大洋B1(420047)ST大洋Ｂ2003年年度报告摘要（英文版）

Shenzhen Great Ocean Shipping Co., Ltd. Summary of Annual Report 2003 §1. Important Notes 1.1 Board of Directors of Shenzhen Great Ocean Shipping Co., Ltd. (hereinafter referred to as the Company) and its directors individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions nor errors which would render any statement misleading. The summary of annual report 2003 is abstracted from the annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 No director stated that they couldn’t ensure the correctness, accuracy and completeness of the contents of the Annual Report or have objection for this report. 1.3 Wang Fu and Xiong Yin 1.4 Shenzhen Pengcheng Certified Public Accountants issued an Auditors’ Report with unable to express opinion for the Company, to which and the Board of Directors and the Supervisory Committee made detailed explanations, the investors are suggested to read the content. 1.5 Chairman of the Board of the Company Mr. Xu Xianghong, Chief Financial Officer Ms. Liu Xiaoping and Person in charge of Accounting Ms. Huang Zhifeng hereby confirm that the Financial Report of the Annual Report is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock ST GREAT OCEAN - B Stock code 200057 Listed stock exchange Shenzhen Stock Exchange Registered address and office address Room 806, Shenye Bldg., No. 7, Wenjin Middle Road, Shenzhen Post code 518001 Internet web site of the Company http://www.cninfo.com.cn E-mail of the Company szdayang@ec-h.com 2.2 Contact person and method Secretary of the Board of Securities Affair Directors Representative Name Yan Zhongyu Contact address Room 806, Shenye Bldg., No. 7, Wenjin Middle Road, Shenzhen Telephone (86)755-82201484 Fax (86)755-80021581 E-mail szdayang@ec-h.com §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data (Unit: RMB) Increase/decrease 2003 2002 2001 over last year（％） Income from main operations - 0.00 Total profit -110,420,728.68 -32,036,802.03 - 6,831,495.77 Net profit -110,420,728.68 -32,036,802.03 - 6,831,495.77 Net profit after deducting -64,420,128.64 -28,747,251.76 - -20,193,229.02 non-recurring gains and losses Increase/decrease At the end of At the end of At the end of from the end of 2003 2002 2001 previous year（％） Total assets 36,368,487.28 93,306,051.14 -61.02% 115,413,856.14 Shareholder’s equity (excluding -200,362,350.64 -89,943,972.32 - -59,372,561.55 minority interests) Net cash flow arising from -47,722.40 -0.12 - -0.03 operating activities 3.2 Major financial indexes (Unit: RMB) Increase/decrease over 2003 2002 2001 last year（％） Earnings per share -0.558 -0.162 - 0.03 Earnings per share (calculated based on new -0.558 - - - share capital if share capital was changed) Return on equity 55.11% 35.62% 68.40% -11.51% Return on equity as calculated based on net profit after deducting non-recurring gains 0.00% 0.00% - 0.00% and losses Net cash flow per share arising from 0.0002 -0.0010 - 0.03 operating activities Increase or decrease At the end At the end At the end from the end of of 2003 of 2002 of 2001 previous year（％） Net assets per share -1.012 -0.454 - -0.30 Net assets per share after adjustment -1.044 -0.74 - -0.68 3.3 Difference of net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) □Applicable √Inapplicable §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital (Unit: share) Increase / decrease in Before the change After the change this time (+, -) I. Unlisted shares 1. Sponsors’ shares 118,800,000 0 118,800,000 Including: State-owned share 0 0 Domestic legal person’s shares 118,800,000 0 118,800,000 Foreign legal person’s shares 0 0 0 Others 0 0 2. Raised legal person’s shares 0 0 3. Inner employees’ shares 0 0 4. Preference shares or others 0 0 Total unlisted shares 118,800,000 0 118,800,000 II. Listed shares 1. RMB ordinary shares 0 0 2.Domestically listed foreign shares 79,200,000 0 79,200,000 3. Overseas listed foreign shares 0 0 4. Others 0 0 Total listed shares 79,200,000 0 79,200,000 III. Total shares 198,000,000 0 198,000,000 4.2 Statement of shares held by the top ten shareholders and the top ten shareholder of circulation share Total number of shareholders at the end of report year 8,915 Particulars about shares held by the top ten shareholders Number of Nature of Increase / Holding Type of shares share shareholders decrease in shares at Proportion Full name of Shareholders (Circulating/No pledged/ (State-owned the report the year-end (%) n-circulating) frozen shareholder/foreign year (share) (share) (share) shareholder) Jiangxi Jiangnan Trust and Investment Co., 43,023,256 21.73 0 0 Non-circulating Foreign shareholder Ltd. Shenzhen E & Sea-gull Group Co., Ltd. 32,843,721 16.59 32,843,72 State-owned 0 Non-circulating 1 shareholder Guangdong Green Development Co., Ltd. 26,516,679 13.39 26,516,67 State-owned 0 Non-circulating 9 shareholder Shenzhen Orient Jida Commerce Co., Ltd. 16,416,344 8.29 16,416,34 State-owned 0 Non-circulating 4 shareholder Xu Jingxin 0 1,130,349 0.57 Circulating 0 Foreign shareholder Song Hua 0 720,075 0.36 Circulating 0 Foreign shareholder Lei Zuyun 0 714,700 0.36 Circulating 0 Foreign shareholder Zhang Guoliang 0 662,800 0.33 Circulating 0 Foreign shareholder Gu Qun 0 627,000 0.32 Circulating 0 Foreign shareholder Ye Lingfen 0 549,000 0.28 Circulating 0 Foreign shareholder Explanation on associated Among the top ten shareholders as listed above, Shenzhen E & Sea-gull relationship among the top ten Group Co., Ltd. holds 45% equity of Guangdong Green Development Co., shareholders or consistent action Ltd., except for this, the Company is unknown whether there exists associated relationship among the top ten shareholders. Particulars about shares held by the top ten shareholders of circulation share Full name of shareholders Number of circulation share Type (A-share, B-share, held at the year-end (share) H-share and other) XU JINGXIN 1,130,349 B SONG HUA 720,075 B LEI ZUYUN 714,700 B ZHANG GUOLIANG 662,800 B GU QUN 627,000 B YE LINGFEN 549,400 B BEST RELIANCE INVESTMENTS LTD 515,499 B HONG YING 492,200 B ZHOU XIAOQIAN 450,813 B LEI ZUYUN 418,027 B FENG XINPING 413,500 B Explanation on associated relationship The Company is unknown whether there exists associated among the top ten shareholders of relationship among the top ten shareholders of circulation circulation share share. 4.3 Particulars about controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in controlling shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for controlling shareholder and other actual controller Shenzhen E & Sea-gull Group Co., Ltd. holds 45% equity of Guangdong Green Development Co., Ltd., thus, Shenzhen E & Sea-gull Group Co., Ltd. is still the first largest shareholder of the Company. §5. Particulars About Directors, Supervisors, Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Shares Shares held Reason of Name Title Sex Age Office term held at the at the change year-begin year-end Dec. 23, 2003- Xu Xianghong Chairman of the Board Male 34 0 0 Dec. 23, 2006 Dec. 16, 2001- Zeng Qingqun Director Male 35 0 0 Dec. 16, 2004 Director Dec. 2, 2002- Xiong Yin Female 36 0 0 Dec. 2, 2005 Director Dec. 16, 2001- Lv Zhiyun Male 33 0 0 Dec. 16, 2004 Director Dec. 2, 2002- Wang Jiping Male 38 0 0 Dec. 2, 2005 Director Dec. 2, 2002- Yan Zhongyu Male 29 0 0 Dec. 2, 2005 Dec. 2, 2002- Liu Hongling Independent Director Female 48 0 0 Dec. 2, 2005 May 16, 2001- Li Caimou Independent Director Female 57 0 0 May 16, 2004 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment Title in Shareholding Name Name of Shareholding Company Office term from the Shareholding Company Company (Yes / No) Shenzhen E & Sea-gull Group Co., Dec. 2003- Lv Zhiyun Chairman of the Board Yes Ltd. Nov. 2006 Shenzhen E & Sea-gull Group Co. Dec. 2003- Zeng Qingqun President Yes Ltd. Nov. 2004 Shenzhen E & Sea-gull Group Co. Dec. 2003- Yes Wang Jie Vice-president Ltd. Nov. 2004 Shenzhen E & Sea-gull Group Co. Deputy General Manager Dec. 2003- Yes Song Jie Ltd. of Project Dept. Nov. 2004 Shenzhen E & Sea-gull Group Co. Dec. 2003- Yes Dai Haihong Engineer of Project Dept. Ltd. Apr. 2004 Shenzhen E & Sea-gull Group Co. Nov. 2002- Yes Xiong Yin CFO Ltd. Jan. 2004 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 208,535.60 Total annual payment of the top three directors RMB 194,600 drawing the highest payment Total annual payment of the top three senior RMB 194,600 executives drawing the highest payment Allowance of independent director RMB 20,000 per person/ year Other treatment of independent directors The Company reimbursed the reasonable charges according to the actual situation, which independent directors attended the meeting of the Board, shareholders’ general meeting or exercise their functions and powers in accordance with the relevant regulations of Company Law and Articles of Association. Name of directors and supervisors receiving no Director of the Company, Mr. Lv Zhiyun, Mr. Zeng payment or allowance from the Company Qingqun, Ms. Xiong Yin, Mr. Wang Jiping received no payment from the Company; Supervisor of the Company, Mr. Wang Jie, Mr. Chen Xiong, Ms. Dai Hai’ou, Mr. Song Jie and Ms. Wang Jing received no payment from the Company. Payment Number of persons RMB 30,000 ～ RMB 50,000 1 RMB 50,000 ～ RMB 100,000 2 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period The Company is mainly engaged in container shipping along Hong Kong, Macao and short-range ocean lines and development of technology to grow vegetables, fruits and teas without pollution and relevant series products development. In the report period, the Company’s previous main business of ocean shipping was still suspended without any income. On Mar. 27, 2003, the Board of the Company agreed to end up trusteeship to Shenye (Shenzhen) Industrial and Trade Co., Ltd. ahead of schedule after considering such reasons as equity, operating structure and business of this company would be adjusted materially and the income from trusteeship fee belonged to non-main operating income for the Company, not impacting basic influence on the Company’s financial position. Since the Company’s financial expense was relatively high, plus the Company has appropriated predicted liabilities and provision for bad debts for other receivables from Taiyuan Information and Maite Xinghua Company mainly based on the principle of solidity in accounting calculation in 2003. As audited by Shenzhen Pengcheng Certified Public Accountants, the Company realized net profit amounting to RMB-110,420,728.68 in 2003, incurring relatively large losses. Problems and difficulties from the operation and their solutions: Facing the full stop of the Company’s main operations and no income from main operations, plus the disadvantageous condition of heavy liabilities burden of the Company, the Board and the Management of the Company was not dejected and dampened but actively strived for seeking for support from creditors and large shareholders and pushing for the liabilities and assets reorganization without saving any effort. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 Classified according to Income from Cost of main Gross Increase/decrease Increase/decreas Increase/decrease industries or products main operations profit in income from e in cost of main in gross profit ratio operations ratio (%) main operations operations over over the last year over the last year the last year (%) (%) (%) Water transportation 0.00 0.00 - 0.00 0.00 0.00 Agriculture 0.00 0.00 - 0.00 0.00 0.00 Other industries 0.00 0.00 - 0.00 0.00 0.00 Including: related 0.00 0.00 - 0.00 0.00 0.00 transactions - 0.00 0.00 - 0.00 0.00 0.00 - 0.00 0.00 - 0.00 0.00 0.00 - 0.00 0.00 - 0.00 0.00 0.00 Including: related 0.00 0.00 - 0.00 0.00 0.00 transactions Pricing rules for related Naught transactions Necessity and durative Naught of related transactions 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Areas Income from main operations Increase/decrease in income from main operations over the last year (%) Naught 0.00 0.00 Naught 0.00 0.00 Naught 0.00 0.00 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase Proportion in the total 0.00 0.00% of the top five suppliers amount of purchase Total amount of sales of the Proportion in the total 0.00 0.00% top five sales customers amount of sales 6.5 Operation of share-holding companies (applicable to the situation where investment equity takes over 10% of its net profit) □Applicable √Inapplicable 6.6 Explanation on reasons of material changes in main operations and its structure □Applicable √Inapplicable 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) than that in the last year □Applicable √Inapplicable 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year □Applicable √Inapplicable Analysis to reasons of material changes in the whole financial position than that in the last year □Applicable √Inapplicable 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment, macro-policies and regulations on the Company’s financial position and operating results □Applicable √Inapplicable 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds □Applicable √Inapplicable Particulars about the changed projects □Applicable √Inapplicable 6.13 Application of the proceeds not raised through shares offering □Applicable √Inapplicable 6.14 Explanation of the Board of Directors on the “Qualified Opinion” made by the Certified Public Accountants √Applicable □Inapplicable Explanation on the issues involved in the auditors’ report unable to form an opinion in four points presented by certified public accounts. 1. Issue concerned about the land use right of Dingqing Chemical Company originally invested by Great Ocean Company. Since the court has not made the final judgment on the auction accounts, the Company was unable to dispose this account. Besides, after learning by the Company, Dingqing Chemical Company did not dispose annual inspection for industry and commerce and also could not gain license in 2003. The Company would conduct disposal after further gaining relevant information. 2. Issue concerned about the Company’s providing guarantees for Taiyuan Information Company and Maite Xinghua Company. The financial position of Taiyuan Information Company continued to be worsened. The Company was unable to get contact with it and was also unable to gain letters or certificates on relevant situation. According to the principle of prudence, the Company appropriated liabilities on this guarantee amount. According to the reflection of the accounting statements of Maite Xinghua Company not audited in 2003, Maite Xinghua Company’s financial position was worsen while relevant interests was also stopped in payment. According to the principle of prudence, the Company appropriated 80% liabilities to this guarantee. 3. Issue concerned about Penggangcheng. According to the provisions in Accounting System of the Company, provision for bad debts amounting to % should be appropriated for those accounts receivable with term less than one year. 4. Issue concerned about sustainable operation. The directors and senior executives of the Company clearly knew the losses in the successive two years and this year was the 3rd year, thus paid high attention. The Company would continue to keep communication and negotiation with all main creditors and conduct further consultation on project of liabilities reorganization so as to fully push the assets and liabilities reorganization, strive for material assets reorganization in 2004 and completely change the passive operating condition of the Company. We believed that the Company certainly could smoothly realize the transfer of the Company’s leading industry and recover the Company’s sustainable profitability capability under the joint efforts of the Board and the Management and all staffs along with the gradual push of the Company’s liabilities and assets reorganization and all other operating business. 6.15 Business plan as of the next year of the Board of Directors (If it has) √Applicable □Inapplicable In the new year, the Board and the Management of the Company would try its best to push the progress of liabilities and assets reorganization and strive for forming agreement on liabilities reorganization with all creditors so as to completely realize the material reorganization of the Company, realize the transfer of its leading industry and recover the Company’s sustainable profitability capability. Profit estimation of the next year (If it has) □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors No distribution or capitalization. 7. Significant Events 7.1 Purchase of assets □ Applicable √ Inapplicable 7.2 Sales of assets □ Applicable √ Inapplicable 7.3 Important guarantee √ Applicable □ Inapplicable Unit: RMB’0000 Guarantee for Date of happening Complete Name of the Company Amount of Guarantee Guarantee related party (date of signing Implementation guaranteed guarantee type term or not (yes or agreement) or not no) Guangdong Maite Joint June 10, Xinghua June 10, 1998 4,000.00 responsibility 1998-June 8, No No Pharmaceuticals Co., guarantee 2000 Ltd. Joint Jan.17, Shenzhen Great Ocean Jan.17, 1997 2,628.83 responsibility 1997-Nov.26, No No Investment Co., Ltd. guarantee 1997 Guangdong Taiyuan Joint Sep.28, Information Industry Sep.28, 1998 3,000.00 responsibility 1998-Sep.28, No No Co., Ltd. guarantee 1999 Tianjin Steamboat Joint Dec.1, Industrial Development Dec.1, 1998 230.00 responsibility 1998-Dec.1, No No Group Co., Ltd. guarantee 1998 Total amount of guarantee 0.83 Total balance of guarantee 9,858.83 Including: Total balance of related guarantee 0.00 Total occurred guarantee the listed company provided for the share-controlling 0.00 subsidiary Total amount of guarantee breaking regulations 0.00 Proportion of total guarantee in the net assets of the Company 0.00 7.4 Current related credits and liabilities √ Applicable □ Inapplicable Unit: RMB’0000 Provided capital to related Provided capital to listed companies Related parties parties by related parties Occurred Balance Occurred Balance Shenzhen E & Sea-gull 0.00 0.00 115.90 115.90 Industry Co., Ltd. Total 0.00 0.00 115.90 115.90 7.5 Entrusted financing □ Applicable √ Inapplicable 7.6 Implementation of projects committed □ Applicable √ Inapplicable 7.7 Significant lawsuit and arbitration √ Applicable □ Inapplicable 1. On Sep. 26, 2003, the Company received the civil judgement issued by Shenzhen Longgang People’s Court and confirmed to make a bargain through auction of the general land with 120486 sq.m. locating in Fengmenao, Guangshan Road, Center New County, Zengcheng City, Guangdong Province to repay the guarantee liabilities caused by the contract dissension of loan amounting to USD 1 million between Shenzhen Shekou Great Ocean Container Shipping Co., Ltd. and Shenzhen Development Bank Longgang Subbranch. The possible influence of this auction on the Company: (1) Shenzhen Shekou Great Ocean Container Shipping Co., Ltd. was originally the wholly-owned subsidiary of the Company. On Dec. 31, 2000, the Company confirmed the liabilities amounting to USD 1 million for the guarantee, so the balance of the payment for this auction after deducting relevant expense will write off partial estimated liabilities appropriated by the Company. (2) Due to the above reason, the Company will correspondingly increase the accounts receivable from Shenzhen Shekou Great Ocean Container Shipping Co., Ltd.. (3) According to Land Transfer Agreement signed by the Company and Zhuhai Zhongyan on Oct. 18, 1998, the Company should pay payment for land transfer totaling RMB 19 million. In March 2000, Zhuhai Zhongyan indicted the Company to Zengcheng People’s Court and required to release the above agreement with the Company and was overruled by Zengcheng People’s Court. Then Zhuhai Zhongyan did not appeal to the court and the Company did not receive the relevant request of paying payment for land transfer of it. According to the law opinion issued by Lawyer Guo Yanfang of Guangdong Xingchen Law Firms, the request of protecting the credit of Zhuhai Zhongyan by the court has exceeded the lawsuit terms, so the entity right was not protected by law and the Company had no statutory obligations of repaying the above payment for land transfer. 2. Dalian Container Wharf Co., Ltd. lodged a complaint to Dalian Marine Court on the port activity expense and late fee owed to it by the Company and Shenzhen Shekou Great Ocean Shipping Co., Ltd. on April 19, 2001 and requested Marine Court to judge the Company and Shenzhen Shekou Great Ocean Shipping Co., Ltd. to take joint responsibility. According to (2001) DHFSCZ No.368 and No.370 Civil Intermediation and (2001) DHFSCZ No.141 Civil Judgment promulgated by Dalian Marine Court on Dec.25, 2001, the Company and Dalian Container Wharf Co., Ltd. reached the following agreement: the Company paid activity expense amounting to RMB 300,000 to Dalian Container Wharf Co., Ltd. before Jan. 31, 2002 and paid activity expense amounting to RMB 250,000 to Dalian Container Wharf Co., Ltd. before Feb. 28, 2002. The expense for accepting and hearing a case amounting to RMB 19,997 was undertaken by Dalian Container Wharf Co., Ltd.. If the Company could not pay the aforesaid payments to Dalian Container Wharf Co., Ltd. as scheduled, the Company should also pay the interests of the aforesaid payments from April 1, 1999 to the actual paying date according to the standard of calculation of overdue loan interests of financial organizations promulgated by People’s Bank of China. Dalian Container Wharf Co., Ltd. gave up all the other requests on the ship activity expense of “Jinpeng” steamboat and “Weikang” steamboat and withdrew the prosecution to the Company. In Oct. 2002, the Company paid RMB 30,000. Ended Dec.31, 2002, there was RMB 520,000 still not paid. 3. On June 3, 2002, Guangdong Zengcheng People’s Court accepted and heard the case of construction contract dispute of construction project appealed to the Company by Heilongjiang Kenqu Longken Construction Engineering Corporation. The accuser appealed and requested the Company to pay engineering account of RMB 1,628,915.39, compensation expense in the shutdown period of RMB 148,449.16 and penalty funds of overdue payment of RMB 191,955.37, which all totally amounted to RMB 1,969,319.92. On June 26, 2002, Zengcheng People’s Court opened the court and heard this case and the Company appeared in court and submitted the answer letter. On Aug.26, 2002, the Company received (2002) ZFMCZ No.1482 Civil Judgment that judged the Company to pay RMB 1,777,364.55 and penalty funds of overdue payment, which was calculated as per 0.02% per day from May 31, 2002 to the date of payment clearing, to Heilongjiang Kenqu Longken Construction Engineering Corporation within 15 days from the date of receiving the Judgment. Ended Dec.31, 2002, the Company still did not pay the aforesaid payments. On Dec.31, 2002, the Company confirmed a liability amounting to RMB 1,777,364.55 for this and at the same time reckoned in the item of “non-business income and expenditure” of the Company. 4. On May 27, 1998, the Company lodged a complaint to PRC Tianjin Marine Court on the issue that Hebei Baoding Light Textile Import and Export Company owed shipping expense amounting to USD 15,960.00 (converting to RMB 132,105.71) to the Company. On Nov.17, 1998, after judged by Tianjin Marine Court with JHFSCPZ No. 164 Civil Judgment, Hebei Baoding Light Textile Import and Export Company should repay the aforesaid arrearage shipping expense and interest. Ended Dec.31, 2002, the Company still did not receive the aforesaid payments. 4. On June 2, 1998, the Company lodged a complaint to PRC Tianjin Marine Court on the issue that Hebei Cangzhou Yanfeng Import and Export Co., Ltd. (hereinafter referred to “Yanfeng Company”) owed shipping expense amounting to RMB 399,743.00 to the Company. On May 25, 1999, after mediated by Tianjin Marine Court (1998) JHFBSTZ No.222 Civil Intermediation, Yanfeng Company agreed to repay RMB 100,000.00 to the Company before June 10, 1999 and repay RMB 219,743.00 before July 30, 1999. Ended Dec.31, 2002, the Company still did not receive the aforesaid payments. 5. Since the Company could not repay the loan amounting to RMB 15,000,000.00 to Shekou Sub-branch, Shenzhen Branch, Bank of China, after mediated by Guangdong Shenzhen Intermediate People’s Court with (1998) SZFJTCZ No.638 Civil Intermediation, the Company should repay the interests and penalty interests ended Nov.21, 1998 of Shekou Sub-branch, Shenzhen Branch, Bank of China before Dec.20, 1998 and repay the principal amounting to HKD 15,000,000.00 (converting to RMB 15,916,500.00) and overdue interests before March 31, 1999. Shenzhen Wandelai Communication Equipments Co., Ltd. (hereinafter referred to as “Wandelai Company”), the guarantee party, should take the joint recovery responsibility. On April 16, 2000, since the Company and Wandelai Company had no assets that could be implemented, Shenzhen Intermediate People’s Court made known to lower levels (1999) SZFZZ No.15-519 Civil Judgment and stopped implementing the former No.638 Civil Intermediation. Ended Dec.31, 2002, the Company still did not repay the aforesaid loan principal and overdue interests and penalty interests. 7. On Oct. 31, 1997, the Company signed Loan Agreement with Zhongjingkai Company. The Company borrowed funds of RMB 25,000,000.00 from Zhongjingkai Company with the annual interest rate of 18% and the Company should repay loan principal and interest once on Dec.31, 1997. Since this borrow funds has not been transferred into the account of the Company and was remitted directly to Changjiang Co. Ltd. by Zhongjingkai Company, thus the Company did not carry through accounting disposal to this loan and corresponding credit in 1997. In 1998, the Company complementarily reckoned this loan and corresponding credit into the accountant as per the aforesaid loan agreement. In 1998, the Company signed Transfer Agreement of Credit and Liability with Changjiang Co., Ltd. and China Huadian Real Estate Company (hereinafter referred to as “Huadian Real Estate Company”). The original funds of RMB 25,000,000.00 remitted to Changjiang Co., Ltd. by Zhongjingkai Company was undertaken by Huadian Real Estate Company and the credit of the Company receivable from Changjiang Co., Ltd. was changed into credit receivable from Huadian Real Estate Company. Ended Dec.31, 2002, the Company still did not receive the aforesaid funds. Since the Company did not repay the loan of RMB 25,000,000.00, Zhongjingkai Company thus lodged a complaint to Guangdong Shenzhen Intermediate People’s Court. On March 9, 1999, after judged by Guangdong Shenzhen Intermediate People’s Court with (1999) SZFJYCZ No.24 Civil Judgment, the Company should repay the loan principal amounting to RMB 25,000,000.00 to Zhongjingkai Company and the interests was calculated as per the floating rate of loan of the same period of People’s Bank of China with the interest term from Nov.8, 1997 to the date of clearing the owed payments. Simultaneously, since the debit and credit action between the Company and Zhongjingkai Company was against the state law and relevant regulations of financial management, the Court judged penalty payments amounting to RMB 100,000.00 respectively to both parties of the case. Ended Dec.31, 2002, the Company still did not repay the loan principal and interests owing to the Zhongjingkai Company. 8. On Mar. 29, 1999, due to the loan dispute case between Shenzhen Development Bank Nantou Sub-branch and the Company, Shenzhen Nanshan People’s Court judged the Company should refund loan principal amounting to USD 800,000.00 (converted to RMB 6,621,840.00) and its interests (Of which, the interests from Oct. 30, 1998 to Apr. 26, 1999 were calculated as per 0.04% and those from Apr. 27, 1999 to the refund date confirmed in this judgment were calculated as per 0.03%) to the accuser within ten days since the effective date of judgment with (1999) SNFJCZ No. 1-068 Civil Judgment. As a warrantor, Shekou Great Ocean took on joint discharging responsibility. On Nov. 4, 1999, Shenzhen Nanshan District People’s Court sealed up partial properties of the Company in Tianjin with (1999) SNFZZ No. 380 Civil Ruling [For details, please refer to Notes VI 5(2)]. On Dec. 23, 1999, Shenzhen Nanshan People’s Court judged to auction Audi Car of the Company (YB12115) at price amounting to RMB 70,000.00 with SNFZ (1999) No. 1-380 Civil Ruling. On Dec. 29, 1999, Shenzhen Nanshan People’s Court judged to auction Mitsubishi Jeep of the Company (YB54709) at price amounting to RMB 25,000.00 with SNFZ (1999) No. 1-380 Civil Ruling. On Aug. 25, 2000, Shenzhen Nanshan People’s Court judged to auction the Company’s property in four units of A, B, L and M in 15/F, Liyuan Building, No. 16, Mingze, Zhongshan District, Dalian with total area amounting to 351 sq. m. (The original house license was 06578) at net amount of RMB 1,242,885.00 with SNFZ (1999) No. 1-380 Civil Ruling. Shenzhen Development Bank Nantou Sub-branch totally received the implementation payment amounting to RMB 1,328,885.00 from Shenzhen Nanshan People’s Court under SNFZ (1999) No. 1-380 case in 2000. Ended Dec. 31, 2003, the Company had still not refunded the said loans. 9. Due to the dispute case on loan contract between France Industrial Bank Shenzhen Branch and the Company, on May 4, 1999, Guangdong Shenzhen Intermediate People’s Court judged that the Company should refund the overdue loans amounting to USD 2,000,000.00 (Converted to RMB 16,554,600.00) and overdue interests (The interests were calculated as per most-favored interests in London Trade Market plus annual interest of 2.5% with time from Jan. 12, 1999 to the effective date of judgment) to France Industrial Bank with (1999) SZFJECZ No. 61 Civil Judgment. Ended Dec. 31, 2003, the Company had not refunded the said payments. 10. Due to the dispute case on damage compensation of marine goods between Guangzhou Yuexiu Enterprise (Group) Company (Hereinafter referred to Yuexiu Company) and the Company Tianjin Branch, Tianjin Marine Court judged that the Company should refund repair expense amounting to HKD 119,800.00 (Converted to RMB 127,119.78) and the interests amounting to 0.05% per day calculated from July 30, 1997 to the effective date of judgment to Yuexiu Company with (1998) JHFGCPZ No. 198 Civil Judgment. On April 28, 1999, the Company appealed to Tianjin Higher People’s Court. The Company thought the law adopted by Tianjin Marine Court in the judgment was not reasonable and the body of the accuser was wrong, thus requested the 2nd trial court rejected the 1st trial judgment according to the law and changed to judge that the Company would not undertake any compensation responsibility. On Jan. 10, 2000, Tianjin Higher People’s Court mediated that the Company should compensate and pay the damage of people and goods of amounting to HKD 40,000.00 to Yuexiu Company with (1999) GJZZ No. 166 Civil Judgment and this payment should be all cleared up at the end of Feb. 2000. On Dec. 31, 2000, the Company confirmed a liability for this amounting to HKD 40,000.00 (converting to RMB 42,444.00). Ended Dec. 31, 2002, the Company still did not pay the aforesaid payments. 11. On Nov. 24, 1998, due to the issue of damage happened by the Company’s taking the shipping of its goods, Yanfeng Company lodged a complaint to PRC Tianjin Marine Court and requested to get a compensation amounting to USD 120,816.30 and RMB 47,833.81, which all converted to RMB 1,047,871.53. Ended Dec. 31, 2002, the Company did not receive relevant judgment. 12. On July 29, 1999, concerning the lawsuit of loan contract between the Company and Shenzhen Commercial Bank Nanshan Sub-branch (initial Shenzhen Municipal Cooperation Commercial Bank Nanshan Sub-branch, Shenzhen Intermediate People’s Court judged the Company to repay RMB 4,000,000.00 debt and its interest owed to the accuser with 15 days since the effect of the judgment through (1999) SZFJTCZI NO.356 Civil Judgment. (The interest is calculated according to contract in the term of the contract and the overdue interest is calculated as the interest rate of overdue loan of the same period regulated by China People’s Bank. The interest term is from the date of owing interest to the date of repaying). The debt interest in term of implementing lingeringly is paid two times if overdue. Ended as of Dec. 31, 2001, the Company has not repaid the aforesaid debts. 13. On June 10, June 29, July 29, 1998, Agricultural Bank of China Guangzhou Taojin Sub-branch, Guangdong Maite Xinghua Pharmaceuticals Co., Ltd. signed Guarantee Loan Contract with the Company. The Company provided nonreversible guarantee for RMB 40,000,000.00 loan in Loan Contract signed by Agricultural Bank of China Guangzhou Taojin Sub-branch and Guangdong Maite Xinghua Pharmaceuticals Co., Ltd with the term of June 10, 1998 to June 8, 2000. Because Guangdong Maite Xinghua Pharmaceuticals Co., Ltd. did not repay the principal and interest in stipulated time, Agricultural Bank of China Guangzhou Taojin Sub-branch indicted to Guangzhou Intermediate People’s Court on Nov. 7, 2000. On June 14, 2001, the Company received civil judgment of Guangzhou Intermediate People’s Court, which judged Guangdong Maite Xinghua Pharmaceuticals Co., Ltd. to repay the aforesaid debt and punishment interest and the Company to take joint liability. Ended as of Dec. 31, 2002, Guangdong Maite Xinghua Pharmaceuticals Co., Ltd. has not repaid the aforesaid debts. 14. On Jan. 17, 1997, Shenzhen Great Ocean Investment Co., Ltd. (hereinafter referred to as Great Ocean Investment) signed Temporary Line of Credit Contract with China Construction Bank Shenzhen Branch Shangbu Sub-branch (hereinafter referred to as Construction Bank Shangbu Sub-branch), which gave Great Ocean Investment temporary T/R acceptance limit amounting to USD 3,600,000.00. The Company issued a nonreversible guarantee to Construction Bank Shangbu Sub-branch for the aforesaid contract of Great Ocean Investment). From July 14, 1997 to Nov. 17, 1997, Construction Bank Shangbu Sub-branch advanced USD 3,600,000.00 L/C to Great Ocean Investment. Due to the default on the aforesaid debt by Great Ocean Investment, Construction Bank Shangbu Sub-branch indicted to Shenzhen Intermediate People’s Court. On Dec. 3, 1998, Shenzhen Intermediate People’s Court judged Great Ocean Investment to repay USD 3,600,000.00 principal of advance payment and corresponding interest and the Company to take joint repayment liability through (1998) SZFJYCZI NO.128 Civil Judgment. On Jan. 8, 1999, the Company indicted to Guangdong Provincial High People’s Court. The Company believed that the register for establishment and loan were involved in illegal actions and appealed the 2nd trial court to inspect comprehensively relevant witnesses, find relevant facts, relieve the initial trial and transfer the lawsuit to police authorities with domination right. On Nov. 26, 1999, Guangdong Provincial High People’s Court judged the Company to take joint repayment liability of USD 3,600,000.00 debt of Great Ocean Investment advanced by Construction Bank Shangbu Sub-branch and payment for breaching the faith through (1999) YFJEZZI NO209. On Sept. 12, 2000, the Company applied for retrial to Guangdong Provincial High People’s Court. On Dec. 11, 2001, Guangdong Provincial High People’s Court released (2000) YGFSJJSZI No. 242 Notification and rejected the retrial application of the Company. On Apr.19, 2000, the Company submitted a report to Shenzhen Public Security Bureau to apply for putting on record and investigating. Due to the aforesaid events, on Oct. 19, 2000, the rest house of the Company locating in 75 Building, Nanyou B District with net assets of RMB 1,197,284.65 was sold publicly in an obliged way, the price of the public sale was RMB 950,000.00. On Jan. 12, 2001, the houses for office of the Company locating in 11/F, New Resource Building, Nanyou Avenue, Nanshan District with net amount of RMB 3,858,689.24 was sold publicly in an obliged way by Shenzhen Intermediate People’s Court. The price of the public sale was RMB 2,560,000.00. Ended as of Dec. 31, 2000, the Company affirmed USD 28,851,160.00 liabilities. Ended as of Dec. 31, 2002, the Company affirmed RMB 26,288,280.00 liabilities. Ended as of Dec. 31, 2002, Great Ocean Investment has not repaid the aforesaid debts. 15. As agreed by the Board of Directors of the Company, the Company signed Contract of Guarantee for Loan with Bank of Communication Guangzhou Branch on Sept. 28, 1998. The Company provided nonreversible credit guarantee for RMB 30,000,000.00 loan of Taiyuan Information Company from Bank of Communication Guangzhou Branch. Meanwhile, Taiyuan Information Company lent RMB 10,000,000.00 among of the aforesaid loan to the Company with the term of one year. Because Taiyuan Information Company did not repay the principal and interest of the aforesaid loan, Bank of Communication Guangzhou Branch indicted to Guangdong Provincial Guangzhou Municipal Intermediate People’s Court. On May 26, 2000, Guangzhou Municipal Intermediate People’s Court judged Taiyuan Information Company to repay RMB 30,000,000.00 principal and punished interest to Bank of Communication Guangzhou Branch within 10 days since the effectiveness date of the judgment and the Company to take joint repayment liabilities through (2000) SZFJCZI No. 122 & No. 123. Ended as of Dec. 31, 2000, the Company affirmed one liabilities amounting to RMB 6,000,000.00. Ended as of Dec. 31, 2002, Taiyuan Information Company has not repaid the aforesaid amount yet. 16. The Company provided pledge guarantee for RMB 2,300,000.00 bank loan of Tianchuan Company as the office building of Tianjin Filiale. 17. Because the Company owed several fees including port loading and unloading fees to Dongfang Company, it signed Contract of Pledge Guarantee with Dongfang Company on Feb. 12, 1999 and promised to repay 70% of the debt before June 1, 1999 and all debt before July 1, 1999 and used the houses equaling to the balance after deducting the pledged houses amounting to RMB 2,300,000.00 among of the real estate which located in No. 59, Shenyang Avenue, Heping District, Tianjin (the office building of Tianjin Filiale of the Company. On Dec. 7, 1999, Dongfang Company indicted to Tianjin Admiralty Court and required the Company to repay the debt. On Jan. 4, 2000, Tianjin Admiralty Court judged to seal up all A & B Office Building, which located in Kangleli, Gansu Rd, Heping District, Tianjin with land No. ZEZI 1/1025 and house property certification No.98JHGZI0004 and other equivalent assets through (1999) JHFSBZI No. 849-1 Civil Judgement. On July 5, 2000, Tianjin Admiralty Court noticed the Company to repay RMB 4,311,726.00 debt and interest owed to Dongfang Company within 10 days and otherwise to be put teeth according to laws through (2000) HFZTZI No. 1281 Execution Notification. Ended as of Dec. 31, 2002, the Company has not repaid the aforesaid expense yet. 18. On June 12, 1999, due to the lawsuit of loan contract dissension between Container Co., Ltd. and Shenzhen Development Bank Longgang Sub-branch, Shenzhen Municipal Longgang District People’s Court judged Container Co., Ltd. to repay USD 1,000,000.00 principal (converted into RMB 8,277,300.00) and interest (calculated as the loan interest rate of the People’s Bank of China in the same period from Sept. 21, 1998 to the repayment date) within 10 days since the effectiveness date of the contract through (1999) LFJCZI No.163 and the Company to take joint repayment liability. Ended as of Dec. 31, 2000, the Company affirmed one liability amounting to USD 1,000,000.00 (converted into RMB 8,277,300.00). Ended as of Dec. 31, 2002, Container Co., Ltd. has not repaid the aforesaid amount. 7.8 Implementation of duties of the Independent Directors Mrs. Liu Hongling was elected as Independent Director of the Company at 2002 1st Provisional Shareholders’ General held on Dec.2, 2002. The number of Independent Director of the Company was 3, which attained to 1/3 of the Board of the Company. Independent Director Mrs. Li Caimou, Mrs Yang Caiqin(later replaced by Mrs. Hongyan), Mrs. Liu Hongling presented 2003 Board Meeting and Shareholders’ General Meeting of the Company, which played an active role in protecting the whole benefits of the Company and the legal rights and interests of the minority shareholdes. §8. Report of the Supervisory 1. On Apr. 17, 2003, the Supervisory Committee held a meeting and formed the following resolutions: (1) Examined and approved Work Report 2002 of the Supervisory Committee; (2) Examined and approved 2002 annual report of the Company and its summary; (3) Examined and approved other proposals submitted to 2002 Shareholders’ General Meeting and relevant documents. 2. On Aug. 12, 2003, the Supervisory Committee held a meeting and formed the following resolutions: (1)Examined and approved Semi-annual Report 2003 of the Company and its summary; (2) Examined and approved Proposal on Profit Distribution of half year of 2003 submitted by the Board. 3. On Sep. 28, 2003, the Supervisory Committee held a meeting and formed the following resolutions: (1) Examined and approved Proposal on Removing the Post of Supervisor held by Mrs. Li Bin; (2) Examined and approved Report on 2003 Itinerant Inspection Renovation. 4. On Nov. 18, 2003, the Supervisory Committee held a meeting and formed the following resolutions: (1) Examined and approved Proposal on Removing the Post of Supervisor held by Mr. Yuan Jiucai due to retire problem; (2) Examined and approved Proposal on Nominating Mr. Wang Jie as the supervisor of the Company; (3) Examined and approved Proposal on Nominating Mrs. Dai Haihong as the supervisor of the Company; (4) Examined and approved Relevant Proposals submitted to 2003 2nd Shareholders’ General Meeting of the Company and the attachments. §9. Financial Report 9.1 Auditor’s Report 9.2 9.3 Compared with the latest annual report, there were no changes about the accounting policy, accounting estimation and accounting methods. 9.4 Compared with the latest annual report, there was no change about the consolidation scope.