung Pao (in Hong Kong) on Mar. 29, 2001. VII. Report of the Board of Directors (I) Business operation of the company. (1) Main business scope and business operation of the company: the company mainly produces and sells various electro-optical products, as well as auxiliary luminaire series products. Its products mainly include the ordinary bulb, decorative bulb, iodine-tungsten lamp, bromine-tungsten lamp, single-end lamp, automobile lamp, motorcycle lamp, high-tension mercury lamp, high-tension Na lamp, metal halide lamp, T8 and T5 fine-caliber and highly energy-saving fluorescent lamp, compact fluorescent lamp and reflection cup, as well as the accessories mainly for T8 and T5 energy-saving lamps. In 2001, the company has made a constant and fast development in its production and business, enlarged the structural regulation of the products, speeded up the investment for “Green Lighting Project”, continuously reduced the product cost, gradually strengthened its market competitive power, maintained its exchange earnings by foreign sales and export, and continued to improved its economic growth speed and benefits. The total bulb output of the year has increased by 28% than that of last year, and the gross industrial output value has increased by 23.8%. It has earned over USD 32.3 million foreign exchange, 5.3% more than last year. Main business income realized is RMB 823.71 million, increasing by 19.85% than that of last year, and the main business profits is RMB 270.05 million, increasing by 29.4%, and making up 128.6% of the total profits of the company. The company continues to keep the advantageous trend of constant stable increase, １９ 19 and there is no change of its main business compared with last year. (2) Business operation and results of affiliated enterprise controlled and invested by the company: Wuzhang Bulbs Factory, Nanhai, is an affiliated enterprise controlled by the company, with its registered capital of RMB 3 million. It mainly produces ordinary lighting bulbs, motorcycle bulbs and high-pressure mercury bulbs, as well as auxiliary semi products. QL Lamps and Components Limited, Foshan. is the sino-foreign joint venture invested by the company, with the registered capital of USD 1.8 million. It mainly produces special optical sources and lighting fittings such as bromine-tungsten lamp, with the assets of RMB 16.342 million, and the net profits of RMB 39,000. Liangke Investment Co., Ltd., Shenzhen, was incorporated in Nov., 2000, and it has increased its capital by issuing more shares in Nov., 2001, with the registered capital of RMB 110 million. Foshan Electrical & Lighting has made investments twice, totally RMB 30 million, making up 27.3% of the capital stock of such company. Liangke mainly engages the investment of high-tech industry, operation of the establishment funds of other investment companies, and investment consultant. By nearly one year of capital operation, it has achieved a certain results. All these three enterprises have normal production, standard operation and fine achievements. Besides, the company has also made less investments in China Everbright Bank, Bank of Communications, Fochen Highway in Foshan, Osram Co. and Zhujiang Property Management Company in Guangzhou. These enterprises are of standard management, fast business development and fine benefits, and have given the considerable investment return to the company based on their actual operations. 3. Main suppliers and clients: the purchasing amount of the company with the top five suppliers have made up 12.11% of the total purchasing amount of the year, and the sales amount of the top five clients made up 15.89% of the total sales of the company. 4. Existing operational problems and remedies of the company: the competition in bulb industry is still quite violent. Firstly, enterprises have rushed to cut the price of products, seriously interfering the market, and forcing our company to reduce the price of some products. Secondly, our famous products and their patent packages have been imitated by more and more lawbreaking merchants, making our sales more difficult, and seriously affecting our market sales. Thirdly, because of the rise of prices of fuels, energies and some major materials, the product cost has increased. And, also because the supply of electro-optical products in the domestic market still exceeds the demand, the competition in the market becomes more and more violent. Facing such difficulties, all staff in the company have united together, smoothed away the difficulties, and made all efforts for development and advancing. The settlements include: 1. To greatly develop technical innovation, improve the process and production efficiency, reduce the staff and promote the efficiency at the same time, and reduce the production cost of products; 2. To control the purchase of raw materials, choose the most suitable materials, reduce the purchase price of raw materials, quicken the circulation of funds, and improve the use efficiency of funds; 3. To expand the production scale, improve the product quality and strengthen the competitive force. The company will quicken its step to introduce the equipment, produce the new products centering the fine-caliber, highly energy-saving and high-tech T8 fluorescent lamp, and make T8 fluorescent lamp as the leading ２０ 20 product of the company; 4. To actively coordinate with the relevant legal departments, and crack down the imitations by laws. Meanwhile, the company will take all effective measures to strengthen the imitation-free ability of its products. 5. The company has disclosed the profits forecast of 2001 when issuing more A shares at the end of 2000. The actual profits is basically same with the forecast. (II) Investment of the company. 1. Use of funds raised (1) In the last half of 2000, the company has actually raised RMB 667 million by issuing more shares, and invested in the 9 investment items disclosed in the Prospectus (except the supplementary current funds) It has invested RMB 90.845 million in 2000, and invested RMB 286 million more in 2001. As at Dec. 31, 2001, RMB 377 million has already invested, with RMB 290 million raised funds remained, which are deposited in the special account for funds raised by shares established by our company with the Bank of China, Foshan Branch. l The detailed investment items are shown as follows: Unit: RMB 10,000 Item For short Investment Investment Cumulative Funds not invested compromised of this term investment 1 T8 19,500 5179 10940 8560 2 T5 19,200 9037 10433 8767 3 Double loop 2,940 1361 1454 1486 4 Test center 2,962 1053 1057 1905 5 Three kilns 2,920 787 1570 1350 6 Tube-pulling production line 2,944 1738 1844 1100 7 Filament and lead 2,950 1114 1648 1302 8 Power facilities 2,900 1457 1817 1083 9 Environment & fire-fighting 2,800 2474 2521 279 10 Current funds 7575.5 4420 4420 3155.5 Total 66691.5 28620 37704 28987.5 ２１ 21 (2) Progress of investment items: the projects for T8 and T5 energy-saving fluorescent lamps have made the fast progress. In particular, the company has introduced 8 production lines for T8 fluorescent lamps, which have all been put into production. The company has also introduced two production lines for T5 fluorescent lamps, one has been put into production, and the other is under installation and commissioning. It has also gradually increased the varieties for auxiliary luminaires, and formed the ability of trail production in batch. The company is making great efforts to investing and constructing the test center for fluorescent lamps, kilns, tube-pulling lines, filaments and leads, as well as the power facilities, and auxiliary environmental protection and fire-fighting engineering. The kilns, tube-pulling lines, filaments and leads and power facilities as the auxiliaries of the newly introduced T8 and T5 production lines have made the especially fast progress. There is no change in the actual investment items. (3) Benefits from investment items: there was three production lines for T8 fluorescent lamps, together with the eight ones just put into production, there are eleven under production, increasing the monthly output of T8 fluorescent lamps from 5 million pieces to 7 million pieces. The monthly output of T8 fluorescent lamps will reach 8 millions in 2002. The monthly output of T5 fluorescent lamps has already reached 500,000 pieces. These products are sold well in the fluorescent lamp market, and the T8 fluorescent lamps of the company are still out of demand. The sales of T8 and T5 in 2002 are 60 million pieces, increasing by 124% in 2000, and earning the profits of more than RMB 30 million. 2. Investment of self-possessed funds. (1) Invest RMB 10 million to jointly establish Zhujiang Property Management Company, Guangzhou, making up 15.38% of the total shares of such company. (2) Increase RMB 20 million more to Liangke Investment Co., Ltd., Shenzhen. It has totally invested RMB 30 million into such company, making up 27.3% of its total shares. (III) Financial situation and business results. The financial target of the company completed and the main reasons for change with last year: Unit: RMB Target At end of 2001 At end of 2000 Change Proportion of change (%) Total assets 224,358 223,603 755 0.34 Long-term liabilities -- -- -- -- Shareholders’ equity 204,863 199,549 5,314 2.66 Total profits 21,568 19,675 1,893 9.62 Main business profit 28,209 21,374 6,835 31.98 Net profits 18,935 18,013 922 5.12 ２２ 22 l Total assets have increased RMB 7.55 million, mainly due to the increase of shareholders’ equity. l The shareholders’ equity has increased RMB 53.14 million, mainly due to the profit distribution of this year. l The main business profits have increased RMB 68.35 million, mainly due to the continuous increase of sales income this year and reduce of cost. l The total profits have increased RMB 18.93 million, and the net profits have increased RMB 9.22 million, mainly due to the increase of main business profits. (IV) Business plan in the new year. (1) To speed up the plan and construction of land newly purchased, and continue to expand the production scale. Under the support of the municipal government, the company has purchased 3 hectares of lands from the transformer plant and Dunhou Village last year, and will make the plan and transformation of such land this year. After completing the construction of the factory building, it will further introduce six T8 production lines, regulate and move the workshops concerned, and expand the production. It will expand the production scale for T8, T5 energy saving lamps, automotive lamps and luminaire, fasten the development, continue to enlarge the production scale, and occupy the dominant position in market competition. (2) Make technical innovation and new product development. The new product development shall be a new growth point for profits of the company, as well as the basic condition for enterprise development. In the new year, the company will speed up the technical innovation, and develop new varieties and new models for fluorescent lamps, fine-caliber energy-saving lamps and luminaire, to suite the demand on the market. Meanwhile, it will strengthen the quality control, constantly improve the equipment and production technology, and steadily promote the production quality. (3) Strengthen the cost control, and improve the market competitive power of products. The company will further perfect and carry out the arrangement for production material consumption, personnel quota, piecework plan and saving plan. It shall control the raw material cost, reuse the cracked glass powder to reduce the loss. It shall also improve the energy-consuming equipment by setting up the pressure air auxiliary system, transforming the press, and reforming and introducing the petroleum gas system, and strengthen the energy equipment and technology, to reduce the consuming costs of water, electricity, fuel and gas. (4) Promote the sales of products. The company will promote the sales by all kinds of measures. First of all, it will develop the secondary market and rural market, and expand the coverage for sales. Secondly, it shall mobilize the activity of dealers, and develop the potentiality of distributors, to guarantee the successful sales of products. Thirdly, the company will broadly promote the brand image of the company by all channels, attend the national lighting exhibitions, to exhibit and publicize the product and image of the company, and promote the sales. While developing the domestic market, it will also export more products and earn more foreign exchanges by making full use of the superior conditions with the accession to WTO. (5) Train and educate the staff members, and fully mobilize their activity in production. The company will arrange more training for its employees, and improve their professional ２３ 23 knowledge, safety awareness and operation skills by training. It will carry out the labor competition for employees, appoint the experts as the evaluators, and implement the system of rewards. Considerably arrange the jobs of staff members based on the need of production, and mobilize their activities in production, to promote the development of productivity. (V) Influence by the China’s accession to WTO After the accession to WTO, the imported electro-optical products may increase, but will not increase too much due to their high prices. As the electro-optical products produced at home have complete varieties and competitive advantages in price, import products will take a small part, having little influence to the electro-optical industry. However, the accession to WTO will have both and advantage and disadvantage to the company. The advantage is that because our company has constantly improved our quality, and has quite complete product varieties and a certain competitive force, it will possibly further expand the exportation based on the good achievements in export during the past years, relieving the situation of domestic products with supply exceeding the supply. The disadvantage is that after the accession to WTO, because the import duties have reduce, more optical products with special purposes abroad will enter into the Chinese market, adversely affecting the company producing the same kinds of products. The antidumping implemented by EU to energy-saving lamps with electronic ballast exported from China has no affection to our product exportation at all. (VI) Routine operation of the Board of Directors. (1) Board meetings and resolutions during the report period: the Board of Directors was reelected this year. The 2nd and 3rd Board of Directors have held 4 meetings within this year. The contents of the meetings and resolutions are: l The first meeting of the 2nd Board of Directors of our company was held on Mar. 26, 2001. Nine directors of the nine who should attend the meeting actually attended the meeting. Five supervisors of the Board of Supervisors and senior management personnel of the company all attended the meeting as the observers. The attendants discussed the annual report of 2000 and the reelection of the Board of Directors, and passed the following resolutions: l Examine and pass the2000 Annual Report and Summary of 2000 Annual Report (both Chinese and English versions) ２４ 24 l Examine and pass the operation report of the Board of Directors of 2000. l Examine and pass the business report of the General Manager of 2000. l Examine and pass the operation report of the Board of Supervisors of 2000. l Examine and pass the final report and the draft profits distribution plan of 2000 The draft plan for profits distribution of 2000 and for the increase of capital stock by capital surplus: according to the net profit audited by Zhengzhong Zhujiang Certified Public Accountants, Guangdong (lower than that audited by KPMG in Hong Kong), the minimum net profits realized of the company in 2000 is RMB 161,153,528.61. The profits available for distribution to shareholders this year after deducting 10% of legal surplus and 5% of public welfare funds is RMB 201,496,353.54 (including RMB 64,515,854.22 as the undistributed profits of last year) Based on 358,448,259 shares of capital stock at the end of 2000, the Board of Directors of the company will distribute RMB 3.80 (including the tax. Dividends for B share shall be paid after being converted into HK dollar) as the cash dividend for every 10 shares to all shareholders of A and B shares. The total dividend actually paid is RMB 136,210,338.42, and the remaining RMB 65,286,015.12 will be carried forward to the next year for distribution. There is no increase of capital stock by surplus in 2000. The above draft distribution plan shall be implemented upon the review and approval of the Shareholders’ General Meeting. l Examine and pass the estimated profit distribution policy of 2001. The company will make a profit distribution by cash after of the financial settlement in 2001. 60% of the profits available for distribution (including the undistributed profits of last year), namely, the net profits realized in 2001 after deducting the three reserves will be used for dividend distribution. The Board of Directors of the company will adjust the profit distribution policy of 2001 according to the actual business operation of the company. l Examine and pass the resolution on amending the relevant articles of the “Articles of Association” of the company. Because the company has successfully issued 55 million A shares more, the structure of the capital stock has changed, thus it is necessary to amend the chapters concerned in the “Articles of Association” of the company. Article 6 in Chapter 1: increase the registered capital of the company from RMB 303,448,259 to RMB 358,448,259. ２５ 25 Article 20 in Chapter 3: structure of capital stock: increase the ordinary shares from 303,448,259 shares to 358,448,259 shares, of which, the 88,397,100 shares held by promoters keep unchanged, and the shares held by other domestic shareholders increase from 132,551,159 shares to 187,551,159 shares. The 82,500,000 shares listed at home and held by foreign shareholders keep unchanged. Article 112 in Chapter 5: as required by the “Guide for Articles of Association” of the China securities supervision committee, the company shall has an independent director. Articles thereafter shall subject to postponement. l Pass the resolution on adjusting the limit of authority for investment amount decided by the Board of Directors from RMB 50 million (making up 5% of net assets) to 10% of the net assets of the company. Because the company has made the great development in its production and business operation in recent years, as at Dec. 31, 2000, it has the total assets audited and confirmed by the accountant of RMB 2172 million, and net assets of RMB 1877 million, both of great increase. To bring forth the decision-making ability of the standing organization of the Board of Directors, and make the investment operation convenient, the Board of Directors asks the Shareholders’ General Meeting to regulate Article 97 in the “Articles of Association” of the company, to adjust the limit of authority for investment amount decided by the Board of Directors from RMB 50 million (making up 5% of the net assets) to 10% of the net assets (including 10%) recently audited. l To pass the resolution on authorizing the Board of Directors to handle the relevant issues for the runner of the company to implement the double/option. To further carry out the spirit of the 4th Session of the 15th National Congress of the Communist Party of China, fully reflect the distribution system of the socialism market economy and the property value of the human capital, based on the reductive trend of state-owned shares, and according to the practices of some domestic and foreign enterprises, the company intends to try out the shareholding system by the runners, to further establish the incentive/restriction system, and preserve and increase the value of the company. Therefore, the Shareholders’ General Meeting is required to authorize the Board of Directors to handles the relevant affairs for shareholding of runners. l Pass the resolution on cease of implementation of two resolutions passed in the last Shareholders’ General Meeting on E-commerce investment and development of spark plug products. There are two resolutions among the 12 resolutions passed in the Shareholders General Meeting of 1999 not implemented, investment on E-commerce and development of spark plug products. As the conditions for carrying out such two resolutions have not become matured, it is submitted to the Shareholders General Meeting for cease of implementation. l Pass the resolution on investing the self-owned funds into the following two ２６ 26 projects. --- Increase the investment of RMB 12.829 million into China Everbright Bank, to subscribe the increased shares. --- Invest RMB 10 million to jointly establish Liangke Investment Co., Ltd., Shenzhen, making up 16.67% of total shares of such company. --- Invest RMB 16.732 to subscribe 11,154,600 shares of Taiji Wine Factory in Foshan, making up 35% of total shares of such company. l Pass the resolution on the reelection and nominees of the 3rd Board of Directors and Board of Supervisors at the expiration of the 2nd Board of Directors and Board of Supervisors. Nominees of directors of the 3rd Board of Directors: Zhong Xincai, Alfred K. N. Chong, Liu Xingming, Ou Muben, Ma Yijun, Liang Weidong, Ye Zaiyou, Shen Weiqiang and Liang Zhen (independent director) Nominees of supervisors of the 3rd Board of Supervisors: Zhang Chaoyang and Chen Guanbiao. Nominees of staff representatives of the 3rd Board of Supervisors: Huang Yazheng, Tan Shengzhi and Mai Kanglin. l Pass the rules of debate for the Board of Directors, Board of Supervisors and the Shareholders’ General Meeting. l Pass the standard of conduct of supervisors. l Pass the operation rules of the General Manager. l Pass the three security management systems including the information disclosure system, depreciation reserve system for four assets and internal control system, and management system for raise of funds. l Nominated by the General Manager, Mr. Guo Jieming is appointed by the Board of Directors as the Deputy general manager of the company. Experiences of Guo Jieming: male, 51, native of Yiyang City, Hunan, college graduate, engineer. Appointed the technician, workshop director and deputy factory director of Yiyang Panels Factory since 1980, and the head of the research institution, director of Development Department, and deputy factory director of Yiyang Bulbs Factory since 1985. As the member of the Political Consultative Conference of Yiyang City, he has received the special subsidy from the State Council. He has been appointed the workshop director and chief of the Equipment Department of our company since 1996. ２７ 27 l Pass the resolution on appointing Zhengzhong Zhujiang Certified Public Accountant in Guangdong and KPMG in Hong Kong as the financial accounting institutes of the company in 2001. l Decide to hold the Shareholders General Meeting of 2000 on Jun. 12, 2001 (Tuesday) (2) On June 12, 2001, the 3rd Board of Directors convened its 1st meeting, with all nine directors and independent director newly elected attending the meeting. The attendants examined and passed the followings: l Elect Zhong Xincai as the Chairman of the Board of Directors, Alfred K. N. Chong as the Vice Chairman of the Board of Directors, Zhong Xincai, Liu Xingming, Ou Muben and Ma Yijun as the standing directors, Ye Zaiyou and Shen Weiqiang as the directors, and Liang Zhen as the independent director. l The Board of Directors of the company decided to continue the appointment of Mr. Zhong Xincai as the General Manager of the company. (3) The Board of Directors of the company convened its 2nd Board meeting on Jul. 24, 2001, with eight of nine directors who should attend the meeting attending the meeting. All supervisors and other senior management personnel attended the meeting. The attendants examined and passed the followings: l Examine and pass the interim report and its summary of the company of 2001. l Examine and passed the interim profit distribution plan of 2001, and decide not to make any interim profit distribution, nor increase of capital stock by surplus. l Invest RMB 10 million in Zhujiang Property Management Co., Ltd., Guangzhou. Zhujiang Property Management Co., Ltd. (hereinafter referred to as Zhujiang Property) was incorporated in May 2001 under the director leadership of the municipal government of Guangzhou, and the investment of four shareholders including two state-owned enterprises, on affiliated company of a listed enterprise, and one listed company. With the registered capital of RMB 55 million, it mainly engages in security investment, property reorganization and financing. Zhujiang Property intends to raised funds of RMB 10 million by issuing more shares at the original price of RMB 1.00/share. We have invested RMB 10 million, making up 15.38% of total shares after expansion. ２８ 28 (4) The Board of Directors of the company convened its 3rd Board meeting on Nov. 16, 2001, with eight of nine directors and independent director attending the meeting. The Board of the Supervisors also attended the meeting. The attendants unanimously passed the followings: l Invest RMB 20 million in Liangke Investment Co., Ltd., Shenzhen. Liangke Investment Co., Ltd. was established in Nov., 2000, with 60 million shares. We have invested RMB 10 million, making up 16.66% of its total shares. It mainly engaged in risk investment, direct investment in high-tech industry and other innovative industries, provision of investment consultant and financial advisory, and establishment of risk investment funds. By issuing 50 million shares more this time, it has 110 million shares today, and six shareholders from the original five. We have held 30 million shares from the former 10 million shares now, making up 27.3% of its total shares. l The Board of Directors decided to ask the directors, supervisors and shareholders independently or jointly holding more than 1% of our shares to recommend and nominate the external accountant as the nominee of the independent director. The conditions and nomination of the independent director shall comply with the requirements in the “Instruction Opinion” and the “Articles of Association” of the company. The nominator of the independent director shall fully understand the basic conditions of the nominee, received the written consent of the nominee before hand, and give opinions for his qualification and independence for the post of the independent director (form specified by the China securities supervision committee) At the same time, the nominee shall make a public declaration (specified form), representing that there is no any relationship between him and our company which may affect his independent and objective judgment. Any director, supervisor and shareholder who wants to recommend or nominate the nominee of the independent director for our company will fax or send the above materials in writing to the secretariat of our Board of Directors before Jan. 30, 2000. Fax: (0757) 2816276 Tel: (0757) 2814805 Post code: 528000 Address: 15# Fenjiang North Road, Foshan, Guangdong l Because Chen Benxian, the secretary of the Board of Directors retired, the Board of Directors decided to appoint Mr. Lin Yihui as the secretary of the Board of Directors under the nomination of the Chairman of the Board of Directors. Experiences of Lin Yihui: male, native of Jieyang, Guangxi, born in Nov., 1954, graduated of the Communist Party School of Guangdong Province as the Master in Economy, member of CPC. He has served in the army after 1970, then held posts in the grass-roots level and governmental organizations. He has appointed the section chief and deputy general manager of Foshan International Trust & Investment Co. since 1986, responsible for the securities operation for years, as well as the sales and issuance of shares and recommendation for listing for many companies. He has ever been appointed the director of the 1st and 2nd Board of Directors of Foshan Electrical & Lighting Co., Ltd. He is now appointed in Foshan ２９ 29 Electrical & Lighting Co., Ltd. after Oct., 2000. 2. Execution of the Board of Directors to the resolutions of the Shareholders’ General Meeting: the Board of Directors has carefully executed the resolutions of the Shareholders’ General Meeting. Among the twelve resolutions passed in the Shareholders’ General Meeting of 2000, eleven resolutions (including the profit distribution plan) have been carried out completely. We have also made some explorations and put forward some programs for the only resolution not implemented, namely, the authority of the Board of Directors to handle the affairs for the double/option of the runner of the company, but it has not been carried out yet because the lack of conditions. In the new year, the company will actively create the conditions to promote the progress of such job. (VII) Draft profits distribution plan of 2001 According to the net profit audited by Zhengzhong Zhujiang Certified Public Accountants, Guangdong (lower than that audited by KPMG in Hong Kong), the minimum net profits realized of the company in 2001 is RMB 173,348,748.33. The profits available for distribution to shareholders this year after deducting 10% of legal surplus and 5% of public welfare funds is RMB 212,632,451.20 (including RMB 65,286,015.12 as the undistributed profits of last year) Based on 358,448,259 shares of capital stock at the end of 2001, the Board of Directors of the company will distribute RMB 4.00 (including the tax. Dividends for B share shall be paid after being converted into HK dollar) as the cash dividend for every 10 shares to all shareholders of A and B shares. The total dividend actually paid is RMB 143,379,303.60, and the remaining RMB 69,253,147.60 will be carried forward to the next year for distribution. There is no increase of capital stock by surplus in 2001. The cash dividend paid to shareholders of B share shall be converted into HK dollars by the middle rate between RMB and HKD declared by the Bank of China on the first business day after the resolution of the Shareholders’ General Meeting. The above draft distribution plan shall be implemented upon the review and approval of the Shareholders’ General Meeting. (VIII) The estimated profit distribution policy and increase of shares by capital surplus of the company of 2002. ３０ 30 The company will make a profit distribution by cash after of the financial settlement in 2002. 60% of the profits available for distribution (including the undistributed profits of last year), namely, the net profits realized in 2002 after deducting the three reserves will be used for dividend distribution. There will be no increase of shares by capital surplus in 2002. Both the profit distribution policy and arrangement for capital surplus of 2002 are the estimated plans. The Board of Directors of the company will adjust the profit distribution policy of 2001 according to the actual business operation of the company. (IX) Other items in report China Security, Security Times, Foshan Daily (all for A share, in Chinese) and Ta Kung Pao in Hong Kong (for B share, in English) have been selected by the company as the newspapers for disclosing the relevant information. There no change during the report period. VIII. Report of the Board of Supervisors 1. Operation of the Board of Supervisors during the report period. During the past one year, the Board of Supervisors has convened three meetings. The Chairman of the Board of Supervisors always attended the meetings of the Board of Directors and the management group, participated in the discussion of the significant policies of the company, reviewed and supervised the resolution and procedure of each Board meeting and Shareholders’ General Meeting. The meetings convened by the Board of Supervisors: (1) The first meeting of the Board of Supervisors of 2001 was held in the afternoon on Mar. 26, 2001. The attendants mainly reviewed the business results of the company in 2000, and the financial reports audited by both the domestic and foreign accountants, passed the annual report of 2000 (text and summary) and the report of the Board of Supervisors, and examined and verified the reelection of the Board of Directors, and various resolutions submitted to the Shareholders’ General Meeting. (2) The second meeting of the Board of Supervisors of 2001 was held on Jun. 12, 2000, with all five supervisors newly elected attending the meeting. The attendants elected Huang Yazheng as the Chairman of the Board of Supervisors by resolution. (3) The third meeting of the Board of Supervisors of 2001 was held on Jul. 24, 2001. The attendants examined and passed the text and summary of the interim report of 2001, and the issue on investing in Zhujiang Property Management Company, Guangzhou. ３１ 31 2. Independent opinion of the Board of Supervisors. (1) Legal operation of the company: it can carry out the stick legal operation, strengthen the standardized construction, set up the rules and systems to perfect the management of the listed company, and further improve management level and standard construction of the company. The company has perfected its internal control system, carried out all management policies for the use of capital, investment project and business operation upon the discussion of the Board of Directors, and made the decisions in legal procedures after making the research and investigation, and studying the feasibility. Since the company set up the post of independent director in 2001, it has solicited the opinion of the independent director for some major decisions, to implement such decisions correctly and effectively, and achieve quite good economic benefits. The Board of Supervisors finds that no director nor manager of the company has violated the laws, rules and regulations and the Articles of Association of the company or damage the interest of the company while taking his post. The directors and managers of the company abide by the laws and discipline, and being honest in performing their official duties, united and enterprising, actively making their efforts and contributions to the development of the company. (2) Inspect the financial situation of the company. The Board of Supervisors believed that the auditing reports and relevant notes made by Zhengzhong Zhujiang Certified Public Accountants, Guandong and KPMG in HongKong have truly reflected the financial situation and business results of the company. (3) The last actual investment with raised funds: The company has issued more A shares in the last half of 2000, and raised funds of RMB 667 million. By now, the company has invested in the 9 investment items disclosed in the Prospectus (except the items of current funds), and the actual investment has no difference with the items discloses in the Prospectus. As at Dec. 31, 2001, RMB 377 million has already invested, with RMB 290 million raised funds remained, which are deposited in the special account for funds raised by shares established by our company with the Bank of China, Foshan Branch. The projects for T8 and T5 energy-saving fluorescent lamps have made the fast progress. In particular, the company has introduced 8 production lines for T8 fluorescent lamps, which have all been put into production. The company has also introduced two production lines for T5 fluorescent lamps, one has been put into production, and the other is under installation and commissioning. The company is making great efforts to investing and constructing the test center for fluorescent lamps, kilns, tube-pulling lines, filaments and leads, as well as the power facilities, and auxiliary environmental protection and fire-fighting engineering. The kilns, tube-pulling lines, filaments and leads and power facilities as the auxiliaries of the newly introduced T8 and T5 production lines have made the especially fast progress. There is no change in the actual investment items. ３２ 32 Benefits have achieved from the investment items during the report period: there was three production lines for T8 fluorescent lamps, together with the eight ones just put into production, there are eleven under production, increasing the monthly output of T8 fluorescent lamps to 7 million pieces. The monthly output of T5 fluorescent lamps has already reached 500,000 pieces. The T8 fluorescent lamps of the company are still out of demand, and are sold well in the market. (4) During the report period, our company has no transaction of the purchase and sales of assets nor the related transaction. (5) Zhengzhong Zhujiang Certified Public Accountants, Guangdong and KPMG in HongKong have issued the auditing report without any reserved opinion to the financial report of the company of 2001. The actual profits realized during the report period has no difference with the estimated profits. VII. Significant Events 1. There is no significant suit or arbitration of the company during the report period. 2. There is no matters on purchase, amalgamation and sales of assets of the company during the report period. 3. There is no significant matters on affiliated transaction of the company during the report period. 4. There is no major contract, including the trust, contract or lease of the assets of other companies, nor the trust, contract or lease of our assets by other companies, nor any security, nor any trust of others for financing during the report period. 5. No change has taken place to the domestic and foreign accountants firms of the company during the report period. The company continues to appoint Zhengzhong Zhuangjiang Certified Public Accounts, Guangdong and KPMG in HongKong as its accountants firms. The remuneration paid by the company to such two accountants firms: (1) The remuneration standard for financial auditing during the report period: RMB 270,000 for Zhengzhong Zhuangjiang Certified Public Accounts, Guangdong, and HKD 560,000 for KPMG in HongKong; (2) The Shareholders’ General Meeting has authorized the Board of Directors to determine the remuneration standard for auditing according to the relevant charging standard and workload; (3) The independent director agrees with the decision of the company to pay the auditing expenses; (4) Except the financial auditing expenses, the company has not paid the property evaluation expense and information service expense; (5) The expenses for business trip and accommodation of the accountants during the auditing shall be shall be borne by the accountants firms themselves. The company will pay the auditing expenses due in full; (6) The auditing expense of this period is same with that of last ３３ 33 financial year; (7) Chanshen Certified Public Accountants, Foshan is appointed to make the financial accounting for QL Lamps and Components Limited, Foshan, an affiliated enterprise of the company, at the price of RMB 7,000; (8) Both parties have signed the auditing agreement to confirm the remuneration for auditing; (9) The Board of Directors of the company believes that any reasonable charge for other services of the accountants firm may not affect the independent opinion of the accountant for auditing. 6. No company, the Board of Directors of the company or any director has been checked by the China securities supervision committee, or experienced the administrative sanction or notice of criticism by the China securities supervision committee, or the public condemn of any security exchange. 7. There is significant event listed in Article 62 of the “Security Law” and Article 17 of the “Rules for Information Disclosure for Companies with Publicly Issued Shares” (trial), and any matter judged as the significant event by the Board of Directors of the company during the report period. 8. The company is approved as an high-tech enterprise in Guangdong Province in 2001 according to YKGZ (2001) No. 86 document issued by the Science and Technology Department of Guangdong Province on Apr. 30, 2001, and has enjoyed the income tax preferential policy at 15% for high-tech enterprise from Jan. 1, 2001 on under the approval of the local tax authority of Guangdong Province by YDSH (2001) No. 410 document issued on Aug. 23, 2001. The announcement on enjoyment of preferential income tax policy for high-tech enterprises was published in China Security, Security Times, Foshan Daily and Ta Kung Pao (in Hong Kong) on Nov. 1, 2001. ３４ 34 X. Financial Report (I) Report of the auditors to the shareholders of Foshan Electrical and Lighting Company Limited (Established in the People’s Republic of China with limited liability) We have audited the accompanying consolidated balance sheet of Foshan Electrical and Lighting Company Limited and its subsidiaries (the “Group”) as of 31 December 2001 and the related consolidated statements of income and cash flows for the year then ended. These consolidated financial statements are the responsibility of the directors. Our responsibility is to express an opinion on these consolidated financial statements 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2001, and of the results of its operations and its cash flows for the year then ended in accordance with International Accounting Standards adopted by the International Accounting Standards Board. KMPG Certified Public Accountants Hong Kong (II) Accounting statement. (1) Consolidated Balance Sheet (Attachment 1). (2) Consolidated Income Statement (Attachment 2). (3) Consolidated Cash-flow Statement (Attachment 3). (4) Consolidated Results and Net Influences to Funds of Shareholders (Attachment 4). (III) Notes on the financial statements (Expressed in Renminbi Yuan) ３５ 35 1. Significant accounting policies Foshan Electrical and Lighting Company Limited (the “Company”) is a company domiciled in the People’s Republic of China (“PRC”). The consolidated financial statements of the Company for the year ended 31 December 2001 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associate. (1) Statement of compliance: the consolidated financial statements have been prepared in accordance with the International Accounting Standards (“IAS”) adopted by the International Accounting Standards Board (“IASB”) and interpretations issued by the Standing Interpretations Committee of the IASB. (2) Basis of preparation: the consolidated financial statements are prepared on the historical cost basis except that certain property, plant and equipment were stated at their revalued amount and investments held for trading and investments available-for-sale were stated at their fair value. The accounting policies have been consistently applied by Group enterprises and, except for the change in accounting policy, are consistent with those adopted in the previous year. (3) Basis of consolidation l Subsidiaries: subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control ceases. l Associate: associate is an enterprise in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised gains and losses of the associate on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate. l Transactions eliminated on consolidation: intra-group balances and transactions, and any realised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with the associate are eliminated, to the extent of the Group’s interest in the enterprise, against the investment in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (4) Translation of foreign currencies: transactions in foreign currencies are translated to Renminbi Yuan at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Renminbi Yuan at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. (5) Property, plant and equipment: ３６ 36 l Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses. Revaluation is performed periodically to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. The cost of property, plant and equipment constructed by the Group includes the cost of materials, direct labour and an appropriate proportion of fixed and variable overheads. l Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item of property, plant and equipment. All other expenditure is recognised in the income statement as an expense as incurred. l Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives, after taking into account their estimated residual values, of items of property, plant and equipment. The estimated useful lives are as follows: Buildings 20 to 30 years Plant and machinery 3 to 28 years Furniture, fixtures and office equipment 3 to 14 years Motor vehicles 3 to 12 years Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and ready for its intended use. No depreciation is provided in respect of construction in progress. (6) Intangible assets l Land use rights: land use rights are stated at cost less accumulated amortisation and impairment losses. Amortisation is charged to income statement on a straight-line basis over the unexpired term of the grant. l Goodwill: goodwill arising on an acquisition represents the excess of the cost of the acquisition over the fair value of the net identifiable assets acquired. Goodwill is stated at cost less accumulated amortisation and impairment losses. In respect of the associate, the carrying amount of goodwill is included in the carrying amount of the investment in associate. Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of 10 years. (7) Construction in progress: construction in progress represents properties under construction and equipment purchased prior to installation, which includes construction and acquisition costs, less impairment losses. Capitalisation of these costs ceases and the construction in progress is transferred to fixed assets when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided in respect of construction in progress until it is completed and ready for its intended use. (8) Investments: l Listed investments held for trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in the income statement. Other unlisted investments held by the Group are classified as being available-for-sale and ３７ 37 are stated at cost, less provision for diminution in value which is other than temporary as determined by the directors for each investment individually. l The fair value of investments held for trading is their quoted bid price at the balance sheet date. l Investments held for trading and available-for-sale investments are recognised/ derecognised by the Group on the date it commits to purchase/sell the investments. On derecognition, the difference between the net proceeds received or receivable and the carrying amount of the investments are accounted for in the income statement. (9) Inventories: l Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. l The cost of inventories is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity. (10) Trade and other receivables: trade and other receivables are stated at their cost less write down for any amounts expected to be irrecoverable. (11) Cash and cash equivalents: cash and cash equivalents comprise cash balances and deposits with banks and other financial institutions, maturing within three months. (12) Impairment: The carrying amounts of the Group’s assets, other than inventories, deferred tax assets and financial assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. ３８ 38 l Calculation of recoverable amount: The recoverable amount of assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. l Reversals of impairment: An impairment loss in respect of goodwill is not reversed unless the loss was caused by a specific external event of an exceptional nature that is not expected to recur, and the increase in recoverable amount relates clearly to the reversal of the effect of that specific event. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if an impairment loss had been recognised. (13) Provisions: a provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. (14) Trade and other payables: trade and other payables are stated at their cost. (15) Dividends: dividends are recognised as a liability in the period in which they are declared. (16) Income tax: l Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment of tax payable for previous years. l Deferred tax is provided using the balance sheet liability method on all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes and the initial recognition of assets or liabilities which affect neither accounting nor taxable profit, and the differences relating to investments in subsidiaries to the extent that they will probably not reversed in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. ３９ 39 l A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (17) Revenue recognition l In relation to the sale of goods, revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, and no significant uncertainties remain regarding recovery of the consideration due, associated costs or the possible return of goods. l Dividend income is accounted for when the shareholder’s right to receive payment is established. l Interest income from bank deposits is accrued on a time-apportioned basis on the principal outstanding and at the rate applicable. (18) Operating lease payments: payments made under operating leases are recognised in the income statement on a straight-line basis over the terms of the respective leases. (19) Employee benefits: contributions to defined contribution retirement schemes are recognised as an expense in the income statement as incurred. 2 Revenue The principal activities of the Group are the sale and manufacture of electrical lightings. Revenue represents the invoiced value of goods supplied to customers, net of value added tax. 3 Segment reporting The Group’s profits are almost entirely attributable to its sale and manufacture of electrical lightings in the PRC. Accordingly, no segmental analysis is provided. 4 Other operating income 2001 2000 RMB RMB Income from sale of raw materials 1,895,827 2,518,606 Rental income 435,322 180,036 Others 5,152,248 4,257,157 7,483,397 6,955,799 ４０ 40 5 Other operating expenses 2001 2000 RMB RMB Amortisation of goodwill - 340,840 Impairment loss on property, plant and equipment 6,541,558 - Loss on disposal of property, plant and equipment 1,178,163 - Loss on disposal of intangible assets 2,460,442 - Others 1,970,784 1,082,183 12,150,947 1,423,023 6 Personnel expenses 2001 2000 RMB RMB Salaries and staff welfare 82,850,843 78,417,629 Contribution to defined contribution plans 7,030,574 5,039,999 89,881,417 83,457,628 The number of employees at 31 December 2001 was 8,472 (2000: 6,177). Certain employees of the Group participate in a defined contribution retirement scheme operated by PRC municipal government. The Group is required to contribute to the scheme at a rate of 26% (2000: 26%) of salary costs including certain allowances. Member of the retirement scheme is entitled to pension benefits equal to a fixed portion of the salary at the retirement date. The Group has no obligation to make payments in respect of pension benefits associated with this plan other than the annual contribution described above. 7 Net financial income 2001 2000 RMB RMB Interest income 9,402,512 11,487,530 Bank charges and other financial expenses (1,181,264) (933,719) Exchange loss (228,643) (324,911) Net financial income 7,992,605 10,228,900 8 Net investment income 2001 2000 RMB RMB Gain on disposal of investments 34,782,984 17,328,156 Gain on disposal of associate 1,758,728 - Dividend income 2,333,799 1,033,726 Other income from investments - 589,577 ４１ 41 Write-down of investments held for trading to fair value (33,652,261) (34,042) Provision for diminution in value of investments available-for-sale (1,000,000) - 4,223,250 18,917,417 9 Income tax expense l Taxation in the consolidated income statement represents: 2001 2000 RMB RMB Current tax expense Provision for PRC income tax for the year 37,634,970 64,418,056 Refund of income tax for the year - (34,743,083) Overprovision of PRC income tax relating to prior years written back (1,491,913) (13,763,687) 36,143,057 15,911,286 Deferred tax income Origination of temporary difference - (9,831,084) Total income tax expense in income statement 26,311,973 15,911,286 The charge for PRC income tax is calculated at the rate of 15% (2000: 33%) on the estimated assessable profits for the year determined in accordance with relevant income tax rules and regulations. Pursuant to a notice from Foshan Local Tax Bureau dated 19 September 2001, the Company is classified as being engaged in high-technological industry and is entitled to a reduced tax rate of 15% with effect from 1 January 2001. Pursuant to a notice dated 9 November 2000 issued by the Department of Finance of Guangdong Province, the Company was entitled to a refund of the PRC income tax for the years ended 31 December 1999 and 2000 of RMB33,096,811 and RMB34,743,083 respectively, being income tax payable in excess of 15% tax rate and which was regarded as non-taxable income. Tax refunds for 1999 and 2000 were all received during the year. Overprovision of PRC income tax in 2000 represented the write back of overprovision of tax in respect of the sale of land use rights in 1995. ４２ 42 l Reconciliation of effective tax rate: 2001 2000 RMB RMB Profit from ordinary activities before share of profit of associate 215,605,004 194,592,009 Income tax using the PRC income tax rate 15% 32,340,751 33% 64,215,363 Non-taxable items (1,303,211) - Net overprovision of current and deferred tax of prior years (4,791,705) (13,763,687) Refund of income tax for the year - (34,743,083) Others 66,138 202,693 26,311,973 15,911,286 l Taxation in the consolidated balance sheet represents: 2001 2000 RMB RMB Balance at 1 January 67,913,472 39,391,180 Provision for PRC income tax for the year 37,634,970 64,418,056 Balance of PRC income tax provision relating to prior years (1,491,913) 15,208,124 Payments made during the year (75,959,776) (51,103,888) Balance at 31 December 28,096,753 67,913,472 10 Property, plant and equipment Furniture, fixtures Plant and and office Motor Buildings machinery equipment vehicles Total RMB RMB RMB RMB RMB Cost or valuation: At 1 January 2001 287,157,008 403,860,393 6,062,645 7,741,099 704,821,145 Additions 5,085,447 10,289,928 294,973 1,598,519 17,268,867 Transfer from construction in progress (note 12) 807,833 96,151,785 260,000 320,000 97,539,618 Disposals (990,698) (6,265,355) (49,500) (282,220) (7,587,773) ４３ 43 At 31 December 2001 292,059,590 504,036,751 6,568,118 9,377,398 812,041,857 Depreciation and impairment loss: At 1 January 2001 74,468,393 133,581,455 3,691,733 5,073,773 216,815,354 Charge for the year 14,303,298 49,089,381 786,636 754,258 64,933,573 Impairment losses 1,157,204 5,265,624 - 118,730 6,541,558 Written back on disposal (321,564) (5,882,700) (7,838) (197,506) (6,409,608) At 31 December 2001 89,607,331 182,053,760 4,470,531 5,749,255 281,880,877 Net book value: At 31 December 2001 202,452,259 321,982,991 2,097,587 3,628,143 530,160,980 At 31 December 2000 212,688,615 270,278,938 2,370,912 2,667,326 488,005,791 Valuation: as required by the relevant PRC rules and regulations, the assets and liabilities of the Company were revalued at 30 April 1993 by Guangzhou Assets Appraisal Corporation using the depreciated replacement cost method prior to the listing of the Company’s A shares on the Shenzhen Stock Exchange. The surplus on revaluation was taken directly to revaluation surplus. In accordance with IAS 16, subsequent to this revaluation, which was based on depreciated replacement costs, property, plant and equipment are carried at revalued amount, being the fair value at the date of the revaluation less any subsequent accumulated depreciation and impairment losses. Revaluation is performed periodically to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. Based on a revaluation performed as of 31 December 2001, which was based on depreciated replacement costs, the carrying value of property, plant and equipment did not differ materially from their fair value. Impairment: due to technological change, certain machinery, mainly for the production of general lighting service lamp, became idle during the year. After assessing the recoverable amount of such machinery and its related buildings and motor vehicles, impairment losses of RMB6,541,558 were made. 11 Intangible assets Land use rights RMB Cost: Balance at 1 January 2001 90,930,482 Additions 30,000,000 Disposal (8,595,749) Balance at 31 December 2001 112,334,733 Amortisation: Balance at 1 January 2001 4,903,752 ４４ 44 Amortisation charge for the year 3,758,294 Written back on disposal (655,350) Balance at 31 December 2001 8,006,696 Net book value: At 31 December 2001 104,328,037 At 31 December 2000 86,026,730 The amortisation charge of RMB3,758,294 (2000: RMB1,312,126) is included in administrative expenses in the income statement. 12 Construction in progress Plant and Office Motor Buildings machinery equipment vehicles Total RMB RMB RMB RMB RMB At 1 January 2001 823,219 41,022,413 - - 41,845,632 Additions 6,483,948 116,945,858 260,000 412,280 124,102,086 Transfer to property, plant and equipment (note 10) (807,833) (96,151,785) (260,000) (320,000) (97,539,618) At 31 December 2001 6,499,334 61,816,486 - 92,280 68,408,100 13 Investment in associate 2001 2000 RMB RMB Share of net assets 30,060,975 14,771,425 Goodwill on acquisition - 3,067,564 30,060,975 17,838,989 Details of the associate, which is established and operating in the PRC, are as follows: Percentage of equity held Name of company by the company Principal activity Liangke Investment Co., Ltd., 37.5% Investments and Shenzhen assets management In the current financial year, the Company entered into the following transactions: l Pursuant to an agreement in respect of the increase of registered capital of Liangke Investment Co., Ltd., Shenzhen (Liangke), the Company made an additional capital contribution of RMB20,000,000 to Liangke. In 2000, the Group’s investment in Liangke was RMB10,000,000, which was classified Liangke as long-term investments. As the Company’s equity interest has increased from 16.67% to 37.5% and it has significant influence over the financial and operating policies of Liangke, investment in Liangke has been classified as investment in associate in 2001. ４５ 45 l Investment in associate in 2000 represented the Company’s investment in Taiji Wine Factory, Foshan, which was disposed of during the year. 14 Other investments 2001 2000 RMB RMB Non-current investments Unlisted equity securities available-for-sale, at cost 130,752,341 131,094,392 Less: Provision for diminution in value (8,850,000) (7,850,000) 121,902,341 123,244,392 Listed equity securities held for trading, at fair value - 171,425,656 121,902,341 294,670,048 Current investments Listed equity securities held for trading, at fair value 81,110,785 - During the year, all the listed equity securities held for trading were reclassified as current investments as the Group intended to hold these investments for short term purposes. 15 Deferred tax assets Recognised deferred tax assets Deferred tax assets are attributable to the following: 2001 2000 RMB RMB Property, plant and equipment 981,234 Other investments 6,383,896 - Inventories 307,971 - Trade and other receivables 2,157,983 - Tax assets 9,831,084 - Movement in temporary differences during the year Recognised At 1 January in income At 31 December 2001 statement 2001 Property, plant and equipment - 981,234 981,234 Other investments - 6,383,896 6,383,896 Inventories - 307,971 307,971 Trade and other receivables - 2,157,983 2,157,983 - 9,831,084 9,831,084 ４６ 46 16 Inventories 2001 2000 RMB RMB Raw materials 25,271,974 31,103,499 Work in progress 51,397,657 49,765,565 Finished goods 33,092,309 30,968,237 Spare parts and consumables 69,734 115,987 109,831,674 111,953,288 Included in finished goods are inventories of $33,092,309 (2000: $30,968,237), stated net of a general provision, made in order to state these items at the lower of their cost and estimated net realisable value. 17 Deposits, prepayments and other receivables 2001 2000 RMB RMB Prepayments for purchase of land use rights and buildings 14,428,417 - Prepayments for purchase of raw materials and machinery 11,899,258 22,253,785 Deposits and other prepayments 2,079,799 26,445,799 Receivable from refund of income tax (note 9(a)) - 67,839,894 28,407,474 116,539,478 18 Cash and bank balances 2001 2000 RMB RMB Deposits with banks and other financial institutions maturing over three months - 70,000,000 Cash and cash equivalents 1,066,769,584 943,565,784 1,066,769,584 1,013,565,784 19 Capital and reserves Statutory Statutory staff Discretionar y Share Share Revaluation surplus welfare surplus Retained capital premium surplus reserve reserve reserve earnings Total RMB RMB RMB RMB RMB RMB RMB RMB Balance as at 1 January 2001 358,448,259 1,186,000,059 13,479,958 118,693,123 73,051,533 58,123,849 187,692,746 1,995,489,527 Net profit for the year - - - - - - 189,354,006 189,354,006 Transfer - - - 17,334,875 8,667,437 - (26,002,312) - ４７ 47 Dividends - - - - - (136,210,338) (136,210,338 Balance as at 31 December 2001 358,448,259 1,186,000,059 13,479,958 136,027,998 81,718,970 58,123,849 214,834,102 2,048,633,195 Balance as at 1 January 2000 275,862,054 601,629,196 13,479,958 102,577,770 64,993,857 58,123,849 128,288,843 1,244,955,527 Bonus issue 27,586,205 (27,586,205) - - - - - - Issue of shares less expenses 55,000,000 611,957,068 - - - - - 666,957,068 Net profit for the year - - - - - - 180,128,651 180,128,651 Transfer - - - 16,115,353 8,057,676 - (24,173,029) - Dividends - - - - - - (96,551,719) (96,551,719) Balance as at 31 December 2000 358,448,259 1,186,000,059 13,479,958 118,693,123 73,051,533 58,123,849 187,692,746 1,995,489,527 Registered, issued and fully paid up capital: the registered capital comprises 275,948,259 (2000: 275,948,259) ordinary A shares and 82,500,000 (2000: 82,500,000) ordinary B shares. All shares were issued and have a par value of RMB 1. On 19 June 2000, a bonus issue of 27,586,205 ordinary shares of RMB1 per share was made. On 11 December 2000, the Company issued 55,000,000 ordinary shares of RMB1 at RMB12.65 per share. Each share was issued at a premium of RMB11.65 each. l Revaluation surplus: the revaluation surplus relates to the revaluation of certain property, plant and equipment at 30 April 1993 and is not distributable. l Statutory surplus reserve: according to the current PRC Company Law and the Company’s articles of association, the Company is required to transfer 10% of its profit after taxation to statutory surplus reserve until the surplus reserve balance reaches 50% of the registered capital. For the purpose of calculating the transfer to reserve, the profit after taxation shall be the amount determined under PRC accounting standards. The transfer to this reserve has to be made before distribution of dividend to shareholders. Statutory surplus reserve can be used to make good previous years’ losses, if any, and for capitalisation issue provided that the balance after such issue is not less than 25% of the registered capital. l Statutory staff welfare reserve: according to the current PRC Company Law and the Company’s articles of association, the Company is required to transfer 5% to 15% (at the discretion of the Board of Directors) of its profit after taxation to its statutory staff welfare reserve. The statutory staff welfare reserve can only be used for the collective benefits of the Company’s employees such as the construction of dormitories, canteen and other staff welfare facilities. The reserve forms part of the shareholders’ equity as individual employees can only use these facilities, the title of which will remain with the Company. The transfer to this reserve must be made before distribution of dividend to shareholders. The Directors have resolved to transfer 5% (2000: 5%) of the current year’s profit to this reserve on 27 February 2002. ４８ 48 l Discretionary surplus reserve: the usage of this reserve is similar to that of statutory surplus reserve. l Dividend The following dividend has not been provided for in the financial statements: 2001 2000 RMB RMB Proposed final dividend of RMB0.4 per ordinary share (2000: RMB0.38) 143,379,304 136,210,338 Pursuant to a resolution passed at the Directors’ meeting held on 27 February 2002, a final dividend of RMB0.4 per ordinary share totalling RMB143,379,304 will be payable to shareholders, subject to the approval of the shareholders at the Company’s 13th Annual General Meeting. Dividend paid during the year is as follows: 2001 2000 RMB RMB Final dividend of RMB0.38 per ordinary share for the year ended 31 December 2000 (1999: RMB0.35) 136,210,338 96,551,719 20 Accruals and other payables 2001 2000 RMB RMB Value added tax and other taxes payable 30,912,799 28,758,056 Temporary payments - 5,790,438 Others 16,404,011 18,232,299 47,316,810 52,780,793 21 Provision for salaries and bonus fund and staff welfare fund 2001 2000 RMB RMB Balance at 1 January 30,317,927 22,897,766 Charge for the year 23,026,264 19,960,814 Paid during the year (13,928,068) (12,540,653) Balance at 31 December 39,416,123 30,317,927 ４９ 49 22 Financial instruments and concentration of risks Financial assets of the Group principally include cash and cash equivalents, trade and other receivables, and investments. Financial liabilities of the Group principally include trade and other payables. Accounting policies for financial assets and liabilities are set out in note 1. l Credit risk: credit risk represents the accounting loss that would be recognised at the reporting date if counterparties failed to perform completely as contracted. The Group does not have significant exposure to any individual customer or counterparty. To reduce exposure to credit risk, the Group performs ongoing credit evaluations of the financial condition of its customers but generally does not require collateral. The Group deposits substantially all the cash and cash equivalents with the four largest state-owned banks of the PRC. The Group is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments but, based on the Group’s credit assessment and the past repayment records of the counterparties, management does not expect any material counterparty to fail to meet its obligations. At balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. l Foreign currency risk: the Group incurs foreign currency risk on certain trade receivables of RMB27,351,991 (2000: RMB29,825,887) and cash and cash equivalents of RMB37,701,271 (2000: RMB32,267,198) that are denominated in United States dollars. Fluctuation of the exchange rate of United States dollars against Renminbi Yuan will affect the Group’s financial position and results of operations. l Fair value: the carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables approximate fair value due to the short-term nature of these instruments. The fair values of the Group’s listed equity investments are estimated by referring to the market prices obtained from the relevant stock exchanges. There are no quoted market prices for unlisted equity investments. Accordingly, a reasonable estimate of fair value could not be made without incurring excessive costs. However, provision for diminution in value of RMB8,850,000 (2000: RMB7,750,000) was made at 31 December 2001. 23 Commitments l Capital expenditure commitments: as at 31 December 2001, the Group had capital expenditure commitments authorised and contracted for but not provided for in the financial statements amounting to approximately RMB48,471,000 (2000: RMB24,614,000). ５０ 50 l Operating lease payments: minimum lease payments under non-cancellable operating leases in respect of properties are payable as follows: 2001 2000 RMB RMB Less than one year 3,129,200 3,129,200 Between one and five years 4,676,000 4,676,000 More than five years 23,704,000 24,873,000 31,509,200 32,678,200 The Group leases a number of factory facilities under operating leases. The leases typically run for an initial period of thirty years, with an option to renew the lease after that date. Fixed annual lease payments are payable over the lease terms. During the year ended 31 December 2001, RMB3,129,200 was recognised as an expense in the income statement in respect of operating leases (2000: RMB4,109,300). 24 Earnings per share l Basic earnings per share: the calculation of basic earnings per share at 31 December 2001 was based on the profit after taxation of RMB189,354,006 (2000: RMB180,128,651) and the weighted average of 358,448,259 shares (2000: 306,612,643 shares). Weighted average number of shares: 2001 2000 RMB RMB Issued shares at 1 January 358,448,259 275,862,054 Effect of bonus shares - 27,586,205 Effect of shares issued in December 2000 - 3,164,384 Weighted average number of shares at 31 358,448,259 306,612,643 December l Diluted earnings per share: no diluted earnings per share is calculated as there are no dilutive potential shares. 25 Group enterprises l Details of the subsidiaries, both of which are established and operating in the PRC, are as follows: ５１ 51 Percentage of Name of company equity held Principal activity Wuzhuang Factory 100% Manufacture of lighting products QL Lamps and Components 40% Manufacture of Limited (“QLLC”) lighting products l As the Group has effective control of QLLC through the power of governing the financial and operating policies of the economic activity under a contractual arrangement, QLLC has been accounted for as a subsidiary and the entire amount of its results for the year is incorporated in the income statement of the Group. 26 Change in accounting policy In the current financial year, the Group adopt IAS 39 (revised 2000). The adoption of IAS 39 has resulted in the Group stating listed investments held for trading at fair value. Such investments were stated at market value in the previous years, which is the basis of the estimation of fair value. Accordingly, no adjustment to the opening balance of retained earnings at 1 January 2001 was required. 27 Comparative figures The following comparative figures have been reclassified in order to conform with the current year’s presentation: l The land use rights have been reclassified from property, plant and equipment to intangible assets. l The 1999 and 2000 tax refunds have been reclassified from other operating income to taxation. 28. Supplementary information. (1) Adjustment statement for difference between the financial reports prepared in accordance with the domestic and foreign accounting standards. Because the company has issued B shares, when making the financial report according to the “Accounting System for Enterprises”, it shall also prepare the financial report complying with the “International Accounting Standard”. The foreign accountants firm appointed by the company is KPMG in HK. The differences in net assets and net profits in the financial reports prepared in accordance with the domestic and foreign accounting standards: ５２ 52 Reference Documents The investors and the relevant departments can demand the following information from the secretary of the Board of Directors in the General Manager Office in the office building of our company: 1. Accounting report signed and sealed by the legal representative of the company, finance chief and the accounting handler. 2. Origin of the auditing report signed and sealed by the accountants office and the public certified accountant. 3. Announcement origin and master copy of all documents of the company publicly disclosed in the newspapers designated by the China securities supervision committee during the report period. 4. Origin of the Annual Report of 2001 personally signed by the Chairman of the Board of Directors. Foshan Electrical and Lighting Co. Ltd. Board of Directors Mar. 27, 2002 ５３ 53 Consolidated balance sheet at 31 December 2001 (Expressed in Renminbi Yuan) 2001 2000 RMB RMB ASSETS Non-current assets Property, plant and equipment 530,160,980 488,005,791 Intangible assets 104,328,037 86,026,730 Construction in progress 68,408,100 41,845,632 Investment in associate 30,060,975 17,838,989 Other investments 121,902,341 294,670,048 Deferred tax assets 9,831,084 - 864,691,517 928,387,190 ------------------- ------------------- Current assets Other investments 81,110,785 - Inventories 109,831,674 111,953,288 Trade receivables 92,770,655 65,584,261 Deposits, prepayments and other receivables 28,407,474 116,539,478 Cash and bank balances 1,066,769,584 1,013,565,784 1,378,890,172 1,307,642,811 ------------------- ------------------- Total assets 2,243,581,689 2,236,030,001 =========== =========== ５４ 54 Consolidated balance sheet at 31 December 2001 (continued) (Expressed in Renminbi Yuan) 2001 2000 RMB RMB LIABILITIES Capital and reserves Share capital 358,448,259 358,448,259 Share premium 1,186,000,059 1,186,000,059 Other reserves 504,184,877 451,041,209 2,048,633,195 1,995,489,527 ------------------- ------------------- Minority interests 5,954,977 5,954,977 ------------------- ------------------- Current liabilities Trade payables 66,028,660 70,428,569 Income tax payable 28,096,753 67,913,472 Accruals and other payables 47,316,810 52,780,793 Provision for salaries and bonus fund and staff welfare fund 39,416,123 30,317,927 Dividend payable 8,135,171 13,144,736 188,993,517 234,585,497 ------------------- ------------------- Total equity, minority interests and liabilities 2,243,581,689 2,236,030,001 =========== =========== 55 Consolidated income statement for the year ended 31 December 2001 (Expressed in Renminbi Yuan) 2001 2000 RMB RMB Revenue 827,662,639 688,923,295 Cost of sales (545,573,662) (475,183,446) Gross profit 282,088,977 213,739,849 Other operating income 7,483,397 6,955,799 Selling expenses (29,029,013) (11,193,249) Administrative expenses (45,003,265) (42,633,684) Other operating expenses (12,150,947) (1,423,023) Profit from operations 203,389,149 165,445,692 Net financial income 7,992,605 10,228,900 Net investment income 4,223,250 18,917,417 Share of profit of associate 77,082 2,161,087 Profit from ordinary activities before taxation 215,682,086 196,753,096 Income tax expense - company and subsidiaries (26,311,973) (15,911,286) - associate (16,107) (713,159) Net profit for the year 189,354,006 180,128,651 =========== =========== Basic earnings per share 0.53 0.59 =========== =========== 56 Consolidated statement of cash flows for the year ended 31 December 2001 (Expressed in Renminbi Yuan) 2001 2000 RMB RMB RMB RMB Operating activities Profit from ordinary activities before taxation 215,682,086 264,592,990 Adjustment for: Dividend income (2,333,799) (1,033,726) Interest income (9,402,512) (11,487,530) Loss on disposal of property, plant and equipment 1,178,165 908,011 Loss on disposal of intangible assets 2,460,442 - Depreciation and amortisation 68,691,867 49,797,474 Impairment loss on property plant and equipment 6,541,558 - Write-down of investments held for trading to fair value 33,652,261 34,042 Provision for diminution in value of investments available-for-sale 1,000,000 - Amortisation of goodwill - 340,840 Gain on disposal of associate (1,758,728) - Gain on disposal of investments (34,782,984) (17,328,156) Share of profit of associate (77,082) (2,161,087) Operating profit before working capital changes 280,851,274 283,662,858 Decrease/(increase) in inventories 2,121,614 (22,476,913) (Increase)/decrease in trade receivables (27,186,394) 3,369,904 prepayments and other receivables 88,132,004 36,102,173 (Decrease)/increase in trade payables (4,399,909) 34,933,383 Decrease in accruals and other payables (5,463,983) (25,726,348) and staff welfare fund 9,098,196 7,420,161 Cash generated from operations 343,152,802 317,285,218 PRC tax paid (75,959,776) (51,103,890) 57 Consolidated statement of cash flows for the year ended 31 December 2001 (continued) (Expressed in Renminbi Yuan) Note 2001 2000 RMB RMB RMB RMB Cash flows from operating activities 267,193,026 266,181,330 Investing activities Interest received 9,402,512 11,487,530 Dividend received from investees and associate 4,899,357 1,033,726 Purchase of property, plant and equipment (17,268,867) (76,310,707) Purchase of intangible assets (30,000,000) - Increase in construction in progress (124,102,086) (70,596,138) Purchase of investments (164,183,042) (235,418,610) Proceeds from disposal of associate 17,032,159 - Proceeds from disposal of other investments 245,970,687 63,907,671 Proceeds from disposal of intangible asset 5,479,957 - Maturity of deposits with banks and other financial institutions maturing over three months 70,000,000 10,000,000 Acquisition of associate (20,000,000) (16,731,901) Cash flows from investing activities (2,769,323) (312,628,429) Financing activities Proceeds from the issue of shares - 666,957,068 Dividends paid (141,219,903) (98,490,964) Cash flows from financing activities (141,219,903) 568,466,104 Net increase in cash and cash equivalents 123,203,800 522,019,005 Cash and cash equivalents at 1 January 943,565,784 421,546,779 Cash and cash equivalents at 31 December 18 1,066,769,584 943,565,784 58 Net impact of IAS adjustments on the consolidated results and share holders’ funds prepared under PRC accounting regulations Financial statements for the year ended 31 December 2001 (Expressed in Renminbi Yuan) Profit after tax Shareholders’ funds 2001 2000 2001 2000 As reported in statutory financial statements prepared under PRC accounting regulations 173,348,748 161,153,529 1,906,996,625 1,876,824,159 Adjustments to align with IAS 1. Provision for doubtful debts 85,131 2,710,975 - (85,131) 2. Provision for investment (6,361,228) 6,853,904 - 6,361,228 3. Stock provision 2,377,833 - - (2,377,833) 4. Overprovision of research and development 4,394,365 - - (4,394,365) 5. Provision of temporary payments 5,790,438 (5,790,438) - (5,790,438) 6. Overprovision/ (underprovision) of income tax 1,491,913 13,493,278 - (1,491,913) 7. Underprovision of depreciation - - (3,739,860) (3,739,860) 8. Dividend proposed - - 143,379,304 136,210,338 9. Recognition of deferred tax asset 9,831,084 - 9,831,084 - 10. Waiver of trade payables - - (203,022) - 11. Consolidation adjustment (2,363,183) 1,447,928 (4,481,447) (2,118,264) 12. Others 758,905 259,475 (3,149,489) (3,908,394) As reported pursuant to IAS 189,354,006 180,128,651 2,048,633,195 1,995,489,527 ========= ========= =========== ========== 59