佛山照明(000541)粤照明Ｂ2002年年度报告（英文版）

Annual Report of 2002 of Foshan Electrical & Lighting Company Limited Important Hints: The Board of Directors of this company and all its directors guarantee that there is no false account, misleading statement or significant omission existing in the information contained in this report, and that they shall bear the individual and joint liabilities for the truthfulness, accuracy and completeness of its content. The accounting data and financial report in this report have been audited by KPMG Certified Public Accountants 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. Mr. Zhong Xincai, the General Manager and the financial chief of the company and Ms. Wang Shuqiong, the Manager of the Financial Department declare to guarantee the truthfulness and completeness of the financial report in this annual report. Content I. Brief Introduction to the Company Page II. Summary of Accounting Data and Business Data III. Change of Capital Stock and Shareholders IV. Directors, Supervisors, Senior Management Personnel and Staffs V. Managerial Hierarchy 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 １ I. Brief Introduction to the Company 1. Name in Chinese: 佛山电器照明股份有限公司 缩 写 : 佛山照明 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 Tel: (0757) 2813838-298, 2810239 Fax: (0757) 2816276 E-mail: gzfsligh@pub.foshan.gd.cn 4. Registered and office address: No. 15 Fenjiang North Road, Foshan, Guangdong Zip code: 528000 Internet web: www.chinafsl.com E-mail: gzfsligh@pub.foshan.gd.cn 5. Company information disclosed in: China Security, Security Times, Ta Kung Pao (in Hong Kong) and Foshan Daily Internet web site publishing the annual report designated by China Securities Regulatory 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. 6. Listing place of shares: Shenzhen Stock Exchange. Abbr. of shares: Foshan Electrical & Lighting (A Share) Yue Electrical & Lighting (B Share) Code of shares: 000541 (A Share) 200541 (B Share) ２ 7. Other relevant information: Date and place of first registration: registered in the Industrial and Commercial Administrative Bureau of Guangdong Province on Oct. 20, 1992. Registration No. of Legal Entity Business License: 19035257-5 Tax registration No.: YWZ 440601190352575 Names and offices of accountants office employed by the company: Domestic: Guangdong Zhengzhong Zhujiang Certified Public Accountants (former Guangzhou Certified Public Accountants) 10/F Guangdong Group Building, 555 Dongfeng East Road, Guangzhou Tel: (020) 83859808 Fax: (020) 83800977 Foreign: KPMG Certified Public Accountants in HK (former KPMG Peat Marwick) 8/F Prince’s Building, Hong Kong Tel: (00852) 2 978 8126 Fax: (00852) 2845 2588 ３ II. Summary of Accounting Data and Business Data 1. Main accounting data and business data of this year. Unit: CNY Total profit 255,183,375.00 Net profit 218,582,323.00 Main business profit 363,385,244.00 Other business profit - Operating profit 234,877,836.00 Investment return 16,922,497.00 Income from subsidy - Non-operating net income and expenditure - Net cash flow from business activities 325,528,282.00 Net increase of cash and cash equivalent 101,128,887.00 2. Net profits calculated by two different accounting standards and the difference: The net profit of the company in 2002 audited in accordance with the domestic enterprise accounting system is RMB 204,819,357.00, while the net profit audited according to the international accounting standard is RMB218,582,323.00. The reasons for such difference are listed below: ４ Net profit (CNY) In accordance with the“Enterprise Accounting System” 204,819,357 1. Assets of deferred taxes confirmed. 1,578,114 2. Capitalized amount and depreciation difference 8,590,420 3. Unrealized income/(loss) of investment held for purchase and sales 2,309,852 listed at the fair value. 4. Loss of investment realized and listed at the fair value. 1,236,587 5. Others 47,993 In accordance with the International Financial Reporting standard 218,582,323 3. Main accounting data and financial targets of three years immediately prior to the report period(consolidated) Unit: CNY Items 2002 2001 2000 Main business income 953,453,964.00 827,662,639.00 688,923,295.00 Net profit 218,582,323.00 189,354,006.00 180,128,651.00 Total assets 2,359,541,714.00 2,243,581,689.00 2,236,030,001.00 Shareholder equity (excluding the shareholder 2,123,836,214.00 2,048,633,195.00 1,995,489,527.00 equity of minority shareholders) Proceeds per share (fully amortized) 0.61 0.53 0.50 Proceeds per share (weighted average) 0.61 0.53 0.59 Net assets per share 5.93 5.72 5.57 Net assets per share after adjustment 5.90 5.69 5.54 Net cash flow per share from business activities 0.91 0.75 0.74 Return rate of net assets % (fully amortized) 10.29 9.24 9.03 ５ 4. Profit data calculated according to the requirements of the Disclosure and Preparation Rules for Publishing the Information of Security Companies” promulgated by China Securities Regulatory Committee (No.9). Profit of the report period 2002 2001 Return rate of net Proceeds per share, Return rate of net Proceeds per share, assets (%) CNY assets (%) CNY Fully Weighted Fully Weighted Fully Weighted Fully Weighted amortized average amortized average amortized average amortized average Main business profit 17.11 16.84 1.01 1.01 13.77 14.49 0.79 0.79 Operating profit 11.06 10.88 0.66 0.66 9.93 10.45 0.57 0.57 Net profit 10.29 10.13 0.61 0.61 9.24 9.73 0.53 0.53 5. Change of shareholders’ equity during the report period. Unit: CNY Item Capital Capital Earned Legal welfare Undistributed Total stock surplus surplus funds profit shareholders’ equity At beginning of the period 358,448,259.00 1,199,480,017.00 194,151,847.00 81,718,970.00 214,834,102.00 2,048,633,195.00 Increase in this period - - 30,722,904.00 20,481,935.00 218,582,323.00 269,787,163.00 Reduce in this period - - - - 194,584,144.00 194,584,144.00 At end of the period 358,448,259.00 1,199,480,017.00 224,874,751.00 102,200,906.00 238,832,281.00 2,123,836,214.00 Reasons of change Profit distribution of Profit distribution of Profit distribution this year this year of this year ６ III. Change of Capital Stock and Shareholders 1. Change of capital stock (1) Change on capital stock of the company Unit: share Before this Change of this time (increase or reduce) (+ or -) After this Rationed Granted Shares transferred from Shares newly Others Subtotal change change shares shares public reserve funds issued I. Uncirculating shares 1. Founder’s share 88,397,100 88,397,100 Including: State-owned share 85,922,100 85,922,100 Domestic corporate share 2,475,000 2,475,000 Foreign corporate share Others 2. Raised corporate share 40,515,750 40,515,750 3. Internal staff share 4. Preferred share or others Total uncirculating shares 128,912,85 128,912,850 0 II. Circulating shares listed 1. RMB ordinary shares 147,035,40 147,035,409 9 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 229,535,40 229,535,409 9 III. Total shares 358,448,25 358,448,259 9 Note: The 193,380 shares held by the directors and supervisors of our company have been frozen according to the relevant regulation. ７ (2) Issuing and listing of shares All Previous Issuing and Listing of Shares (CNY, 10,000 shares) Year Type of shares Issuing Issuing price Issuing quantity Listing Listing trade Total capital stock date date 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 (grant 5 for 94.5.11 965 11,575.5 (after granting) 10) 1995 A share rationing 95.01 8.00 1815.3036 95.2.22 481.1946 13,390.8036 (after rationing) (ration 3 for 10) B share issuing 95.07 HK5.61 5000 95.8.8 5000 18,390.8036 (RMB6.02) (after issuing B share) Listing of internal shares held 92.08 4.00 1157 95.9.29 1157 18,390.8036 (after the listing of by staff staff shares) 1996 A, B shares, shares transferred 96.09 --- 9195.4018 96.9.20 5278.3 27,586.2054 (after increase shares from public surplus (increase 5 for 10) by transfer) 1997 A, B shares --- --- --- --- --- 27,586.2054 1998 A, B shares --- --- --- --- --- 27,586.2054 1999 A, B shares --- --- --- --- --- 27,586.2054 2000 Transferred & rationed shares 95.01 8.00 31.9554 2000.4.14 31.9554 27,586.2054 (include transferred and rationed shares listed) Increased shares from A and B 2000.06 --- 2758.6205 2000.6.23 2758.6205 30,344.8259 (after increased shares transfer (increase 1 for 10) shares by transfer) New issue of A shares 2000.12 12.65 5500 2000.12.23 5500 35,844.8259 (after new issue) 2001 A and B shares -- -- -- -- -- 35,844.8259 2002 A and B shares -- -- -- -- -- 35,844.8259 ８ (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/share, which were handed over to the Securities 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 Stock 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 Securities Registration Company. There were still 193,380 shares (including the rationed and granted shares) for internal staffs held by the directors and supervisors frozen at the end of 2002. 2. Introduction to shareholders. (1) Up to Dec. 31, 2002, the company totally has 80,680 shareholders. Among them, there are 64,981 shareholders for A share (Foshan Electrical and Lighting 000541), including 5 shareholder of senior management shares, and 15,699 shareholders for B share (Yue Electrical and Lighting 200541) (2) Shares held by the top ten shareholders (as at Dec. 31, 2002) Unit: share No. Names of shareholders Listed share Unlisted Percentage in Nature of share held share held total capital stock (%) 1 State-owned Assets Office of Foshan City - 85,922,100 23,97 State-owned share 2 Youchang Lighting Equipment Trading Co., - 7,002,641 1.95 Corporate share Ltd. ,Guangzhou 3 Fenghe Valuable Securities Investment Funds 2,687,027 0.75 Circulating A share 4 Yuyuan Securities Investment Funds 2,665,945 - 0.74 Circulating A share 5 Yinfeng Securities Investment Funds 2,593,046 - 0.72 Circulating A share 6 Alfred K.N. Chong 2,388,700 - 0.67 Circulating B share 7 Jinxin Securities Investment Funds 2,203,732 - 0.61 Circulating A share 8 DBS VICKERS (HONG KONG) LTD.A/C 1,504,158 - 0.42 Circulating B share CLIENTS 9 YOU YUE XIU 1,455,745 - 0.41 Circulating B share 10 BERMUDA TRUST (FAR EAST) LTD. VALUE 1,399,838 - 0.39 Circulating B Share PARTNERS ‘A’FD Total 16,898,191 92,924.741 30.64 Note: l There is no relationship between the top 10 shareholders, and they are not of the concerted action. l There is no change and mortgage of shares for shareholders with at least 5% of the shares during the report period. The State-owned Assets Office of Foshan City (national corporate share, A share) has the same 85,922,100 shares in the initial period and at the end ９ of the period. No mortgage nor freezing of shares held by it has occurred. １０ (3) The first major shareholder of the company is the State-owned Assets Office of Foshan City, which is one of the founder shareholders of the company holding 85,922,100 shares at the present, making up 23.97% of the total shares of the company. Except it, there is no other corporate shareholder in the company holding more than 10% of the total shares. IV. Directors, Supervisors, Senior Management Personnel and Staffs (I) Directors, supervisors and senior management personnel. 1. Basic condition Name Sex Age Post Term of offices Shares held (numbers) Year start Year end Zhong Xincai M 60 Chairman of the Board of Directors, General Jun. 2001 – Jun. 2004 74,250 74,250 Manager Alfred K. N. Chong M 51 Vice Chairman of the Board of Directors Jun. 2001 – Jun. 2004 2,133,700 2,388,700 (B share) (B share) Ou Muben M 53 Executive director, Vice General Manager Jun. 2001 – Jun. 2004 33,000 33,000 Liu Xingming M 40 Executive director, Vice General Manager Jun. 2001 – Jun. 2004 21,780 21,780 Liang Weidong M 40 Director Jun. 2001 – Jun. 2004 Shen Weiqiang M 53 Director Jun. 2001 – Jun. 2004 Ye Zaiyou M 47 Director Jun. 2001 – Jun. 2004 Liang Zhen M 65 Independent Director Jun. 2001 – Jun. 2004 Wu Jianhong F 56 Independent Director May. 2002 – Jun. 2004 Huang Yazheng M 60 Chairman of the Board of Supervisors, Jun. 2001 – Jun. 2004 31,350 31,350 Chairman of the Labor Union Tan Shengzhi M 54 Supervisor Jun. 2001 – Jun. 2004 33,000 33,000 Mai Kanglin M 30 Supervisor Jun. 2001 – Jun. 2004 Zhang Chaoyang M 38 Supervisor Jun. 2001 – Jun. 2004 Chen Guanbiao M 54 Supervisor Jun. 2001 – Jun. 2004 Guo Jieming M 53 Vice General Manager Ma Yijun M 34 GM assistant Liang Weiqiang M 45 GM assistant Lin Yihui M 49 Secretary of the Board of Directors Wang Shuqiong F 40 Financial chief Mr. Ye Zaiyou is appointed the Chairman of the Board of Directors of Wuzhuang Color Glazed Tiles Factory in Nanhai, the shareholder unit of the company and one of its founder shareholder. This factory is a popularly-run enterprise. １１ 2. Annual remuneration. (1) The remuneration of directors, supervisors and senior management personnel of the company shall be determined in accordance with the program approved by the Board of Directors, depending on their respective position, post and task completed. The total annual remuneration of the current directors, supervisors and senior management personnel is RMB 1,350,000, and the total remuneration for the top three directors (also the senior management personnel) is RMB 650,000. (2) During the report period, Mr. Liang Zhen and Ms Wu Jianhong, the independent directors of the company, have received no subsidy and other welfare from the company, but have been refunded the expenses on transportation and board and lodging for attending the board meeting of the company. In the new year, the company will give them the applicable welfare treatment according to the relevant regulations and the actual situation. (3) Division of annual remuneration for directors, supervisors and senior management personnel of the company: one between RMB 350,000 and 380,000, three between 100,000 and 150,000, and seven between 50,000 and 90,000. (4) Alfred K. N. Chong, the Vice Chairman of the Board of Directors, directors Liang Weidong, Shen Weiqiang and Ye Zaiyou, and supervisors Zhang Chaoyang and Chen Guanbiao, have received no remuneration nor subsidy from the company. Except for Ye Zaiyou who receives the remuneration from the shareholder unit as a shareholding director, no other director or supervisor has received any remuneration or subsidy from the shareholder unit and any other affiliated unit, but received the remuneration from his own work unit. 3. Director, supervisor and senior management personnel resigned during the report period. Name Former Post Reason of Resign Ma Yijun Executive Director Resign from his post of director because he is also the senior management personnel Li Dehua General Manager Assistant Retired at the expiration of his term of office (II) Staffs The company has the total staff members of 8300, including 7500 production personnel, 75 sales personnel, 310 technical personnel, 19 financial personnel, and 20 administrative personnel. There are 375 staff graduated from universities, colleges and polytechnic schools, and 205 retired staff. １２ 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 Regulatory 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 Securities Regulatory Committee 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. (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 appointed two independent director during the report period, and will appoint an independent director more in Jun., 2003, to bring the initiative of the independent director into full play. １３ (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 and Wu Jianhong, the independent directors of the company, have carefully performed their duties as the independent directors since they took their posts. They have attended all seven board meetings held this year, made the preparations and studies before hand after receiving the notice, and fully put forward their personal opinions to earnestly maintain the overall interests of the company. 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 １４ independent operation and independent auditing. １５ 4. Assessment and evaluation for senior management personnel during the report period and the execution of the incentive system. The Remuneration and Assessment Commission of the Board of Directors of the company has examined the operating result in 2001 according to the regulations in the “Implementation Plan for Share Incentive Funds for Senior and Middle-Rank Management Personnel of Foshan Electrical & Lighting Limited Company” passed by the Shareholders’ General Meeting of the company during the report period, appropriated RMB 14.02 million as the share incentive funds, appointed the intermediary unit to set up the enforcement regulations for share incentive funds, drawn up the allocation standard of personal incentive funds for senior and middle-rank management personnel and business and technical backbones based on assessment and appraisal, and submitted it to the Board of Directors of the company for approval. The senior and middle-rank management personnel and business and technical backbones of the company have started to purchase the circulating share (A share) of the company since Jan., 2003, and the company has fixed the shares purchased by the incentive funds. VI. Shareholders’ General Meeting The Shareholders’ General Meeting of 2001 was convened in the conference room on the third floor in North Area of the company on May 16, 2002. 1. Convene the Shareholders’ General Meeting. The announcement for convening the Shareholders’ General Meeting of 2001 of the Board of Directors of the company was published 30 days in advance on the China Security, Security Times, Ta Kung Pao (in Hong Kong) and Foshan Daily on Mar. 27, 2002. The Board of Directors of the company shall be responsible for convening the Shareholders’ General Meeting of 2001. There are 271 shareholders and proxies of shareholders attending the meeting, representing 108,229,568 shares, making up 30.19% of total capital stocks. Among them, there are 86 shareholders of B share, representing 2,604,020 shares of B share, making up 0.73% of total capital stock and complying with the relevant provisions in the “Company Law” and the “Articles of Association” of the company. １６ 2. Resolution of Shareholders’ General Meeting. The Shareholders’ General Meeting of 2001 passed 11 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 May 17, 2002. Director Chen Ziyun, the lawyer from Tianjue Law Firm, Guangdong presented 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 2001. 108,184,368 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 40,200 votes against and 5,000 votes abstention. (2) To review and pass the Business Report of the General Manager in 2001. 108,184,368 votes for, making up 99.96% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 40,200 votes against and 5,000 votes abstention. (3) To review and pass the Operation Report of the Board of Supervisors in 2001. 108,131,868 votes for, making up 99.91% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 70,700 votes against and 27,000 votes abstention. (4) To review and pass the Financial Report and the Profits Distribution Plan in 2001. 108,180,468 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 45,600 votes against and 3,500 votes abstention. The Profits Distribution Plan in 2001 is: the net profit audited by Zhengzhong Zhujiang Certified Public Accountants is taken, which is lower than that audited by KPMG Certified Public Accountants in HK . The minimum net profit realized by the company in 2001 is RMB 173,348,748.33, and the profit 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 65,286,015.16 as the undistributed profits of last year). Based on 358,448,259 shares of capital stock at the end of 2001, 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. 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. There will be no increase of capital stock transferred from surplus in 2001. １７ (5) To pass the resolution on cease of the establishment of the solely-invested plant in Langfang, Hebei 108,169,318 votes for, making up 99.94% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 40,200 votes against and 20,050 votes abstention. (6) To pass the resolution on amending the some articles in the “Articles of Association” of the company. 108,153,294 votes for, making up 99.93% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 40,200 votes against and 36,074 votes abstention. (7) To pass the resolution on adjusting the individual member of the Board of Directors and electing Ms. Wu Jianhong as the independent director. 108,099,456 votes for, making up 99.88% of the shares represented by the shareholders attending the meeting, including 2,577,420 shares of B share, 83,300 votes against and 46,812 votes abstention. (8) To pass the resolution on establishing the special commission of the Board of Directors and drawing up the enforcement regulations. 108,107,968 votes for, making up 99.89% of the shares represented by the shareholders attending the meeting, including 2,534,420 shares of B share, 63,200 votes against and 58,400 votes abstention. (9) To pass the resolution on establishing the share incentive system for senior and middle-rank management personnel and authorizing the Board of Directors to implement it. 108,040,431 votes for, making up 99.83% of the shares represented by the shareholders attending the meeting, including 2,504,420 shares of B share, 149,875 votes against and 39,262 votes abstention. (10) To pass the resolution on introducing the production equipment and technical software for high-strength gas discharging metal halogen lamps. 108,171,605 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 40,200 votes against and 17,763 votes abstention. (11) To pass the resolution on renewing Zhengzhong Zhujiang Certified Public Accountants in Guangdong and KPMG Certified Public Accountants in Hong Kong as the financial accounting institutes of the company in 2002. 108,173,756 votes for, making up 99.95% of the shares represented by the shareholders attending the meeting, including 2,604,020 shares of B share, 40,200 votes against and 15,612 votes abstention. １８ 3. Change and replacement of directors and supervisors. Ms. Wu Jianhong was elected the independent director of the company on the Shareholders’ General Meeting in 2001 held on May 16, 2002. The application of Mr. Ma Yijun for resigning his post of the director because he is the senior management personnel at the same time was approved. The experience of Ms. Wu Jianhong, the independent director, was published on the China Security, Security Times, Ta Kung Pao (in Hong Kong) and Foshan Daily on Mar. 27, 2002. VII. Report of the Board of Directors (I) Brief analysis of financial status. The company has made a steady business development during the report period, without any significant change on the main financial indices. (II) 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 2002, the company has made a constant and fast development in its production and business. Despite of the falling of prices for some products like T8, braking light, turning light and instrument light, because the company has quickened the expansion of its production scale, and strictly controlled its business cost, 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 improve its economic growth speed and benefits. The total bulb output of the year has increased by 15.11% than that of last year, and the gross industrial output value has increased by 19.72%. It has earned over USD 33 million foreign exchange, 20.27% more than last year. Main business income realized is RMB 957 million, increasing by 16.73% than that of last year, and the main business profits is RMB 353.84 million, increasing by 31.03%, and making up 145.61% of the total profits of the company. The company continues to keep the advantageous trend of constant stable increase, and there is no change of its main business compared with last year. １９ (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 total assets of RMB 12 million. Liangke Investment Co., Ltd., Shenzhen, was incorporated in Nov., 2000, with the registered capital of RMB 80 million. Foshan Electrical & Lighting has made investments of RMB 30 million in total, making up 37.5% 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 two year of capital operation, it has achieved a certain results, although it has had a loss of RMB 1.15 million during the report period. 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 and Zhujiang Property Management Company in Guangzhou. Except Zhujiang Property Management Company in Guangzhou has made no profit distribution because of loss, 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 15.23% of the total purchasing amount of the year, and the sales amount of the top five clients made up 14.78% 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. To outcome these problems, the company shall (i) greatly develop technical innovation, improve the process and production efficiency, reduce the staff and promote the efficiency at the same time, and reduce ２０ the production cost of products; (ii) 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; (iii) 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, make T8 fluorescent lamp as the leading product of the company, and expand the market coverage; and (iv) 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. (III) 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 projects disclosed in the Prospectus (except the supplementary current funds). As at Dec. 31, 2002, RMB 534 million has already been invested, with RMB 133 million raised funds remained and deposited in the special account for funds raised by shares established by our company with the Bank of China, Foshan Branch. l The investment projects and use of funds are detailed as follows: Unit: RMB 10,000 Item For short Investment Investment Cumulative Funds not invested subscribed of this term investment 1 T8 19,500 8,932 19,873 -373 2 T5 19,200 832 11,265 7,935 3 Double loop 2,940 930 2,384 556 4 Test center 2,962 1,942 2,998 -36 5 Three kilns 2,920 466 2,036 884 6 Tube-pulling production line 2,944 182 2,026 918 7 Filament and lead 2,950 1,493 3,141 -191 8 Power facilities 2,900 644 2,461 439 9 Environment & fire-fighting 2,800 242 2,762 38 10 Current funds 7575.5 40 4,460 3,115.5 Total 66691.5 15,703 53,406 13,285.5 (2) Progress of investment projects: the projects for T8 energy-saving fluorescent lamps have made the fast progress, with 14 production lines introduced, which will be been put into production all within this year. The company has also introduced two production lines for T5 fluorescent lamps, which have been put into production both. It has also gradually increased the varieties for auxiliary luminaires, and formed the ability of trial production in batch. The supporting projects including the test center for fluorescent lamps, kilns, tube-pulling lines, filaments and leads and power facilities, and auxiliary environmental protection and fire-fighting engineering have largely completed according to the investment plan. ２１ The company plans to further introduce two production lines for T5 fluorescent lamps, and has parts of funds unused. It will introduce the equipment and put them into operation as soon as possible in line with the market situation. There is no change in the actual investment projects. ２２ (3) Benefits from investment projects: there was three production lines for T8 fluorescent lamps, together with the 14 ones just put into production, there are currently 17 under production, increasing the monthly output of T8 fluorescent lamps 10 million pieces. 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 89 million pieces, 48.33% more than those in 2001, and earning the profits of 69.7% more. 2. Investment of self-possessed funds. Invest USD 3.6 million to introduce a production line for metal halogen lamps from US and relevant technical software. The production line is currently under installation and commission, and is planed to put into operation in Mar., 2003. (IV) Financial situation and business results. The financial target of the company completed and the main reasons for change with last year: Unit: RMB10,000 Target At end of 2002 At end of 2001 Change Proportion of change (%) Total assets 235,954 224,358 11,596 5.17 Shareholders’ equity 212,384 204,863 7,521 3.67 Main business profit 36,339 28,209 8,130 28.82 Net profits 21,858 18,935 2,923 15.44 Net increase of cash & cash equivalent 10,113 12,320 -2,207 -17.91 l The total assets have increased by RMB 115.96 million, mainly due to the increase of shareholders’ equity and the monetary funds. l The shareholders’ equity has increased by RMB 77.21 million, mainly due to the profit distribution of this year. l The main business profits have increased by RMB 81.30 million, mainly due to the continuous increase of sales income this year, the reduce of cost, and the change of tax policy for export products as “tax exemption, setoff and rebate” now. l The net profits have increased by RMB 29.23 million, mainly due to the increase of main business profits. l The cash and cash equivalent have reduced by RMB 22.07 million, mainly due to the increase of net cash flow from the investment activity than that of last year. (V) Business plan in the new year. (1) 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. ２３ (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 suit 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 and reduce the consumption. It shall also improve the energy-consuming equipment by 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 well, and fully mobilize their activity in production. The company will arrange more training for its employees, and improve their professional 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. (6) Arrange and implement the share incentive funds according to the “Implementation Plan for Share Incentive Funds for Senior and Middle-Rank Management Personnel”, standardize it and carry it in real earnest, stabilize and attract more talents, and promote the long-term steady development of the company. ２４ (VI) 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 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 reduced, 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. (VII) 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 Board of Directors have held 7 board meetings within this year. The contents of the meetings and resolutions are: (1) The fourth meeting of the 3 rd Board of Directors of this company was held on Mar. 25, 2002. Nine directors of the nine who should attend the meeting actually attended the meeting (including one independent director). All supervisors of the Board of Supervisors and senior management personnel of the company attended the meeting as the observers. The attendants discussed the relevant issues carefully, and passed the following resolutions unanimously: l Examine and pass the 2001 Annual Report and Summary of 2001 Annual Report of the company (both Chinese and English versions) l Examine and pass the operation report of the Board of Directors of 2001. l Examine and pass the business report of the General Manager of 2001. l Examine and pass the final report and the draft profits distribution plan of 2001 ２５ The draft plan for profits distribution of 2001: according to the net profit audited by Zhengzhong Zhujiang Certified Public Accountants, Guangdong (which is lower than that audited by KPMG Certified Public Accountants 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 65,286,015.16 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 4.0 (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 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 2002 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 two reserves will be used for dividend distribution. The Board of Directors of the company will adjust the profit distribution policy of 2002 according to the actual business operation of the company. l Resolution on cease of the establishment of the solely-invested plant in Langfang, Hebei The resolution on establishing the solely-invested plant in Langfang, Hebei was reviewed and passed in the Shareholders’ General Meeting held in Jun., 1998. It was planned to complete the construction in three phases from 1998 to 2003 by self-owned assets of RMB 90 million in total, and set up a plant to mainly produce ordinary bulbs and ball decorative bulbs. It started the installation of equipment in Mar., 1999, and put three production lines into operation in Oct., 1999. It was planned to continue the development and expand the production scale, however, because the local environment is inapplicable for the investment and development of the company, the company had to stop the production, and disassemble and move the production lines already installed to Foshan for installation and production. ２６ l Resolution on amending the some articles in the “Articles of Association” of the company. Amend the articles 49, 67, 68, 93 and 112 based on the actual situation of the company according to the requirements in the “Management Rules for Listed Company” and the proposal from the Guangzhou Securities Control Office of the China Securities Regulatory Committee during its inspection tour in 2001. --- Article 49: The shareholder may attend the Shareholders’ General Meeting personally, or appoint a proxy to attend and vote. The shareholder shall appoint the proxy in writing, and sign the letter of authorization by him/her or any other proxy already authorized in writing. For the shareholder who is a corporate, affix the seal of the corporate or signed by the proxy formally authorized. Changed to: Article 49: The shareholder may attend the Shareholders’ General Meeting personally, or appoint a proxy to attend and vote. The Board of Directors, independent director and any shareholder complying with the relevant conditions of the listed company may acquire the right vote of any shareholder of the listed company on the Shareholders’ General Meeting. The right of vote shall be acquired free by fully disclosing the relevant information to the acquired. The shareholder shall appoint the proxy in writing, and sign the letter of authorization by him/her or any other proxy already authorized in writing. For the shareholder who is a corporate, affix the seal of the corporate or signed by the proxy formally authorized. --- Article 67: Main existing problems: (1) The way of nomination by shareholders to the candidates of directors and supervisors has not set up; (2) The regulation that the candidates of supervisors shall be nominated by the Board of Directors does not comply with the provisions in the “Company Law” and the “Guidance for Articles of Association of Listed Company”; (3) The regulation that “the shareholder holding 5% of the issued shares (jointly) of the listed company may nominate the candidate of the independent director” does not comply with the requirements of the China Securities Regulatory Committee in the “Instruction Opinion for Independent Director System in the Listed Company”. Changed to: Article 67: The candidates of directors shall be nominated by the Board of Directors after discussion, or nominated by the shareholder holding at least 5% of the issued shares of the company (independently or jointly), reviewed by the Board of Directors, and submitted to the Shareholders’ General Meeting as the resolution. ２７ The candidates of the independent director shall be nominated by the Board of Directors, Board of Supervisors, and the shareholder holding at least 1% of the issued shares of the company (independently or jointly), reviewed by the Board of Directors, and submitted to the Shareholders’ General Meeting as the resolution. The candidates of supervisors as the representative of the staffs shall be nominated by the Labor Union Committee of the company, and elected democratically in the Worker’s Representative Assembly. The candidates of supervisors as the representative of shareholders shall be nominated by the Board of Supervisors or the shareholder holding at least 5% of the issued shares of the company (independently or jointly), reviewed by the Board of Supervisors, and submitted to the Shareholders’ General Meeting as the resolution. The Board of Directors and the Board of Supervisors shall submit the experiences and basic conditions of all nominated directors, independent directors and supervisors. --- Article 68: registered ballot is taken for vote on the Shareholders’ General Meeting. Changed to: Article 68: Registered ballot is taken for vote on the Shareholders’ General Meeting. For the election of the directors, cumulative ballot system shall be adopted, i.e., each shareholder or representative of shareholder with the right of vote may cast his/her votes corresponding to all director candidates for one candidate of director, or scatter his/her votes for any/several desirous candidates of director. Decide the directors selected based on the votes acquired. --- Article 93: The Board of Directors is composed of 9 director, including one Chairman of the Board, one Vice Chairman and one independent director. Changed to: Article 93: The Board of Directors is composed of 9 director, including one Chairman of the Board, one Vice Chairman and two independent directors (including one professional accounting personnel). --- Article 112: The company has one independent director. Changed to: Article 112: The company has two independent directors. l Resolution on adjusting the individual member of the Board of Directors and electing the new independent director. ２８ It is set forth in the Articles of Association of the company that the Board of Directors of the company is currently composed of 9 directors, including on independent director. According to the requirements of the China Securities Regulatory Committee in the “Instruction Opinion for Independent Director System in the Listed Company”, there must be 2 independent directors in the Board of Directors of any listed company before Jun. 30, 2002. Therefore, the company has adjusted the individual member of the Board of Director to increase one independent director while maintaining the number of 9 directors set forth in the Articles of Association of the company. In such circumstance, Mr. Ma Yijun, the executive director proposed to resign his post of the executive director because he is also the senior management personnel of the company as the same time. As for the nomination of the candidate of the independent directory, a decision was made on the 3rd meeting of the 3rd Board of Directors in Nov., 2001, i.e., to nominate the candidates of the independent director majoring in accounting outside the company by the Board of Directors, Board of Supervisors, and the shareholder holding at least 1% of the issued shares of the company (independently or jointly). By recommendation and nomination, Ms. Wu Jianhong has become the candidate of independent director majoring in accounting of the company. l Resolution on investment on national debt by idle funds. To improve the utilization rate of the idle funds in the company, and avoid the risks on the market, the company will invest its idle funds on the national debts, to acquire the proceeding higher than the saving interest in the bank. The company shall strictly carry out the control system for short-term investment, and guarantee the safe and profitable idle funds. l Resolution on establishing the special commission of the Board of Directors and drawing up the enforcement regulations. In accordance with the “Management Rules for Listed Company”, the Board of Directors of the company shall set up the special commissions in strategy, audit, nomination, remuneration and assessment. All members of these special commissions shall be the directors. The numbers of members of each special commission shall be: 4 in Audit Commission, 3 in Nomination Commission, 4 in Remuneration and Assessment Commission, and 3 in Strategy Commission. In the Audit Commission, Nomination Commission, and Remuneration and Assessment Commission, the independent directors shall be the majority and the convener, and one independent director in the Audit Commission shall be the professional accounting personnel. Each special commission may appoint the intermediary unit to provide the professional opinion at the cost of the company. The special commissions shall be responsible for the Board of Directors, and submit all resolutions to the Board of Directors for assessment and decision. ２９ Each special commission shall operate in accordance with the enforcement regulations set forth by the Board of Directors of the company. l Resolution on establishing the share incentive system for senior and middle-rank management personnel and authorizing the Board of Directors to implement it. To deepen the internal allocation system of the company , perfect and incentive and restriction system, stabilize the business management backbones, and promote the long-term stable development of the company, in accordance with the relevant documents and speeches from the China Securities Regulatory Committee, the provincial government of Guangdong and the municipal government of Foshan, and by referring to the practices in some listed companies, the Board of Directors has decided to set up the share incentive system for senior and middle-rank management personnel, and submit it to the Shareholders’ General Meeting for approval. The annual net return on assets of 6% shall be taken as the base number for the assessment index of the share incentive funds. No funds will be appropriated for the annual return below 6%. For the net return of 6% and more, 5% of the net profits realized shall be drawn, and the appropriation of the incentive funds shall increase with the increase of net return on assets in synchronization. For example, as the net return on assets increased every 1% on the basis of such 6%, the share incentive funds will also increase by 1% on the basis of such 5%, and so on and so forth. The amount appropriated shall be included in the production cost of this year. This program shall be started in the fiscal year of 2001 under the arrangement and management of the Board of Directors authorized by the Shareholders’ General Meeting. Draw the share incentive funds based on the actual results assessed, and include it into the operating cost of 2002. The enforcement regulations and remuneration concerned shall be drafted by the Assessment Commission, and approved by the Board of Directors. The Board of Directors shall be responsible for the assessment of share incentive funds, and the appropriation and allocation of funds under the authorization of the Shareholders’ General Meeting. l Resolution on introducing the production equipment and technical software for high-strength gas discharging metal halogen lamps. ３０ The high-strength gas discharging metal halogen lamp is kind of new high-tech and energy-saving electro-optical product of high added value, and is a new brilliance in electro-optical products in the future with bright market prospect. This product is applicable for stadium, highway, expressway, airport, harbor, railway, plaza, signboard and urban lightening project. Currently, there are more than 10 domestic manufacturers for metal halogen lamps, but only two or three of them have made the quality products recognized on the market. These two or three manufacturers have introduced the advanced equipment and technical software from US, and this is the main reason for their success. To strengthen the future development of the company, and occupy the market as soon as possible, the company will invest USD 3.6 million to introduce the complete set of production equipment and technical software for single-end and double-end metal halogen lamps from US, and produce at least 1 million of metal halogen lamps each year, to create the new growth point of profit for the company. l Resolution on renewing Zhengzhong Zhujiang Certified Public Accountants in Guangdong and KPMG Certified Public Accountants in Hong Kong as the financial accounting institutes of the company in 2002. l Decide to hold the Shareholders’ General Meeting of 2002 on May 16, 2002 (Thursday). (2) On Apr. 24, 2002, the 3 rd Board of Directors convened its 5 th meeting, and examined the resolutions by communications and faxes. Nine directors attended gave the votes for such resolutions, complying with the relevant provisions set forth in the “Company Law” and the “Articles of Association” of the company. The attendants examined and passed the report of the 1st quarter in 2002 of Foshan Electrical & Lighting Company Limited. (3) The 3 rd Board of Directors of the company convened its 6 th board meeting on May 16, 2002, all nine directors who should attend the meeting attending the meeting (including two independent directors). The attendants discussed and passed the composition of each special commission of the Board of Directors based on the decision of the Shareholders’ General Meeting of 2001 on setting up the special commissions of the Board of Directors, and decided that all special commissions shall start their performance and operation from that day on. (4) On Jun. 17, 2002, the 3 rd Board of Directors convened its 7 th meeting, and examined the resolutions by communications and faxes. Nine directors attended gave the votes for such resolutions. The attendants examined and passed the resolution on setting up the self-inspection report of modern enterprise system for listed company. It was decided by the Board of Directors that the self-inspection report complies with the actual situation of the company, and that the Board of Directors shall hold the responsibility for its truthfulness. ３１ (5) The 3 rd Board of Directors of the company convened its 8 th board meeting on Jun. 25, 2002, all nine directors who should attend the meeting attending the meeting. In accordance with the decision of the Shareholders’ General Meeting of 2001 on establishing the share incentive system for senior and middle-rank management personnel and authorizing the Board of Directors to arrange and implement such system, and to further standardize the share incentive system of the company, the Board of Directors of the company decided: l According to the regulations set forth in the “Implementation Plan for Share Incentive Funds for Senior and Middle-Rank Management Personnel”, the Remuneration and Assessment Commission of the Board of Directors will refer to the conditions for the plan of share incentive funds according to the business result of 2001 audited by the certified public accountant’s office, calculate the amount of share incentive funds, and appropriate such amount based on the relevant regulations. l Appoint the intermediary professional consulting unit to provide the consulting service for the implementation of such share incentive system, assist the company to design and draw up the details methods and enforcement regulations for the share incentive system, and make the implementation of plan of the share incentive funds fair, reasonable, standard and legal. l The Remuneration and Assessment Commission will work out the distribution program of the incentive funds in accordance with the enforcement regulations and detailed methods drafted by the intermediary professional consulting unit, and distribute the incentive funds based on the assessment result. l The distribution program of the incentive funds will become enforceable so long as it was submitted by the Remuneration and Assessment Commission and approved by the Board of Directors. (6) The 3 rd Board of Directors of the company convened its 9 th board meeting on Aug. 15, 2002, eight of nine directors who should attend the meeting attending the meeting (including two independent directors). Mr. Liang Weidong asked for leave for business, and authorized another director to vote on behalf of him. All supervisors and senior management personnel of the company attended the meeting as the observers. The attendants reviewed and passed the following resolution unanimously: l Review and pass the interim report of 2002 and its summary of the company of 2002 (in Chinese and English versions). l Review and pass the interim profit distribution plan of 2002, and decide not to make any interim profit distribution, nor increase of capital stock by ３２ surplus. ３３ (7) On Nov. 23, 2002, the 3rd Board of Directors convened its 10 th meeting, and examined the resolutions by communications and faxes. Nine directors (including two independent directors) attended gave the votes for such resolutions. The attendants examined and passed the report of the 3rd quarter in 2002 of Foshan Electrical & Lighting Company Limited. 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 eleven resolutions passed in the Shareholders’ General Meeting of 2001, eleven resolutions (including the profit distribution plan) have been carried out completely. The Board of Directors has made the assessment and allocation set forth in the plan of share incentive funds for senior and middle-rank management personnel of the company under the authorization. The senior and middle-rank management personnel and business and technical backbones of the company have started to purchase the circulating share (A share) of the company since Jan., 2003, and the company has fixed the shares purchased by the incentive funds. (VIII) Draft profits distribution plan of 2002 According to the net profit audited by Zhengzhong Zhujiang Certified Public Accountants, Guangdong (which is lower than that audited by KPMG Certified Public Accountants in Hong Kong), the minimum net profits realized of the company in 2002 is RMB 204,819,357.27. The profits available for distribution to shareholders this year after deducting 10% of legal surplus and 5% of public welfare funds is RMB 222,867,665.55 (including RMB 69,253,147.60 as the undistributed profits of last year) Based on 358,448,259 shares of capital stock at the end of 2002, the Board of Directors of the company will distribute RMB 4.20 (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 150,548,268.78, and the remaining RMB 72,319,396.77 will be carried forward to the next year for distribution. There is no increase of capital stock by surplus in 2002. 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. ３４ (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 is 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 report period, the Board of Supervisors has convened two 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 4 th meeting of the 3 rd Board of Supervisors of 2002 was held on Mar. 26, 2002, with all five supervisors attending the meeting. Mr. Huang Yazheng, the Chairman of the Board of Supervisors presided the meeting. The attendants reviewed and passed the following resolutions: l Examine and pass the 2001 Annual Report and Summary of 2001 Annual Report of the company. l Examine and pass the operation report of the Board of Supervisors of 2001. l Examine and pass the final report and the draft profits distribution plan of 2001. l Examine the audit report (without any reservation) issued by Zhengzhong Zhujiang Certified Public Accountants in Guangzhou and KPMG Certified Public Accountants in HK, and think that the financial report has objectively, truly and accurately reflected the financial status and business result of the company. (2) The 5 th meeting of the 3 rd Board of Supervisors of 2001 was held on Aug. 15, 2002. The attendants examined and passed the text and summary of the interim report of 2002, and the resolution on making on interim profit distribution, nor increase of capital stock by surplus in the last half of 2002. ３５ 2. Independent opinion of the Board of Supervisors. (1) Legal operation of the company: it can carry out the strict 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 status of the company. The Board of Supervisors believed that the audit reports and relevant notes made by Zhengzhong Zhujiang Certified Public Accountants, Guandong and KPMG in HK 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 projects disclosed in the Prospectus (except the items of current funds), and the actual investment has no difference with the items disclosed in the Prospectus. As at Dec. 31, 2002, raised funds of RMB 534.06 million has already been invested, with RMB 132.85 million remained and 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 14 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. Most of the supporting projects such as the test center for fluorescent lamps, kilns, tube-pulling lines, filaments and leads, power facilities, and auxiliary environmental protection and fire-fighting works have been completed, some even surpassed the production target. Benefits have achieved from the investment projects during the report period: there are currently 17 production lines for T8 fluorescent lamps, with the total monthly output of 10 million pieces. The monthly output of T5 fluorescent lamps has already reached 500,000 pieces. The T8 fluorescent lamps of the company are ３６ still out of demand, and are sold well in the market. ３７ (4) During the report period, our company has no transaction for purchase and sales of assets nor the related transaction. (5) Zhengzhong Zhujiang Certified Public Accountants, Guangdong and KPMG Certified Public Accountants in HK have issued the audit report without any reservation to the financial report of the company of 2002. IX. 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 Certified Public Accountants in HK as its accountants firms. Zhengzhong Zhuangjiang Certified Public Accounts, Guangdong has served the company for continuous 9 years, while KPMG Certified Public Accountants in HK has served the company for continuous 7 years. The remuneration paid by the company to such two accountants firms are the remuneration standard for financial auditing during the report period is RMB 280,000 to Zhengzhong Zhuangjiang Certified Public Accounts, Guangdong, and HKD 560,000 for KPMG in HK. 6. No company, the Board of Directors of the company or any director has been checked by the China Securities Regulatory 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. ３８ X. Financial Report essssssss(Established in the People’s Republic of China with limited liability) Report of the auditors to the shareholders of Foshan Electrical and Lighting Company Limited Respective responsibilities of directors and auditors We have audited the accompanying consolidated balance sheet of Foshan Electrical and Lighting Company Limited and its subsidiaries (the “Group”) as of 31 December 2002 and the related consolidated statements of income and cash flows for the year then ended on pages 2 to 26. 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. Basis of opinion 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. Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2002, and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards promulgated by the International Accounting Standards Board. Certified Public Accountants Hong Kong, 26 March 2003 ３９ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 (Expressed in Renminbi Yuan) Consolidated income statement for the year ended 31 December 2002 Note 2002 2001 Rmb Rmb Revenue 2 953,453,964 827,662,639 Cost of sales (590,068,720) (545,573,662) Gross profit 363,385,244 282,088,977 Other operating income 4 7,408,237 7,483,397 Selling expenses (37,205,759) (29,029,013) Administrative expenses (87,151,988) (45,003,265) Other operating expenses 5 (11,557,898) (12,150,947) Profit from operations 234,877,836 203,389,149 Net financial income 7 4,405,114 7,992,605 Net investment income 8 16,922,497 4,223,250 Share of (loss)/profit of associate (1,022,072) 77,082 Profit from ordinary activities before taxation 255,183,375 215,682,086 Income tax expense - company and subsidiaries 9(a) (37,406,946) (26,311,973) - associate - (16,107) Profit from ordinary activities after taxation 217,776,429 189,354,006 Minority interests 805,894 - Profit attributable to shareholders 19 218,582,323 189,354,006 =========== =========== Basic earnings per share 23 0.61 0.53 =========== =========== No separate consolidated statement of recognised gains and losses has been prepared as the net profit for the year would be the only component of this statement. ４０ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 The notes on pages 8 to 26 form part of these financial statements. ４１ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 (Expressed in Renminbi Yuan) Consolidated balance sheet at 31 December 2002 Note 2002 2001 Rmb Rmb ASSETS Non-current assets Property, plant and equipment 10 623,742,316 530,160,980 Lease prepayments 11 111,994,038 104,328,037 Construction in progress 12 69,364,002 68,408,100 Investment in an associate 13 29,038,903 30,060,975 Other investments 14 100,086,416 121,902,341 Deferred tax assets 15 11,409,198 9,831,084 945,634,873 864,691,517 -------------------- -------------------- Current assets Other investments 14 15,932,055 81,110,785 Inventories 16 101,063,851 109,831,674 Trade receivables 108,055,460 92,770,655 Deposits, prepayments and other receivables 17 20,957,004 28,407,474 Cash and cash equivalents 18 1,167,898,471 1,066,769,584 1,413,906,841 1,378,890,172 -------------------- -------------------- Total assets 2,359,541,714 2,243,581,689 ============ ============ The notes on pages 8 to 26 form part of these financial statements. ４２ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 (Expressed in Renminbi Yuan) Consolidated balance sheet at 31 December 2002 (continued) Note 2002 2001 Rmb Rmb EQUITY, MINORITY INTERESTS AND LIABILITIES Capital and reserves Share capital 358,448,259 358,448,259 Share premium 1,186,000,059 1,186,000,059 Other reserves 579,387,896 504,184,877 19 2,123,836,214 2,048,633,195 -------------------- -------------------- Minority interests 5,149,083 5,954,977 -------------------- -------------------- Current liabilities Trade payables 93,229,8 61 66,028,660 Taxation 9(c) 28,945,157 28,096,753 Accruals and other payables 20 59,828,485 55,451,981 Salaries, bonus and staff welfare payables 48,552,914 39,416,123 230,556,417 188,993,517 -------------------- -------------------- Total equity, minority interests and liabilities 2,359,541,714 2,243,581,689 ============ ============ Approved and authorised for issue by the board of directors on 26 March 2003 ) ) ) Directors ) ) ４３ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 The notes on pages 8 to 26 form part of these financial statements. ４４ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 Consolidated statement of cash flows for the year ended 31 December 2002 (Expressed in Renminbi Yuan) Note 2002 2001 Rmb Rmb Rmb Rmb Operating activities Profit from ordinary activities before taxation 255,183,375 215,682,086 Adjustments for: - Dividends income (3,053,523) (2,333,799) - Interest income (6,225,334) (9,402,512) - Loss on disposal of property, plant and equipment 9,370,302 1,178,165 - (Gain)/loss on disposal of land use right (4,847,080) 2,460,442 - Depreciation and amortisation 88,904,596 68,691,867 Impairment loss on property, plant and equipment - 6,541,558 - Revaluation of investments held for trading to fair value (2,309,852) 33,652,261 - Provision for diminution in value of investments available-for-sale 3,000,000 1,000,000 - Gain on disposal of an associate - (1,758,728) - Gain on disposal of an investments (14,559,122) (34,782,984) - Share of loss/(profit) of an associate 1,022,072 (77,082) Operating profit before working ４５ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 capital changes 326,485,434 280,851,274 Decrease in 8,767,823 2,121,614 inventories Increase in trade receivables (15,284,805) (27,186,394) ４６ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 Consolidated statement of cash flows (Expressed in Renminbi Yuan) for the year ended 31 December 2002 (continued) Note 2002 2001 Rmb Rmb Rmb Rmb Operating profit before working capital changes (continued) Decrease in deposits, prepayments and other receivables 7,450,470 88,132,004 Increase/(decrease) in trade payables 27,201,201 (4,399,909) Decrease in accruals and other payables (91,976) (5,463,983) Increase in salaries, bonus and staff welfare payables 9,136,791 9,098,196 Cash generated from operations 363,664,938 343,152,802 PRC tax paid (38,136,656) (75,959,776) Cash flows from operating activities 325,528,282 267,193,026 Investing activities Interest received 6,225,334 9,402,512 Dividends received 3,053,523 4,899,357 Purchase of property, plant and equipment (43,545,196) (17,268,867) Increase in lease prepayments (24,525,456) (30,000,000) Increase in construction in progress (151,619,837) (124,102,086) Purchase of (13,622,203) (164,183,042) investments Proceeds from disposal of associate - 17,032,159 Proceeds from disposal ４７ of other investments 114,485,833 245,970,687 Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 (Expressed in Renminbi Yuan) Consolidated statement of cash flows for the year ended 31 December 2002 (continued) Note 2002 2001 Rmb Rmb Rmb Rmb Investing activities (continued) Proceeds from disposal of land use right 19,608,686 5,479,957 Proceeds from disposal of property, plant and equipment 8,919,225 - Maturity of deposits with banks and other financial institutions maturing over three months - 70,000,000 Acquisition of an associate - (20,000,000) Cash flows from investing activities (81,020,091) (2,769,323) Financing activities Dividends paid (143,379,304) (141,219,903) Cash flows from financing activities (143,379,304) (141,219,903) Net increase in cash and cash equivalents 101,128,887 123,203,800 Cash and cash equivalents at 1 January 1,066,769,584 943,565,784 Cash and cash equivalents at 31 December 18 1,167,898,471 1,066,769,584 =========== =========== ４８ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 The notes on pages 8 to 26 form part of these financial statements. ４９ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 (Expressed in Renminbi Yuan) Notes on the financial statements 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 2002 comprise the Company and its subsidiaries (together referred to as the “Group”). (a) Statement of compliance The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) promulgated by the International Accounting Standards Board (“IASB”). IFRS includes International Accounting Standards (“IAS”) and related interpretations. (b) Basis of preparation The consolidated financial statements are prepared on the historical cost basis except that property, plant and equipment were stated at their revalued amount as stated in note 10 and investments held for trading were stated at their fair value. The accounting policies have been consistently applied by the Group. The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. (c) Basis of consolidation (i) 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. (ii) 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. ５０ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 1 Significant accounting policies (continued) (c) Basis of consolidation (continued) (iii) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised 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. (d) 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. (e) Property, plant and equipment Property, plant and equipment are stated at cost or valuation (see note 10) less accumulated depreciation and impairment losses (see note 1(l)). 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. When an asset’s carrying amount is increased as a result of a revaluation, the increase is credited directly to equity under the component of revaluation reserve. However, a revaluation increase is recognised as income to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense. When an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised as an expense in the consolidated income statement. However, a revaluation decrease is charged directly against any related revaluation surplus to the extent that the decrease does not exceed the amount held in the revaluation reserve in respect of that same asset. Revaluations are 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. 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. ５１ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 1 Significant accounting policies (continued) (e) Property, plant and equipment (continued) 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 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. (f) Lease prepayments Lease prepayments represent land use rights paid to the PRC’s land bureau. Land use rights are carried at cost and amortised on a straight-line basis over the respective periods of the rights which range from 40 years to 50 years. (g) 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 (see note 1(l)). 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. (h) Investments 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 are stated at cost, less provision for impairment losses (see note 1(l)). A provision is made where, in the opinion of management, there is an impairment in the value of an investment. The fair value of investments held for trading is their quoted bid price at the balance sheet date. ５２ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 1 Significant accounting policies (continued) (h) Investments (continued) 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. (i) Inventories 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. 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 production overheads. (j) Trade and other receivables Trade and other receivables are stated at their cost less allowance for any amounts expected to be irrecoverable. All allowance is provided for based upon the evaluation of the recoverability of these accounts at the balance sheet date. (k) Cash and cash equivalents Cash and cash equivalents comprise cash balances and deposits with banks and other financial institutions, maturing within three months. (l) Impairment The carrying amounts of the Group’s assets, other than inventories (see note 1(i)), deferred tax assets (see note 1(o)) and financial assets stated at fair value, 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. (i) 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. ５３ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 1 Significant accounting policies (continued) (l) Impairment (continued) (ii) Reversals of impairment 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. (m) 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. (n) Dividends Dividends are recognised as a liability in the period in which they are declared. (o) Income tax 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. 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. 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. ５４ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 1 Significant accounting policies (continued) (p) Revenue recognition 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. Dividend income is accounted for when the shareholder’s right to receive payment is established. Interest income from bank deposits is accrued on a time-apportioned basis on the principal outstanding and at the rate applicable. (q) 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. (r) 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 manufacture and sale 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 manufacture and sale of electrical lightings in the PRC. Accordingly, no segmental analysis is provided. 4 Other operating income 2002 2001 Rmb Rmb Income from sale of raw materials 568,516 1,895,827 Rental income 268,721 435,322 Gain on disposal of land use rights 4,847,080 - Others 1,723,920 5,152,248 7,408,237 7,483,397 ========== ========== ５５ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 5 Other operating expenses 2002 2001 Rmb Rmb Loss on disposal of property, plant and 9,370,302 1,178,163 equipment Impairment loss on property, plant and equipment - 6,541,558 Loss on disposal of land use right - 2,460,442 Others 2,187,596 1,970,784 11,557,898 12,150,947 ========== ========== 6 Personnel expenses 2002 2001 Rmb Rmb Salaries and staff welfare 113,370,743 82,850,843 Senior management incentive scheme payment (note (i)) 31,012,914 - Contribution to defined contribution plans (note (ii)) 6,021,513 7,030,574 150,405,170 89,881,417 ========== ========== Notes: (i) Pursuant to a resolution passed in the Board Meeting held on 25 March 2002 and the approval by the shareholders in the Annual General Meeting (“AGM”) held on 16 May 2002, the Company established a Senior Management Incentive Scheme (the “Scheme”). According to the Scheme, incentive payments are to be made to the senior management when the Company’s return on net assets for the year is 6% or above, which is measured based on the Company’s annual net profit determined under PRC accounting standards. No incentive payments would be made if the return on net assets is less than 6%. The Scheme was effective from 2001 retrospectively. In 2002, provisions for incentive payments of RMB14 million and RMB17 million have been made in relation to the years of 2001 and 2002, respectively, and the amounts of provisions are included in 2002 administrative expenses. ５６ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 6 Personnel expenses Notes: (continued) (ii) Certain employees of the Group participate in a defined contribution retirement scheme operated by the PRC municipal government. The Group is required to contribute to the scheme at a rate of 15% (2001: 14%) of salary costs. 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 2002 2001 Rmb Rmb Interest income 6,225,334 9,402,512 Bank charges and other financial expenses (1,611,844) (1,181,264) Exchange loss (208,376) (228,643) Net financial income 4,405,114 7,992,605 ========== ========== 8 Net investment income 2002 2001 Rmb Rmb Gain on disposal of investments 14,559,122 34,782,984 Dividends income 3,053,523 2,333,799 Net unrealised gains/(losses) of investments held for trading carried at fair value 2,309,852 (33,652,261) Provision for diminution in value of investments available-for-sale (3,000,000) (1,000,000) Gain on disposal of an associate - 1,758,728 16,922,497 4,223,250 ========== ========== ５７ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 9 Income tax expense (a) Taxation in the consolidated income statement represents: 2002 2001 Rmb Rmb Current tax expense Provision for PRC income tax for the year 38,985,060 37,651,077 Overprovision of PRC income tax relating to prior years written back - (1,491,913) 38,985,060 36,159,164 ----------------- ----------------- Deferred tax income Origination and reversal of temporary difference (note 15) (1,578,114) (9,831,084) ----------------- ----------------- Total income tax expense in the consolidated income statement 37,406,946 26,328,080 ========== ========== The charge for PRC income tax is calculated at the rate of 15% (2001: 15%) 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. (b) Reconciliation of effective tax rate: 2002 2001 Rmb Rmb Profit from ordinary activities before taxation 255,183,375 215,682,086 ========= ========= Income tax using the PRC income tax rate 15% 38,277,506 15% 32,352,313 Non-taxable items (1,812,608) (1,303,211) Non-deductible expenses 788,737 66,138 Net overprovision of current and deferred tax of prior years - (4,791,705) Others 153,311 4,545 37,406,946 26,328,080 ========= ========= ５８ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 9 Income tax expense (continued) (c) Taxation in the consolidated balance sheet represents: 2002 2001 Rmb Rmb Balance at 1 January 28,096,753 67,913,472 Provision for PRC income tax for the year 38,985,060 37,634,970 Balance of PRC income tax provision relating to prior years - (1,491,913) Payments made during the year (38,136,656) (75,959,776) Balance at 31 December 28,945,157 28,096,753 ========== ========== 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 2002 292,059,590 504,036,751 6,568,118 9,377,398 812,041,857 Additions 20,248,429 26,812,880 590,566 361,800 48,013,675 Transfer from construction in progress (note 17,182,654 131,944,881 84,000 1,452,400 150,663,935 12) Disposals (6,680,567) (262,695) (221,489) (55,557,099) (48,392,348) At 31 December 322,810,106 614,402,164 6,979,989 10,970,109 955,162,368 2002 --------------- --------------- --------------- --------------- --------------- Depreciation and impairment loss: At 1 January 2002 89,607,331 182,053,760 4,470,531 5,749,255 281,880,877 Charge for the year 16,857,840 68,376,077 703,039 869,791 86,806,747 Written back on disposal (3,552,242) (262,695) (221,489) (37,267,572) (33,231,146) At 31 December 102,912,929 217,198,691 4,910,875 6,397,557 331,420,052 2002 --------------- --------------- ------------- ------------- --------------- Net book value: ５９ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 At 31 December 219,897,177 397,203,473 2,069,114 4,572,552 623,742,316 2002 ========= ========= ======== ======== ========= At 31 December 202,452,259 321,982,991 2,097,587 3,628,143 530,160,980 2001 ========= ========= ======== ======== ========= ６０ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 10 Property, plant and equipment (continued) 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 by Directors as of 31 December 2002, which was based on depreciated replacement costs, the carrying value of property, plant and equipment did not differ materially from their fair value. Impairment In 2001, certain machinery became idle due to technological change. After assessing the recoverable amount of such machinery, impairment losses of Rmb6,541,558 were made. No impairment loss was made in 2002. 11 Lease prepayments Rmb Cost: Balance at 1 January 2002 112,334,733 Additions 24,525,456 Disposal (17,914,368) Balance at 31 December 2002 118,945,821 ----------------- Amortisation: Balance at 1 January 2002 8,006,696 Amortisation charge for the year 2,097,849 Written back on disposal (3,152,762) Balance at 31 December 2002 6,951,783 ----------------- Net book value: At 31 December 2002 111,994,038 ========== At 31 December 2001 104,328,037 ========== ６１ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 12 Construction in progress Plant and Office Motor Buildings machinery equipment vehicles Total Rmb Rmb Rmb Rmb Rmb At 1 January 2002 6,499,334 61,816,486 - 92,280 68,408,100 Additions 20,051,498 130,109,219 84,000 1,375,120 151,619,837 Transfer to property,plant and equipment (note 10) (17,182,654) (131,944,881) (84,000) (1,452,400) (150,663,935) At 31 December 2002 9,368,178 59,980,824 - 15,000 69,364,002 ========= ========== ======== ========== ======= 13 Investment in associate 2002 2001 Rmb Rmb Share of net assets 29,038,903 30,060,975 ========= ========= 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 深圳量科創業投資有限公司 37.5% Investments and assets management ６２ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 14 Other investments 2002 2001 Rmb Rmb Non-current investments Unlisted equity securities available-for-sale, at cost 111,936,416 130,752,341 Less: Provision for impairment losses (11,850,000) (8,850,000) 100,086,416 121,902,341 ========== ========= Current investments Listed equity securities held for trading, at fair value 15,932,055 81,110,785 ========== ========= 15 Deferred tax assets Recognised deferred tax assets Deferred tax assets are attributable to the following: 2002 2001 Rmb Rmb Property, plant and equipment 3,675,342 981,234 Other investments 3,891,623 6,383,896 Inventories 1,404,443 307,971 Trade and other receivables 2,437,790 2,157,983 Deferred tax assets 11,409,198 9,831,084 ========== ========= Movement in temporary differences during the year At Recognised At Recognised At 1 January in income 1 January in income 31 December 2001 statement 2002 statement 2002 (note 9(a)) Property, plant and equipment - 981,234 981,234 2,694,108 3,675,342 Other investments - 6,383,896 6,383,896 (2,492,273) 3,891,623 Inventories - 307,971 307,971 1,096,472 1,404,443 Trade and other receivables - 2,157,983 2,157,983 279,807 2,437,790 - 9,831,084 9,831,084 1,578,114 11,409,198 ======= ======== ======== ======== ========= ６３ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 16 Inventories 2002 2001 Rmb Rmb Raw materials 18,606,359 25,271,974 Work in progress 47,643,457 51,397,657 Finished goods 34,753,756 33,092,309 Spare parts and consumables 60,279 69,734 101,063,851 109,831,674 ========== ========== Included in finished goods are inventories of Rmb34,753,756 (2001: Rmb33,092,309), stated net of a general provision. 17 Deposits, prepayments and other receivables 2002 2001 Rmb Rmb Prepayments for acquiring land use right and purchase of buildings 5,400,242 14,428,417 Prepayments for purchase of raw materials and machinery 8,653,745 11,899,258 Deposits and other prepayments 6,903,017 2,079,799 20,957,004 28,407,474 ========== ========== 18 Cash and cash equivalents Cash and cash equivalents as of 31 December 2001 and 2002 are cash at bank and in hand. ６４ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 19 Capital and reserves 2002 Statutory Statutory staff Discretionary 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 2002 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 Net profit for the year - - - - - - 218,582,323 218,582,323 Transfers - - - 20,481,936 20,481,936 10,240,968 (51,204,840) - Dividends - - - - - - (143,379,304) (143,379,304) Balance as at 31 December 2002 358,448,259 1,186,000,059 13,479,958 156,509,934 102,200,906 68,364,817 238,832,281 2,123,836,214 ========== =========== ========= ========== ========= ========== =========== =========== 2001 Statutory Statutory staff Discretionary 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 Transfers - - - 17,334,875 8,667,437 - (26,002,312) - 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 ========== =========== ========= ========== ========= ========== =========== =========== Registered, issued and fully paid up capital The registered capital comprises 275,948,259 (2001: 275,948,259) ordinary A shares and 82,500,000 (2001: 82,500,000) ordinary B shares. All shares were issued and have a par value of Rmb 1. Revaluation surplus The revaluation surplus relates to the revaluation of certain property, plant and equipment on 30 April 1993 (see note 10) which is not distributable. Distributable retained earnings According to the Company’s Articles of Association, the retained earnings available for distribution are the lower of the amount determined under PRC accounting standards and amount determined under IFRS. As of 31 December 2002, the retained earnings available for distribution were Rmb72,319,396 (2001: Rmb69,253,148), after taking into account of the current year’s proposed final dividend and the transfers to other reserves. 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. ６５ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 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. ６６ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 19 Capital and reserves (continued) 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 (determined under PRC accounting standards) 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 factilities. 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 10% (2001: 5%) of the current year’s profit to this reserve on 26 March 2003. Discretionary surplus reserve The usage of this reserve is similar to that of statutory surplus reserve. The transfer to this reserve must be made out of its profit after taxation (determined under PRC accounting standards), but before distribution of dividend to shareholders. The Directors have resolved to transfer 5% (2001: Nil) of the current year’s profit to this reserve on 26 March 2003. Dividend (a) The following dividend has not been provided for in the financial statements: 2002 2001 Rmb Rmb Proposed final dividend of Rmb0.42 per ordinary share (2001: Rmb0.4) 150,548,269 143,379,304 ========= ========= Pursuant to a resolution passed at the Directors’ meeting held on 26 March 2003, a final dividend of Rmb0.42 per ordinary share totalling Rmb150,548,269 will be payable to shareholders, subject to the approval of the shareholders at the Company’s 14th Annual General Meeting. (b) Dividend paid during the year is as follows: 2002 2001 Rmb Rmb Final dividend of Rmb0.4 per ordinary share for the year ended 31 December 2001 (2000: Rmb0.38) 143,379,304 136,210,338 ６７ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 ========= ========= ６８ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 20 Accruals and other payables 2002 2001 Rmb Rmb Senior Management Incentive Scheme 31,012,914 - Value added tax and other taxes payable 6,456,905 30,912,799 Others 22,358,666 16,404,011 59,828,485 47,316,810 ========== ========== 21 Financial instruments and concentration of risks Financial assets of the Group principally include cash and cash equivalents, trade receivables, deposits and other receivables, and investments. Financial liabilities of the Group principally include trade and other payables and accruals. Accounting policies for financial assets and liabilities are set out in note 1. (a) 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. (b) Foreign currency risk The Group incurs foreign currency risk on certain trade receivables of Rmb28,243,928 (2001: Rmb27,351,991) and cash and cash equivalents of Rmb20,819,370 (2001: Rmb37,701,271) 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. ６９ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 21 Financial instruments and concentration of risks (continued) (c) Fair value The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of IAS 32 and IAS 39. Fair value estimates, methods and assumptions, set forth below for the Group’s financial instruments, are made to comply with the requirements of IAS 32 and IAS 39, and should be read in conjunction with the Group’s consolidated financial statements and related notes. The estimated fair value amounts have been determined by the Group using market information and valuation methodologies considered appropriate. However, considerable judgment is required to interpret market data to develop the estimates of fair values. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Group could realised in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The following summarise the major methods and assumptions used in estimating the fair values of the Group’s financial instruments. The carrying amounts of cash and cash equivalents, trade receivables, deposits and other receivables, trade and other payables and accruals 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 impairment losses of Rmb11,850,000 (2001: Rmb8,850,000) was made at 31 December 2002 (see note 14). 22 Commitments (a) Capital expenditure commitments As at 31 December 2002, the Group had capital expenditure commitments authorised and contracted for but not provided for in the financial statements amounting to approximately Rmb24,957,416 (2001: Rmb48,471,000). (b) Operating lease payments Minimum lease payments under non-cancellable operating lease are payable as follows: 2002 2001 Rmb Rmb Less than one year 1,169,000 3,129,200 Between one and five years 4,676,000 4,676,000 More than five years 17,535,000 23,704,000 23,380,000 31,509,200 ========== ========== ７０ Foshan Electrical and Lighting Company Limited Financial statements for the year ended 31 December 2002 22 Commitments (continued) (b) Operating lease payments (continued) The Group leases a land use right under operating lease. The lease typically runs 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 2002, Rmb3,129,200 was recognised as an expense in the income statement in respect of operating leases (2001: Rmb3,129,200). 23 Earnings per share (a) Basic earnings per share The calculation of basic earnings per share at 31 December 2002 was based on the profit attributable to shareholders of Rmb218,582,323 (2001: Rmb189,354,006) and the number of shares in issue during the year ended 31 December 2002 of 358,448,259 (2001: 358,448,259). (b) Diluted earnings per share No diluted earnings per share is calculated as there are no dilutive potential shares. 24 Group enterprises (a) Details of the subsidiaries, both of which are established and operating in the PRC, are as follows: 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”) (note b) lighting products (b) 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. 25 Comparative figures Dividend payable of Rmb8,135,171 in 2001 has been reclassified to “accruals and other payables” to conform with the current year’s presentation. ７１ Foshan Electrical and Lighting Company Limited Year ended 31 December 2002 (Expressed in Renminbi Yuan) Net impact of IFRS adjustments on the consolidated results and shareholders’ funds prepared under PRC accounting regulations Financial statements for the year ended 31 December 2002 Profit after tax Shareholders’ funds 2002 2001 2002 2001 As reported in statutory financial statements prepared under PRC accounting regulations 204,819,357 173,348,748 1,961,332,290 1,906,996,625 Adjustments to align with IFRS (i) Dividend proposed - - 150,548,269 143,379,304 (ii) Recongition of deferred tax asset 1,578,114 9,831,084 11,409,198 9,831,084 (iii) Capitalisation and depreciation difference 8,590,420 - - (8,590,420) (iv) Unrealised gains/(losses) of investments held for trading carried at fair value 2,309,852 (1,236,587) 2,309,852 (1,236,587) (v) Realised loss of investments carried at fair value 1,236,587 - - - (vi) Provision for doubtful debts, stocks and investments - 1,892,174 - - (vii) Overprovision of research and development - 4,394,365 - - ７２ Net impact of IFRS adjustments on the consolidated results and (Expressed in Renminbi Yuan) shareholders’ funds prepared under PRC accounting regulations Financial statements for the year ended 31 December 2002 (continued) Profit after tax Shareholders’ funds 2002 2001 2002 2001 Adjustments to align with IFRS (continued) (viii) Overprovision of income tax - 1,491,913 - - (ix) Others 47,993 (367,691) (1,763,395) (1,746,811) As reported pursuant to IFRS 218,582,323 189,354,006 2,123,836,214 2,048,633,195 ========= ========= =========== =========== XI. Reference Documents The investors and the relevant departments can demand the following information from the secretary of the Board of Directors of this company: 1. Accounting statement signed and sealed by the legal representative of the company, finance chief and the chief accountant. 2. Origin of the auditing report signed and sealed by the certified public accountants’ office and the public certified accountant. 3. Origin and master copy of the announcement of all documents of this company publicly disclosed in the newspapers designated by the China securities supervision committee during the report period. 4. Origin of the Annual Report of 2002 personally signed by the Chairman of the Board of Directors. Foshan Electrical and Lighting Co. Ltd. Board of Directors Foshan Electrical and Lighting Company Limited Year ended 31 December 2002 Mar. 26, 2003 74