京粮控股(000505)*ST珠江Ｂ2003年年度报告（英文版）

Hainan Pearl River Holding Company Limited HAINAN PEARL RIVER HOLDINGS CO., LTD. ANNUAL REPORT 2003 §1. Important Notes 1.1 Board of Directors of Hainan Pearl River Holdings 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 full text of annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 Director Tan Shuguang entrusted Director Zheng Qing to attend the Board meeting and vote on his behalf. 1.3 Mr. Zheng Qing, Chairman of the Board as well as General Manager, Mr. Chen Binglian, Deputy General Manager as well as Chief Financial Officer, hereby guarantee that the financial report enclosed in this Annual Report 2003 is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock *ST Pearl River, *ST Pear River B Stock code 000505, 200505 Listed stock exchange Shenzhen Stock Exchange Registered address and office address 29/F, Royal Empire Building, Pearl River Plaza, Binhai Avenue, Haikou Post code 570125 Internet web site of the Company Naught E-mail of the Company hnpearl@public.hk.hi.cn 2.2 Contact person and method Secretary of the Board of Representative in charge of Directors Securities Affairs Name Feng Pai Gu Lirong Contact address 29/F, Royal Empire Building, Pearl 29/F, Royal Empire Building, River Plaza, Binhai Avenue, Pearl River Plaza, Binhai Avenue, Haikou Haikou Telephone (86)898-68581888 ext. (86)898-68581888 ext. Fax (86)898-68581026 (86)898-68581026 E-mail hnpearl@public.hk.hi.cn hnpearl@public.hk.hi.cn §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 129,561,020 91,008,755 42.36 91,705,847 Total profit -1,482,336 -140,462,535 -50,828,884 Net profit 1,629,184 -137,499,128 -39,149,574 Net profit after deducting non-recurring gains and losses -14,620,656 -132,518,891 -20,252,670 Increase/decrease At the end of At the end of from the end of At the end of 2003 2002 2001 previous year（％） Total assets 699,838,932 663,838,276 5.42 715,376,924 Shareholder’s equity (excluding minority interests) 250,895,785 251,348,071 -0.18 389,230,308 Hainan Pearl River Holding Company Limited Net cash flow arising from operating activities -2,065,568 -28,296,825 -17,591,817 3.2 Major financial indexes Unit: RMB Increase/decrease over 2003 2002 2001 last year（％） Earnings per share 0.004 -0.364 -0.104 Return on equity (%) 0.65 -54.70 -10.06 Return on equity calculated based on net profit after deducting non-recurring gains -5.822 -41.375 -4.920 and losses (%) Net cash flow per share arising from operating activities -0.005 -0.075 -0.047 Increase or decrease At the end At the end from the end of At the end of 2003 of 2002 of 2001 previous year（％） Net assets per share 0.664 0.6666 -0.30 1.031 Net assets per share after adjustment 0.601 0.610 -1.475 0.950 3.3 Difference in net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Impact of IFRS and Other Adjustments on Profit/(Loss) for the Year and Net Assets: Profit/(Loss) for the Net assets as at year ended 31 December 31 December 2003 2002 2003 2002 RMB'000 RMB'000 RMB'000 RMB'000 As reported in statutory accounts As previously reported 1,629 (138,051) 250,895 251,348 Opening balances adjustment - Interest received from related parties capitalised in capital reserve now - 552 - - reversed As restated 1,629 (137,499) 250,895 251,348 Impact of IFRS and other adjustments - reversal of opening balances adjustment - (552) - - - adjustment on capitalisation of interest charges arising from borrowings used to finance the properties under development during the construction period and corresponding depreciation 931 5,268 (4,788) (5,719) - reversal of adjustment on capitalisation of interest charges arising from borrowings used to finance the properties under development during the construction period now disposed of 4,788 - 4,788 - - unrecognised losses of consolidated subsidiaries (2,445) (626) - - Hainan Pearl River Holding Company Limited - reversal of capital reserve arising from transfer of construction in progress from the Company to a subsidiary as capital injection - - (363) - - goodwill on acquisition of an associate recorded as bad debts under IFRS (3,059) - (3,059) - - provision for bad and doubtful debts - - (14,600) (14,600) - adjustment on treasury stock - - (1,410) (1,410) - excess interest income from a related company recognised as capital reserve in PRC statutory accounts now adjusted as income for the year - 795 - - - share of accumulated losses of an investee company classified as an associate in last year now adjusted as share of loss from associates in last year - (1,253) - - - adjustment to income from an associate - - (9,929) (9,929) - others 872 80 (526) (1,398) As restated for the Group 2,716 (133,787) 221,008 218,292 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share (Unit: share) Amount at the Amount at the period-begin period-end I. Non-circulating shares 1. Sponsors’ shares Including: Domestic legal person’s shares 206,744,976 206,744,976 2. Inner employees’ shares Total non-circulating shares 206,744,976 206,744,976 II. Circulating shares 1. Domestically RMB ordinary shares 113,405,824 113,405,824 2. Domestically listed foreign shares 57,500,000 57,500,000 Total circulating shares 170,905,824 170,905,824 III. Total shares 377,650,800 377,650,800 4.2 Statement of shares held by the top ten shareholders 50403 shareholders of A-share and 11231 shareholders of Total number of shareholders at the end of report year B-share Particulars about shares held by the top ten shareholders Number of Increase / Shares held Type of shares share decrease in at the Proportion Nature of Full name of Shareholders (Circulating/No pledged/ the report year-end (%) shareholders n-circulating) frozen year (share) (share) (share) Beijing Wanfa Real Estate 0 112,628,976 29.82 Non-circulating 0 Legal person Development Co., Ltd. shareholder Guangzhou Lishengde Investment 0 17,000,000 4.50 0 Legal person Non-circulating Co., Ltd. shareholder Henglong International Co., Ltd. 0 13,570,000 3.59 13,570,000 Legal person Non-circulating shareholder Shanghai Central South Investment 0 11,000,000 2.91 0 Legal person Non-circulating and Management Co., Ltd. shareholder Hainan Pearl River Holding Company Limited Hainan Development Bank Haikou 0 7,820,000 2.07 0 Legal person Non-circulating Branch shareholder Hebei Securities Co., Ltd. 0 5,750,000 1.52 0 Legal person Non-circulating shareholder Guangzhou Pearl River Foreign 0 4,896,000 1.30 0 Legal person Capital Contraction Design Institute, Non-circulating shareholder Hainan Branch Ping An Insurance Company Of 0 3,450,000 0.91 0 Legal person Non-circulating China, Ltd. shareholder Hainan Yueyin Science and 0 2,660,000 0.70 0 Legal person Non-circulating Technology Co. Ltd. shareholder Shenzhen Gintian Industrial Co., Ltd. 0 2,300,000 0.61 2,300,000 Legal person Non-circulating shareholder Explanation on associated Among the top ten shareholders, there existed no associated relationship relationship among the top ten between the first largest shareholder and the other shareholders, and it didn’t shareholders or consistent action belong to the consistent actionist regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies with the other shareholders. For the other shareholders, the Company is unknown whether there exists associated relationship, or whether the rest shareholders belong to the consistent actionist regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies. Particulars about shares held by the top ten shareholders of circulating share Name of shareholder Number of circulation shares Type (A-share, B-share, held at the year-end H-share or other) ZHAO SHU ZHEN 865,300 A-share QIU LAN ZHEN 459,100 A-share ZHANG HUI LONG 397,430 A-share CAO JI ZHEN 267,000 A-share CHAI LING YAN 241,241 A-share BAI JUN MEI 229,000 A-share GAO LEI 225,100 A-share CHENG GUO 223,350 A-share ZHANG LI HONG 221,409 A-share TIAN YONG QIN 215,800 A-share Explanation on associated Among the above top ten shareholders of circulation share, the relationship among the top Company is unknown whether there exists associated relationship, ten shareholders of and whether they belong to the consistent actionist regulated by the circulation share Management Measure of Information Disclosure on Change of Shareholding for Listed Companies or not. 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 Beijing Wanfa Real Estate Development Co., Ltd. (“Wanfa Real Estate”), the first largest shareholder of the Company, was established in Nov. 1995, with registered capital: RMB 280 million, legal representative: Meng Qiao, main business: development and operation of real estate. As a joint-stock company, its major shareholders are Beijing Xinxing Real Estate Development General Company, Beijing Jiaheng Taishi Industrial Co., Ltd., Beijing Shengcai Science and Trade Co., Beijing Jiuzhu Property and Management Co., Ltd. and Beijing Yitai Co. The actual controller of the Company’s controlling shareholder, Beijing Xinxing Real Estate Development General Company (“Xinxing Real Estate”) is one of the shareholders of Beijing Wanfa Real Estate Development Co., Ltd., who established in 1992 with registered capital of RMB 10 million and legal representative: Zheng Qing. The said company is principally engaged in the development and operation of real Hainan Pearl River Holding Company Limited estate as a collective enterprise. §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Name Title Sex Age Office Shares held Shares held Reason for term at the at the change year-begin year-end Zheng Qing Chairman of the Board / Male 37 Sep. 2002- 25000 25000 Naught General Manager Sep. 2005 Peng Shuyin Director Male 46 Sep. 2002- 0 0 Naught Sep. 2005 Wu Xiaojing Director Male 52 Sep. 2002- 0 0 Naught Sep. 2005 Shi Yonghui Director Male 39 Sep. 2002- 0 0 Naught Sep. 2005 Zhang Jian Director Male 50 Sep. 2002- 0 0 Naught Sep. 2005 Tan Shuguang Director Male 33 Sep. 2002- 0 0 Naught Sep. 2005 Wang Zhigang Independent Director Male 44 Sep. 2002- 0 0 Naught Sep. 2005 Yang Kaijun Independent Director Male 47 Sep. 2002- 0 0 Naught Sep. 2005 Zhang Taowei Independent Director Male 40 Sep. 2002- 0 0 Naught Sep. 2005 Sun Xianli Convener of Male 57 Sep. 2002- 0 0 Naught Supervisory Committee Sep. 2005 She Jianhui Supervisor Female 50 Sep. 2002- 0 0 Naught Sep. 2005 Xu Jingui Supervisor Male 34 Sep. 2002- 0 0 Naught Sep. 2005 Feng Pai Deputy General Male 40 Apr. 2003- 0 0 Naught Manager Apr. 2006 Chen Binglian Deputy General Male 44 Apr. 2003- 0 0 Naught Manager Apr. 2006 Zhu Biqing Deputy General Female 35 Apr. 2003- 0 0 Naught Manager Apr. 2006 Cui Zhongwei Deputy General Male 46 Apr. 2003- 0 0 Naught Manager Apr. 2006 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment Name of Shareholding Title in Shareholding Name Office term from the Company Company Company (Yes / No) Beijing Wanfa Real Estate Zheng Qing Director Jun. 1999 to now Yes Development Co., Ltd. Beijing Wanfa Real Estate Shi Yonghui Deputy General Manager Jul. 1993 to now No Development Co., Ltd. Guangzhou Lishengde Zhang Jian Chairman of the Board Aug. 2000 to now No Investment Co., Ltd. Hainan Yueyin Science and Tan Shuguang General Manager May 2001 to now No Technology Co. Ltd. 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 790,000 Total annual payment of the top three directors Naught (one director drew the remuneration from the drawing the highest payment Company because he concurrently took the post of General Manager of the Company.) Total annual payment of the top three senior RMB 490,000 executives drawing the highest payment Hainan Pearl River Holding Company Limited Allowance of independent director Naught Other treatment of independent directors Naught Name of directors and supervisors receiving no Director: Peng Shuyin, Wu Xiaojing, Shi Yonghui, Zhang payment or allowance from the Company Jian and Tan Shuguang Independent Director: Wang Zhigang, Yang Kaijun and Zhang Taowei Supervisor: Sun Xianli, She Jianhui Range of payment Number of persons RMB 150,000 ～ RMB 250,000 1 RMB 100,000 ～ RMB 150,000 4 RMB 50,000 ～ RMB 100,000 1 §6. Report of the Board of Directors 6.1 Discussion and analysis of the whole operation in the report period 1. In 2003, Wuhan project has achieved the confirmation of land transaction, orientation of project market, submittal and approval of design and layout and registration of road, etc., prophase preparation of project development was in order basically. 2. Sanya Wanjia Holiday Inn entered into the phase of decoration with the pre-selling procedure of villas under dealing. 3. The Company started to conduct the whole programming and submittal and approval work of registration in the project of Hainan Jianfengling Tourism Holiday Zone. 4. The Company gained the certain investment income through transferring the equity of Hainan Pearl River Tubular Pile Co., Ltd., which insured the Company to turn losses into profits in 2003. 5. Pearl River Property Company gave play to brand advantage, expanded comprehensive property management area with breakthrough of a million square meters, the operation scale and management level strode new step. 6.2 Statement of core business classified according to industries or products Unit: RMB Classified according to Income from Cost of main Gross Increase/ Increase/ Increase/ industries or products main operations profit decrease of decrease of decrease of operations ratio income from cost of main gross profit (%) main operations operations ratio compared with compared compared the previous with the with the year (%) previous year previous (%) year (%) Income from sales of 11,789,924.86 9,818,306.12 16.72 3,962.26 659.19 real estate Income from property 10,453,147.29 8,066,370.58 22.83 19.50 26.81 -16.31 management Income from 99,470,379.57 71,170,891.57 28.45 29.71 11.40 70.46 proceeding and building 6.3 Particulars about core business classified according to areas Unit: RMB Areas Income from main operations Increase/decrease of income from main operations compared with the previous year (%) Hainan 116,897,388 29.89 Shanghai 10,970,775 987.62 Hainan Pearl River Holding Company Limited 6.4 Particulars about the customers of purchase and sales Total amount of purchase of 19,360,000 Proportion in the total 37.85% the top five suppliers amount of purchase Total amount of sales of the 41,100,000 Proportion in the total 31.32% top five sales customers amount of sales 6.5 Operation of share-holding companies (applicable to the situation of investment earnings’ taking over 10% of net profit) □Applicable √Inapplicable 6.6 Explanation of reason of material change of main operations and its structure □Applicable √Inapplicable 6.7 Explanation of reason of material change of profitability capability of main operations (gross profit ratio) compared with the previous year □Applicable √Inapplicable 6.8 Analysis of reason of material change of operating results and profit structure compared with the previous year √Applicable □Inapplicable Unit: RMB Items Jan.-Dec. 2003 Jan.-Dec.2002 Increase/decrease (%) Income from main operations 129,561,020 91,008,755 42.36 Profit from main operations 32,129,557 14,289,597 124.85 Net profit 1,629,184 -137,499,128 Net increase of cash and cash equivalents 43,449,341 -16,341,383 Investment earnings 7,605,302 -55,168,915 Main reasons for change: Increase in income and profit from main operations was because the income and profit from proceeding and building and from sales of real estate has increased by a big margin. Analysis of reason of material change of the whole financial position compared with the previous year □Applicable √Inapplicable 6.9 Explanation of the past, current and future important effects of the material change of 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 change projects □Applicable √Inapplicable Hainan Pearl River Holding Company Limited 6.13 Application of the proceeds non-raised through share offering √Applicable □Inapplicable Name of project Amount of project Progress of project Earning of project Sanya Wanjia Junhua Holiday Inn RMB 17.88 million Decoration engineering Naught Wuhan Real Estate Project RMB 31.68 million Land transfer Naught 6.14 Explanation of the “Qualified Opinion” of Certified Public Accountants by the Board of Directors □Applicable √Inapplicable 6.15 Business plan as of the new year of the Board of Directors √Applicable □Inapplicable 1. In 2004, the Company’s development of real estate will have a breakthrough, accomplish starting working and sales in the project of Wuhan project at an early date. The Company’s important source of profit in future is that the said project entered into rolling development. 2. Attach greater importance on engineering progress of Sanya Wanjia Hotel, ensure the construction quality and try to bring it into trial operation as soon as possible. 3. Continue to make the prophase layout working of Hainan Jianfengling Tourism Resort project, and lay a solid foundation for long-term development of the Company. 4. Reinforce the management of investment controlling companies and the secondary companies, and promote improvement of economic benefit. Profit estimation of the new report year □Applicable √Inapplicable 6.16 The preplan of the profit distribution and capitalization of capital public reserve of the Board of Directors In the report period, the Company would conduct neither profit distribution nor converting capital reserve into share capital. §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets √Applicable □Inapplicable Contribution to net profit of the Related transaction Transaction parties and the Date of Company of the Gains or losses or not (if yes, Sale price assets sold sale assets sold from the from sale explain pricing year-begin to the principle) date of sale One Fortune Group Pte. Ltd. Hainan Pearl River Tubular Dec. 31, RMB 50 RMB 13.1 Pile Co., Ltd. RMB 21.01 million No 2003 million million 98.76% equity Note: The Company is engaged in the development and management of real estate, so it is no impact on the continuity of the Company’s business and stability of management team. 7.3 Significant guarantee □Applicable √Inapplicable Hainan Pearl River Holding Company Limited 7.4 Current related credits and liabilities √Applicable □Inapplicable Unit: RMB’0000 Funds provided to listed company by Funds provided to related party Related parties related parties Amount occurred Balance Amount occurred Balance Beijing Xinxing Real Estate 5150 5867 Development General Company Hainan Longzhu Shunda -276 549 Entertainment Co., Ltd. Guangzhou Lishengde 0 440 Investment Co., Ltd. Shanghai Sea Pearl Property 20 129 Co., Ltd Total -256 1118 5150 5867 7.5 Entrusted financing □Applicable √Inapplicable 7.6 Implementation of projects committed □Applicable √Inapplicable 7.7 Significant lawsuits and arbitrations √ Applicable □ Inapplicable The case on the Company prosecuted Hainan Zhongkexin Industrial Development Co., Ltd. and Hainan Overseas Chinese Commerce Co., Ltd. to pay the arrears for purchase of houses and overdue default fine, in the report period, Haikou Municipal Intermediate People’s Court issued the judgment, which judged Hainan Zhongkexin Industrial Development Co., Ltd. to pay the rest arrears for purchased of houses amounting to RMB 9.4 million and overdue default fine amounting to RMB 1.15 million. Hainan Zhongkexin Industrial Development Co., Ltd. did neither appeal to the court in the legal term nor perform efficient judgment. The Company has applied for enforcement in the last ten-day of October 2003, but it was no executive results in the report period. The said event was published on Securities Times dated Nov. 20, 2003. 7.8 Particulars about the performance of obligations of Independent Directors The Company timely engaged independent directors according to the Guiding Opinions on the Establishment of Independent Director System in Listed Companies with the number of independent directors being one third of the total members of the Board. In addition, the Company specified the independent director system in the Articles of Association. The independent directors performed their power and duties with due diligence and played a good role as independent directors. Independent directors expressed their independent opinion on the engagement of senior executives and sales of material assets. §8. Report of the Supervisory Committee The Supervisory Committee believed that the Company operated according to laws and there existed no problems in financing, purchase and sale of material assets of the Company. §9. Financial Report 9.1 Auditors’ Opinion To the members of Hainan Pearl River Holding Company Limited (incorporated in the People's Republic of China with limited liability) We have audited the financial statements of Hainan Pearl River Holding Company Limited (the "Company") and its subsidiaries (the "Group") for the year ended 31 December 2003 on pages 2 to Hainan Pearl River Holding Company Limited 25 which have been prepared in accordance with International Financial Reporting Standards as promulgated by the International Financial Reporting Standards Board. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing issued 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements give a true and fair view of the state of the Group's affairs as at 31 December 2003 and of the Group's profit and cash flows for the year then ended. Grant Thornton Certified Public Accountants Hong Kong 9.2 Notes to accounting statement 1. Compared with the latest annual report, there is no change in accounting policy, accounting estimate and calculation method. 2. Compared with the latest annual report, the Company’s consolidated scopes newly add Beijing Baili Network Co., Ltd., while no longer consolidate balance sheet as at the year-end of Hainan Pearl River Tubular Pile Co., Ltd.. 9.3 Accounting statement (Attached hereafter) Board of Directors of Hainan Pearl River Holdings Co., Ltd. April 18, 2004 Consolidated statement of income For the year ended 31 December 2003 Notes 2003 2002 RMB'000 RMB'000 Turnover 6 129,561 91,009 Cost of sales (97,180) (76,776) Gross profit 32,381 14,233 Other income 7 1,856 8,957 Gain on disposal of a subsidiary 18,158 - Selling, general and administrative expenses (25,050) (36,502) Written back/(Provision) for diminution in value of properties held for sale 2,276 (29,994) Provision for doubtful debts (5,221) (20,353) Provision for diminution in value of long term investments (332) (49,323) Hainan Pearl River Holding Company Limited Profit/(Loss) from operations 24,068 (112,982) Net finance costs 8 (18,748) (14,904) Loss from associates (3,310) (8,295) Profit/(Loss) before taxation 9 2,010 (136,181) Taxation 10 - - Profit/(Loss) before minority interests 2,010 (136,181) Minority interests 706 2,394 Profit/(Loss) for the year 28 2,716 (133,787) Profit/(Loss) per share (RMB Fen) 11 0.72 (35.43) Hainan Pearl River Holding Company Limited Consolidated balance sheet As at 31 December 2003 Notes 2003 2002 RMB'000 RMB'000 ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 12 89,772 84,621 Long term investments 13 154,509 156,523 Intangible assets 14 13,825 12,938 258,106 254,082 Current assets Properties held for sale 15 264,474 230,892 Inventories 16 636 3,038 Trade and other receivables 17 81,627 107,135 Amounts due from associates 3,914 6,694 Amounts due from investee companies - 11,443 Amount due from a related company 4,180 4,180 Cash at banks and in hand 58,692 15,243 413,523 378,625 Current liabilities Bank loans 18 93,570 125,035 Short term loans 19 167,000 15,000 Trade and other payables 20 131,338 108,332 Amounts due to associates 2,352 852 Amounts due to investee companies 226 - Loan from a related company 21 46,670 7,170 Dividends payable 3,213 3,213 444,369 259,602 Net current (liabilities)/assets (30,846) 119,023 Non-current liabilities Long term loans 22 - 152,000 Minority interests 6,252 2,813 Net assets 221,008 218,292 CAPITAL AND RESERVES Share capital 23 377,651 377,651 Reserves 24 (156,643) (159,359) Shareholders’ funds 221,008 218,292 Consolidated cash flow statement For the year ended 31 December 2003 2003 2002 Hainan Pearl River Holding Company Limited RMB'000 RMB'000 Cash flows from operating activities Profit/(Loss) before taxation 2,010 (136,181) Adjustments for : Depreciation 7,960 8,506 Provision for doubtful receivables 5,221 20,353 Permanent diminution in value of long term investments 332 49,323 (Written back)/Provision for properties held for sale (2,276) 29,994 Loss from associates 3,310 8,295 Gain on disposal of investment in a long term - (2,730) investment/an associate Gain on disposal of a subsidiary (18,158) - (Gain)/Loss on disposal of property, plant and (335) 610 equipment Written off of inventories - 746 Amortisation of intangible assets 1,674 1,854 Interest income (763) (1,581) Interest expense 19,511 16,485 Operating profit/(loss) before working capital changes 18,486 (4,326) Increase in trade and other receivables (6,901) (63,038) (Increase)/Decrease in properties held for sale (20,101) 1,072 (Increase)/Decrease in inventories (6,279) 3,709 Decrease in amount due from an unconsolidated - 92 subsidiary Decrease in amounts due from associates 2,780 1,791 Decrease in amounts due from investee companies - 10,191 Increase in amount due from a related company - (4,180) Increase in trade and other payables 35,630 44,256 Increase/(Decrease) in amount due to an associate 1,500 (169) Increase in amounts due to investee companies 226 - Increase in amount due to a related company - 6,670 Cash generated from/(used in) operations 25,341 (3,932) Interest paid (7,159) (16,485) Net cash generated from/(used in) operating activities 18,182 (20,417) Cash flows from investing activities Proceeds from disposal of property, plant and equipment 2,246 501 Acquisition of a subsidiary net of cash acquired (see note (6,335) - 26) Disposal of a subsidiary net of cash disposed of (see note 13,679 (18) 27) Increase in long term investments (225) (12,950) Purchases of property, plant and equipment (22,896) (42,020) Interest received 763 1,581 Net cash used in investing activities (12,768) (52,906) Cash flows from financing activities Bank loans repayment (4,465) - New bank loans taken out 3,000 17,100 New long term loans taken out - 40,000 Increase in loan from a related company 39,500 - Decrease in minority interests - (118) Net cash generated from/(used in) financing activities 38,035 56,982 Increase/(Decrease) in cash 43,449 (16,341) Cash at beginning of year 15,243 31,584 Hainan Pearl River Holding Company Limited Cash at end of year 58,692 15,243 Consolidated statement of changes in equity for the year ended 31 December 2003 Share Capital Revenue Accumulated capital reserve reserve losses Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 January 2002 377,651 288,912 109,855 (424,339) 352,079 Transfer - - 53 (53) - Loss for the year - - - (133,787) (133,787) Balance at 31 December 2002 377,651 288,912 109,908 (558,179) 218,292 and as at 1 January 2003 Profit for the year - - - 2,716 2,716 Balance at 31 December 2003 377,651 288,912 109,908 (555,463) 221,008 Hainan Pearl River Holding Company Limited Notes to the financial statements for the year ended 31 December 2003 1. ORGANISATION AND OPERATIONS Hainan Pearl River Holding Company Limited (the "Company") was incorporated in the People's Republic of China (the "PRC") in November 1987. On 3 January 1992, the Hainan Provincial People's Government approved the reorganisation of the Company into a joint stock limited company. The principal activities of the Company and its subsidiaries (the "Group") are property development, construction related products and services and travel related services. The registered office of the Company is located at 29/F., Dihao Building, Pearl River Plaza, Binhai Avenue, Haikou, Hainan, PRC. The average number of employees of the Group during the year was 338 (2002 : 588). 2. BASIS OF PRESENTATION The consolidated financial statements have been prepared on a going concern basis notwithstanding that at 31 December 2003, the Group reported net liabilities of RMB30,846,000. The going concern basis has been adopted on the basis of the undertaking of a related company not to demand repayment of the trust loans amounted to RMB152,000,000 due from the Group for the next twelve months until such time when repayment will not affect the Group's ability to repay other creditors in the normal course of business. Should the Group be unable to continue in business as a going concern, adjustments would have to be made to reclassify non-current assets as current assets and non-current liabilities as current liabilities, to reduce the value of assets to their recoverable amount and to provide for any further liabilities which might arise. The consolidated financial statements of the Group incorporate the financial statements of the Company and its major subsidiaries made up to 31 December 2003. All material inter-company transactions and balances are eliminated on consolidation. Hainan Pearl River Holding Company Limited 2. BASIS OF PRESENTATION (Continued) As at 31 December 2003, the Company had the following subsidiaries, which were all incorporated in the PRC : Date of Attributable Registered Company name establishment equity interest capital Principal activities Consolidated subsidiaries Hainan Pearl River Properties and 22 August 1991 100% RMB5,000,000 Property Hotels Management Co., Ltd. management ("海南珠江物业酒店管理 有限公司") Hainan Pearl River Enterprises 29 June 1993 100% RMB40,000,000 Property Holding Co., Ltd. Shanghai Real development Estate Co. ("海南珠江实业股份有限 公司上海房地产公司") Hainan Pearl River Enterprises 18 September 100% RMB1,000,000 Construction Project Construction Supervision 1993 supervision and Co., Ltd. management ("海南珠江实业工程建设 监理公司") Hainan Pearl River Tourism Co. 5 April 1994 100% RMB1,500,000 Travel services ("海南珠江国际旅行社") Hubei Pearl River Real Estate 12 April 2001 92% RMB37,500,000 Property Development Co., Ltd. development ("湖北珠江房地产开发 有限公司") Sanya Wanjia Hotel Management 19 March 2003 100% RMB40,000,000 Hotel management Co., Ltd. ("三亚万嘉酒店管理 有限公司") Beijing Baili-net Technology Co., 17 August 1998 75% RMB20,000,000 Information Ltd. technology ("北京百利网科技 consulting services 有限公司") A subsidiary is a company controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefit from its activities. Hainan Pearl River Holding Company Limited 2. BASIS OF PRESENTATION (Continued) As at 31 December 2003, the Company had the following major associates, which were all incorporated in the PRC : Date of Attributable Registered Principal activities Company name establishment equity interest capital Beijing Dirui Computer & 12 August 1999 27.27% RMB41,250,000 Hotel video Technology Co., Ltd. communication ("北京市迪瑞计算技术有 system 限公司") Beijing Wanwangyuan 25 September 2000 30% RMB30,000,000 Communication Communication & technique and Technology Co. system ("北京万网元通讯技术公 司") Beijing Feikai Biological 21 February 2001 40% RMB15,000,000 Biological technique Technology Co. research ("北京飞凯生物技术公司") Beijing Xin Li Ji Vacuum Glass 27 March 2001 34.89% RMB25,000,000 Investment holding Technique Co., Ltd ("北京新立基真空玻璃技 术有限公司") Zhongjangwang Database Co., 20 June 1996 18.397% RMB80,000,000 Interest services Ltd ("中经网数据有限公司") An associate is a company, other than a subsidiary, in which the Group has a long term equity interest and over which the Group is in a position to exercise significant influence on its financial and operating policy decisions. The results of the above associates are accounted for by using the equity method of accounting and the Group's interests are stated at the share of net assets value in these associates. Other associates, except as stated above, are stated in the consolidated balance sheet at cost less provision for permanent diminution in value. The results of operations and net assets of these associates are not accounted for on the equity basis for the purpose of the restatement of the financial statements to conform to IFRS, because, in the opinion of the directors, they are not material to the results of operations and financial position of the Group taken as a whole. The results of these companies are dealt with in the consolidated statement of income to the extent of dividend income received and receivable. Hainan Pearl River Holding Company Limited 3. PRINCIPAL ACCOUNTING POLICIES The financial statements on page 2 to 25 are prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Financial Reporting Standards Board ("IFRSB") and interpretations issued by the Standard Interpretation Committee of the IFRSB as if those standards had been applied consistently throughout the year. This basis of accounting differs from that used in the statutory accounts of the Group which were prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises in the PRC. The financial statements are prepared under the historical cost convention. The following principal accounting policies were adopted in restating the financial statements of the Group to conform to IFRS : (a) Property, plant and equipment (i) Depreciation Depreciation is provided to write off the cost or carrying value of property, plant and equipment over their estimated useful lives, taking into account the estimated residual value, using the straight line method. The estimated useful lives of property, plant and equipment are as follows : Land and buildings 25 years Machinery and equipment 10 years Furniture and fixtures 5 years Motor vehicles 5 years (ii) Measurement bases Property, plant and equipment are stated at cost less provision for diminution in value and accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the working condition and location for its intended use. Subsequent expenditure relating to property, plant and equipment is added to the carrying amount of the assets if it can be demonstrated that such expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the assets. When assets are sold, any gain or loss resulting from their disposal, being the difference between the net disposal proceeds and the carrying amount of the assets, is included in the consolidated statement of income. Hainan Pearl River Holding Company Limited 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (b) Construction in progress Construction in progress represents machineries and properties under construction and is stated at cost. Cost includes construction cost plus interest charges arising from borrowings used to finance these projects during the construction period. Construction in progress is transferred to property, plant and equipment when it is capable of producing saleable output on a commercial basis. (c) Goodwill Goodwill represents the premium of purchase consideration over the fair values ascribed to the net assets of subsidiaries or associates acquired and is amortised, using the straight line method, over a period of 10 years. (d) Impairment The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. All impairment losses are recognised in the consolidated statement of income. Calculation of recoverable amount The recoverable amount of the Group's receivables is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration are not discounted. The recoverable amount of other 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 situations. (e) Properties held for sale Properties held for sale are stated at the lower of cost and net realisable value. Cost of properties held for sale includes cost of construction, development expenditures and interest charges capitalised. Net realisable value is determined on the basis of the estimated selling price less further costs of construction and estimated costs necessary to make the sale. Hainan Pearl River Holding Company Limited 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (f) Long term investments Long term investments are stated at cost less provision for permanent diminution in value where necessary. (g) Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. (h) Financial instruments Financial instruments of the Group include other investments, loans and receivables, cash and bank balances, creditors and other payables. The accounting policies for various types of investments of the Group are set out in the individual accounting policies associated with these investments. Other financial instruments are stated at cost. (i) Foreign currencies Transactions in foreign currencies are translated into Renminbi Yuan at the rates of exchange ruling at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Renminbi Yuan at the rates of exchange ruling at that date. Profits and losses arising on exchange are dealt with in the consolidated statement of income. (j) Recognition of revenue Revenue from the sale of developed properties is recognised when title of the property is transferred and the buyer takes legal possession of the property. Revenue from the sale of goods is recognised when the goods are delivered to customers. Revenue from property management is recognised when the management fee is due and receivable. Hainan Pearl River Holding Company Limited 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (k) Provision A provision is recognised in the consolidated 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. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (l) Segmental reporting A segment is a distinguishable component of the Group that is engaged either in a particular business (business segment), or conducting business in a particular geographical area (geographical segment), which is subject to risks and rewards that are different from those of other segments. (m) Discontinuing operation A discontinuing operation is a clearly distinguishable component of the Group's business, both operationally and for financial reporting purposes, that is disposed of or abandoned pursuant to a single plan, and which represents a separate major line of business or geographical area of operation. (n) Cash and cash equivalent For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash in hand and amounts repayable on demand with banks and short-term highly liquid investments which are readily convertible into known amounts of cash without notice and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advance. Hainan Pearl River Holding Company Limited 4. SEGMENT INFORMATION Segmental information of the Group by business segment (primary segment) and geographical segment (secondary segment) are as follows : (a) Business segment Discontinuing operation Continuing operations (see note 5) Properties development and Travel-related Manufacture management services of PHC-pipe Total 2003 2002 2003 2002 2003 2002 2003 2002 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Turnover 25,766 10,044 4,325 4,278 99,470 76,687 129,561 91,009 Segment results 1,259 (54,983) 11 (27) 23,625 10,655 24,895 (44,355) Unallocated expenses (4,137) (76,922) Net finance costs (18,748) (14,904) Minority interests 706 2,394 Profit/(Loss) for the year 2,716 (133,787) Segment assets 453,060 340,940 50,233 1,492 - 69,836 503,293 412,268 Unallocated assets 168,336 220,439 Total assets 671,629 632,707 Segment liabilities 434,785 334,985 9,584 259 - 59,604 444,369 394,848 Unallocated liabilities - 16,754 Total liabilities 444,369 411,602 Capital expenditure 13,826 27,908 1,850 22 7,219 14,089 22,895 42,019 Depreciation 3,214 3,359 22 25 22 25 7,960 8,506 (b) Geographical segment The sales of the Group during the years ended 31 December 2002 and 2003 were made in the PRC. Hainan Pearl River Holding Company Limited 5. DISCONTINUING OPERATIONS The Group has entered into a sale and purchase agreement with an independent third party on 22 October 2003 under which the Group agreed to dispose of 98.67% equity interest in its wholly-owned subsidiary, Hainan Pearl River Pile Co., Ltd., which was engaged in manufacture of PHC-pipe for a consideration of RMB50 million. The disposal is to raise funding for the Group's property and hotel development in Wuhan and Sanya respectively. The disposal was completed in December 2003. As at 31 December 2003, the Group has received from the independent third party cash consideration of RMB25,548,000 and the remaining portion is included under other receivables under current assets. As a result, manufacture of PHC-pipe is reported in the financial statements for the year ended 31 December 2003 as a discontinuing operation. The sales, results, cash flows and net assets of this discontinued segment were as follows: 2003 2002 RMB'000 RMB'000 Sales and results: Sales 99,470 76,687 Operating expenses (78,455) (66,194) Profit for the year 21,015 10,493 Assets and liabilities: Total assets 97,028 69,836 Total liabilities (64,635) (59,604) Net assets 32,393 10,232 Cash flows: Operating cash flows 20,245 (12,428) Investing cash flows (10,890) (14,147) Financing cash flows (1,015) 29,700 Total cash flows 8,340 3,125 Hainan Pearl River Holding Company Limited 6. TURNOVER Turnover comprises income from sales of developed properties, sales of goods and property management and sales of construction related products. 7. OTHER INCOME 2003 2002 RMB'000 RMB'000 Gain on disposal of investment in a long term investment / an associate - 2,730 Rental income 1,618 1,654 Others 238 4,573 1,856 8,957 8. NET FINANCE COSTS 2003 2002 RMB'000 RMB'000 Interest expenses 19,511 16,485 Interest income (763) (1,581) 18,748 14,904 9. PROFIT/(LOSS) BEFORE TAXATION 2003 2002 RMB'000 RMB'000 Profit/(Loss) before taxation is arrived at after charging : Amortisation of intangible assets 1,674 1,854 Depreciation of property, plant and equipment 7,960 8,506 Staff cost 8,126 6,196 Hainan Pearl River Holding Company Limited 10. TAXATION The Group provides for taxation on the basis of its income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes. 11. PROFIT/(LOSS) PER SHARE Profit/(Loss) per share was calculated based on the profit for the year of RMB2,716,000 (2002 : loss of RMB133,787,000) and on the weighted average number of 377,650,800 (2002 : 377,650,800) shares. Hainan Pearl River Holding Company Limited 12. PROPERTY, PLANT AND EQUIPMENT Land and Machinery and buildings equipment Motor vehicles a RMB'000 RMB'000 RMB'000 At cost less impairments At 1 January 2003 31,323 50,908 8,418 Additions 294 8,850 20 Disposals (3,283) - (68) Acquisition of a subsidiary - 4,872 - Disposal of a subsidiary (15,018) (40,863) (816) Transfer from property held for sales - - - At 31 December 2003 13,316 23,767 7,554 Accumulated depreciation At 1 January 2003 5,262 24,997 5,603 Charge for the year 1,542 5,698 564 Written back on disposal (1,387) - (53) Acquisition of a subsidiary - 1,442 - Disposal of a subsidiary (3,398) (15,663) (15) At 31 December 2003 2,019 16,474 6,099 Net book value At 31 December 2003 11,297 7,293 1,455 At 31 December 2002 26,061 25,911 2,815 Hainan Pearl River Holding Company Limited 13. LONG TERM INVESTMENTS 2003 2002 RMB'000 RMB'000 Investments in unconsolidated subsidiaries - unlisted, at cost 899 770 Investments in associates - unlisted, at cost 5,378 5,133 Interest in associates - unlisted, share of net assets value 23,287 16,394 Investments in unlisted shares of public companies, at cost 1,680 1,680 Other investments, at cost 196,380 205,329 227,624 229,306 Provisions (73,115) (72,783) 154,509 156,523 14. INTANGIBLE ASSETS Product production technique Goodwill Total RMB'000 RMB'000 RMB'000 At 1 January 2002 3,000 15,493 18,493 Goodwill arising on investment in an associate - 7,177 7,177 Amortisation (225) (1,629) (1,854) Disposal of a subsidiary (see note 26) (2,775) (8,103) (10,878) At 31 December 2002 and 1 January 2003 - 12,938 12,938 Goodwill arising on acquisition of a subsidiary - 2,561 2,561 Amortisation - (1,674) (1,674) At 31 December 2003 - 13,825 13,825 27 Hainan Pearl River Holding Company Limited 15. PROPERTIES HELD FOR SALE 2003 2002 RMB'000 RMB'000 Completed properties 135,444 145,796 Properties under development 175,445 134,383 Less : Provisions (46,415) (49,287) 264,474 230,892 Particulars of properties under development as at 31 December 2003 are as follows : Area in Average cost square per square Project meter meter Cost RMB RMB'000 Yanjiang First Road 76,780 797 61,172 Longzhou New Town/ 龙珠国际大酒店 37,300 1,128 42,077 Wuhan Mingzhu Garden/ 武汉明珠嘉园 246,000 280 68,799 Others 3,397 175,445 As stated in note 3 (e) above, properties held for sale are stated at the lower of cost and net realisable value. The estimation of net realisable value of properties held for sale requires the Company's directors to make assumptions on future market conditions with reference to currently available information and valuation made by professional valuer and bankers. As at 31 December 2003, the directors' valuation on properties for sale was performed after taking into consideration the latest sale transactions, if any, or the announcement of the minimum selling prices on the land located nearby the properties held for sale held by the Group. The minimum selling prices are set by the government from time to time based on the supply and demand of the property market in the PRC. 16. INVENTORIES As at 31 December 2003, all of the inventories held were stated at cost. 28 Hainan Pearl River Holding Company Limited 29 Hainan Pearl River Holding Company Limited 17. TRADE AND OTHER RECEIVABLES 2003 2002 RMB'000 RMB'000 Trade receivables 28,066 52,774 Other receivables and prepaid expenses 77,645 106,699 Less : Provisions (24,084) (52,338) 81,627 107,135 18. BANK LOANS Bank loans of approximately RMB44.6 millions (2002 : RMB36.5 millions) were secured by certain properties held for sale, property, plant and equipment and shares of unlisted investment. At 31 December 2003, all of the bank loans were in RMB. The bank loans bear interests ranging from 5.84% to 9.12% per annum (2002 : 5.84% to 9.12%). 19. SHORT TERM LOANS Short term loans represent trust lending loans bearing interest at 5.31% to 5.49% (2002 : 5.31%) per annum and are repayable in the fourth quarter of 2004. The trust party of the loan is Beijing Xin Xing Property Development Company Limited. Included in the short term loans, there were loans amounting to RMB152,000,000 of which the trust party undertook not to demand repayment within the next twelve months, subject to the finalisation of formal renewed trust loan agreements. 20. TRADE AND OTHER PAYABLES 2003 2002 RMB'000 RMB'000 Trade payables 19,818 40,836 Other payables and accrued expenses 111,520 67,496 131,338 108,332 30 Hainan Pearl River Holding Company Limited 21. LOAN FROM A RELATED COMPANY Loan from a related company represents a loan from Beijing Xin Xing Property Development Company Limited. The loan is unsecured and bears interest at 5.31% per annum (2002 : 5.31% per annum). 31 Hainan Pearl River Holding Company Limited 22. LONG TERM LOANS Last year, long term loans represented two years trust lending loans bearing interest at 5.49% per annum and were repayable in the fourth quarter of 2004. The trust party of the loans was Beijing Xin Xing Property Development Company Limited. 23. SHARE CAPITAL 2003 2002 RMB'000 RMB'000 Registered and fully paid 206,744,976 legal entity shares of RMB 1 each 206,745 206,745 113,405,824 A shares of RMB 1 each 113,406 113,406 57,500,000 B shares of RMB 1 each 57,500 57,500 377,651 377,651 24. RESERVES Capital Revenue Accumulated reserve reserve losses Total RMB'000 RMB'000 RMB'000 RMB'000 Balance at 31 December 2003 288,912 109,908 (555,463) (156,643) Balance at 31 December 2002 288,912 109,908 (558,179) (159,359) According to the Company Law of the PRC and the Article of Association of the Company, when distributing net profit of each year, the Company shall set aside 10% of its net profits as reported in the statutory accounts for the statutory common reserve fund (except when the fund has reached 50% of the Company's registered share capital) and 5% to 10% for the statutory common welfare fund (collectively as "Revenue reserve"). These reserves cannot be used for purposes other than those for which they are created and are not distributable as cash dividends. The Company declares dividends based on the lower of retained earnings as reported in the 32 Hainan Pearl River Holding Company Limited statutory accounts and the financial statements prepared under IFRS. As the statutory accounts have been prepared on an accounting basis other than IFRS, the net profit/(loss) as reported in the statutory accounts is different from the amount reported in the accompanying consolidated statement of income (see note 28). 33 Hainan Pearl River Holding Company Limited 25. RELATED PARTY TRANSACTIONS During the year the Group had the following transactions with its related parties : 2003 2002 RMB'000 RMB'000 Interest paid for loan from a related company (see also note 21) 2,333 1,024 Interest paid for trust lending loans (see also notes 19 and 22) 9,249 7,654 Interest received from an investee company 1,121 1,108 26. ACQUISITION OF A SUBSIDIARY The fair value of assets acquired and liabilities assumed were as follows: 2003 2002 RMB'000 RMB'000 Cash at banks and in hand 665 - Property, plant and equipment 3,430 - Trade and other receivables 22,147 - Trade and other payables (9,658) - Minority interests (4,145) - Net assets acquired 12,439 - Goodwill arising on acquisition 2,561 - Consideration 15,000 - Satisfied by : Cash consideration 7,000 - Decrease in other investments 8,000 - 15,000 - Net cash outflow arising on acquisition Cash consideration (7,000) - Cash at banks and in hand acquired 665 - 34 Hainan Pearl River Holding Company Limited (6,335) - 35 Hainan Pearl River Holding Company Limited 27. DISPOSAL OF A SUBSIDIARY 2003 2002 RMB'000 RMB'000 Cash at banks and in hand 11,869 18 Property, plant and equipment 38,594 2,837 Product production technology - 2,775 Goodwill on consolidation - 8,103 Inventories 8,681 122 Trade and other receivables 37,884 10,376 Bank loans (30,000) (4,200) Trade and other payables (34,634) (11,215) Minority interests - (3,721) Net assets disposed of 32,394 5,095 Gain on disposal 18,158 - Consideration 50,552 5,095 Satisfied by : Cash consideration 50,000 - Increase in interests in associate - 5,095 Increase in other investments 552 - 50,552 5,095 Net cash inflow/(outflow) arising on disposal Cash consideration received 25,548 - Cash at banks and in hand disposed of (11,869) (18) 13,679 (18) 36 Hainan Pearl River Holding Company Limited 28. IMPACT OF IFRS AND OTHER ADJUSTMENTS ON PROFIT/(LOSS) FOR THE YEAR AND NET ASSETS Profit/(Loss) for the Net assets as at year ended 31 December 31 December 2003 2002 2003 2002 RMB'000 RMB'000 RMB'000 RMB'000 As reported in statutory accounts As previously reported 1,629 (138,051) 250,895 251,348 Opening balances adjustment - Interest received from related parties capitalised in capital reserve now reversed - 552 - - As restated 1,629 (137,499) 250,895 251,348 Impact of IFRS and other adjustments - reversal of opening balances adjustment - (552) - - - adjustment on capitalisation of interest charges arising from borrowings used to finance the properties under development during the construction period and corresponding depreciation 931 5,268 (4,788) (5,719) - reversal of adjustment on capitalisation of interest charges arising from borrowings used to finance the properties under development during the construction period now disposed of 4,788 - 4,788 - - unrecognised losses of consolidated subsidiaries (2,445) (626) - - - reversal of capital reserve arising from transfer of construction in progress from the Company to a subsidiary as capital injection - - (363) - - goodwill on acquisition of an associate recorded as bad debts under IFRS (3,059) - (3,059) - - provision for bad and doubtful debts - - (14,600) (14,600) - adjustment on treasury stock - - (1,410) (1,410) - excess interest income from a related company recognised as capital reserve in PRC statutory accounts now adjusted as income for the year - 795 - - - share of accumulated losses of an investee company classified as an associate in last year now adjusted as share of loss from associates in last year - (1,253) - - - adjustment to income from an associate - - (9,929) (9,929) - others 872 80 (526) (1,398) As restated for the Group 2,716 (133,787) 221,008 218,292 37 Hainan Pearl River Holding Company Limited 29. FINANCIAL INSTRUMENTS (a) Fair value of financial instruments The directors consider that the carrying amount of cash, trade and other receivables, trade and other payables and banks loans approximates to their fair value. (b) Credit risks At balance sheet date, the Group has no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated balance sheet. 30. APPROVAL OF THE FINANCIAL STATEMENTS The financial statements on pages 2 to 25 were approved by the board of directors on 20 April 2004. 38