冰山冷热(000530)大冷Ｂ2003年年度报告摘要（英文版）

Stock Code: 000530; 200530 Short Form of the Stock: Daleng Gufen; Daleng B; No: 2004-002 Dalian Refrigeration Co., Ltd. 2003 Annual Report Summary (For Disclosing Overseas) §1 Important Notes 1.1 The Board of Directors of Dalian Refrigeration Co., Ltd. (hereinafter referred to as the Company) and its directors hereby confirm that there are no any important omissions, fictitious statements or serious misleading carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completeness of the whole contents. 1.2 All directors attend the meeting of the Board of Directors. 1.3 This summary is extracted from the original of the annual report. For more information, the investors are recommended to refer to the original. 1.4 This report is written respectively in Chinese and in English. In the event of any discrepancy between the two above-mentioned versions, the Chinese version shall prevail. 1.5 Chairman of the Board of Directors of the Company Mr. Zhang He, Financial Majordomo and the head of Accounting Department Ms. Xu Xiaorui 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 DALENG GUFEN; DALENG-B Stock code 000530; 200530 Listed stock exchange Shenzhen Stock Exchange Registered address and office address 888 Xinan Road, Shahekou District, Dalian Post code 116033 Internet web site of the Company www.daleng.cn E-mail of the Company dlzqb@bingshan.com 2.2 Contact person and method Secretary of the Board of Directors Authorized representative in charge of securities affairs Name Ms. Lv Lianzhen Ms. Ge Yan Contact address Office of Dalian Refrigeration Co., Securities Department of Dalian Ltd. Refrigeration Co., Ltd. Telephone 0086-411-86538100 0086-411-86538131 Fax 0086-411-86641470 0086-411-86654530 E-mail bingzhen@bingshan.com geyan@bingshan.com §3 Summary of Accounting Data and Financial Indexes 3.1 Major accounting data (Unit: In RMB’000) 1 Increase/decr 2003 2002 ease over last 2001 year(%) Revenue 1,063,738 976,884 8.89 853,218 Profit before taxation and 116,453 97,511 19.43 72,717 minority interests Net profit 86,634 70,524 22.84 69,502 Increase/decr 2003.12.31 2002.12.31. ease over last 2001.12.31 year(%) Total assets 1,925,066 1,880,642 2.36 1,836,202 Shareholder’s equity(excluding 1,246,193 1,194,492 4.33 1,157,622 minority interests) Net cash generated from 110,812 91,166 21.55 50,806 operating activities 3.2 Major financial indexes (Unit: In RMB) Increase/decr 2003 2002 ease over last 2001 year(%) Earnings per share 0.25 0.20 25.00 0.20 Return on equity 6.95 5.90 17.80 6.00 Net cash per share generated 0.32 0.26 23.08 0.15 from operating activities Increase/decr 2003.12.31 2002.12.31. ease over last 2001.12.31 year(%) Net assets per share 3.56 3.41 4.40 3.31 3.3 Difference in net profit as audited by Chinese Accounting Standards (CAS) and International Financial Reporting Standards (IFRS) (Unit: In RMB’000) √Applicable □Inapplicable CAS IFRS Net profit 86,147 86,634 Explanation on the difference Impact of IFRS adjustment on net profit is as follows: - Accounting for installation service contract 4,063 - Deferred taxation (3,790) - Equity accounting of investments (3,161) - Waived liabilities to third parties in capital surplus in statutory account 1,052 - Others 2,323 §4 Changes in Share Capital and Particulars about Shareholders 2 4.1 Statement of changes in share Unit: share Increase/decrease in this Before the After the time(+, -) change change No change I. Shares unlisted 1、Initiator shares 104,422,500 104,422,500 Including： State-owned shares 104,422,500 104,422,500 Domestic legal person’s shares Foreign legal person’s shares Others 2、Raised legal person’s shares 32,222,250 32,222,250 3、Inner employee’s shares 4、Preference shares or others Total of shares unlisted II. Shares listed 136,644,750 136,644,750 1、Common shares (in RMB yuan) 2、Domestically listed foreign shares 98,370,225 98,370,225 3、Others 115,000,000 115,000,000 Total of shares listed 213,370,225 213,370,225 III. Total shares 350,014,975 350,014,975 4.2 Statement of shares held by the top ten shareholders Total shareholders at the end of report year 64,999 Particulars about shares held by the top ten shareholders（Unit: ’0000 shares） Increase/de Holding Proportion Type of Number Nature of crease in shares at to total shares of shares shareholders Full name of shareholders the report the shares（％） pledged year year-end or frozen 3 0 10,442.25 29.83 Non-circul State-owned Dalian Binshan Group Co., Ltd. ating A 0 shareholder shares 0 3,500.15 10.00 Circulating Foreign Sanyo Electric Co., Ltd. 0 B shares shareholder +176.7942 1,095.4242 3.13 Circulating Guotai -Jun'an Securities Co., Ltd. 0 A shares Beijing Fuerli Investment +349.7563 349.7563 1.00 Circulating 0 Consultation Co., Ltd. A shares 0 315.00 0.90 Non-circul Jilin Jiuzhou Development Co. ating A 0 shares 0 315.00 0.90 Non-circul Taiyuan Zhaohe Investment Development ating A 0 Co. shares 0 283.70 0.81 Non-circul Shenyin Wanguo Securities Co., Ltd. ating A 0 shares +277.6205 277.6205 0.79 Circulating Zhentai Industrial Co., Ltd. 0 A shares 0 194.425 0.56 Non-circul Dalian No. 1 Refrigerator Plant ating A 0 shares 0 179.50 0.51 Non-circul Dalian Huaxin Trust Investment Co., Ltd. ating A 0 shares Explanation on associated relationship among the top Among the top ten shareholders, an associated relationship exists ten shareholders or consistent action between Dalian Binshan Group Co., Ltd., and Dalian No. 1 Refrigerator Plant。 4 Particulars about shares held by the top ten negotiable shareholders（Unit: ’0000 shares） Holding negotiable shares at the Name of shareholders Type of shares year-end Sanyo Electric Co., Ltd. 3,500.15 Circulating B shares Guotai Junan Securities Co., Ltd. 1,095.4242 Circulating A shares Beijing Fuerli Investment Consultation Co., Ltd. 349.7563 Circulating A shares Zhentai Industrial Co., Ltd. 277.6205 Circulating A shares Chaohuang Investment Co., Ltd. 97.00 Circulating B shares Shanghai Hong Kong Wanguo Securities Co., Ltd. 65.777 Circulating B shares Fang Yijun 62.398 Circulating B shares Tan Ying 62.16 Circulating A shares Skandia Global Funds Plc 53.00 Circulating B shares Wang Chanjuan 51.0296 Circulating B shares Exp lanation on associated relationship among the top It is unknown whether there are associated relations between the top ten negotiable shareholders ten negotiable shareholders of the Company. 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 Dalian Bingshan Group Co., Ltd. (hereinafter referred to as the Group) held 29.83% of the total shares of the Company by the end of the year. The Group’ s legal representative is Zhang He. The Group was established on May 22, 1996 and has the registered capital of 126,540 thousand yuan, being mainly engaged in the manufacture and installation of the complete sets of refrigerators, air conditioners, cold chains and electrical appliances, etc. for industrial and commercial poposes. Its minor businesses include the electronic and household electrical appliances, light industry, chemical industry, import and export trading, etc. The Group is a state-owned solely-funded company subordinate to Dalian Financial Bureau State-Owned Capital Department. §5 Particulars about the Directors, Supervisors and Senior Staff Members 5.1 Particulars about changes in shares held by directors, supervisors and senior staff members 5 Holding Holding Term of shares at shares at Reason of Name Title Sex Age duty the the change year-begin year-end Directors (9 persons) Chairman of Zhang He Male 66 01.5-04.5 25,650 25,650 No change the Board Mu Vice chairman Male 54 01.5-04.5 22,650 22,650 No change Chuanjiang of the Board Yang Bin Director Male 47 01.5-04.5 0 0 No change Xu Director Female 40 03.5-04.5 3,000 3,000 No change Xiaorui Shimada Director Male 59 03.5-04.5 0 0 No change Tadao Li Mei Director Female 39 01.5-04.5 0 0 No change Lv Independent Male 62 02.5-04.5 7,125 7,125 No change Zhongli director Wang Independent Male 67 02.5-04.5 0 0 No change Dong director Zhang Independent Male 63 03.5-04.5 0 0 No change Guile director Supervisor (3 persons) Yu Fuchun Chairman Male 45 01.5-04.5 7,800 7,800 No change Men Supervisor Male 51 01.5-04.5 750 750 No change Yuesheng Zhu Supervisor Male 39 01.5-04.5 0 0 No change Guangxi 6 Senior Staff Members Standing Deputy Yang Bin Male 47 03.4-04.5 0 0 No change General Manager Deputy Zhang General Male 45 01.5-04.5 21,125 21,125 No change Hongzhi Manager Deputy Wang General Male 52 01.5-04.5 14,250 14,250 No change Dekun Manager Deputy Wang General Male 42 01.5-04.5 0 0 No change Zhiqiang Manager Deputy Hu Xitang General Male 36 01.5-04.5 0 0 No change Manager Deputy Ding Jie General Male 41 01.5-04.5 0 0 No change Manager Xu Financial Female 40 03.4-04.5 3,000 3,000 No change Xiaorui Majordomo 5.2 Particulars about directors and supervisors holding the position in Shareholding Company √Applicable □Inapplicable Title in Drawing the payment Name of Shareholding Name Shareholding Term of duty from the Shareholding Company Company Company (Yes/No) Dalian Binshan Group Chairman of the From 1999 to Yes Zhang He Co., Ltd. Board now Guotai-Jun'an Securities From 1999 to Yes Li Mei Vice President Co., Ltd. now 7 5.3 Particulars about the annual remuneration of directors, supervisors and senior staff members Total annual remuneration RMB1,075,000 Total annual remuneration of the top three RMB 358,000 directors drawing the highest remuneration Total annual remuneration of the top three senior staff members drawing the highest RMB 358,000 remuneration Allowance of independent director RMB 25,000 Other treatment of independent director No Name of directors and supervisors receiving no Li Mei, Shimada Tadao payment or allowance from the Company Payment Number of person RMB 110,000—RMB 130,000 2 RMB 100,000—RMB 110,000 5 RMB 80,000—RMB 100,000 2 RMB 40,000—RMB 80,000 3 Bellow RMB 40,000 1 §6 Report of the Board of Directors 6.1 Discussion and analysis of the whole operation in the report period The Company is the largest industrial refrigerator producer and the largest exporter of refrigerator packages in China, and owns the only famous trademark in Chinese industrial refrigeration industry. ① The main businesses In 2003, in standing the test of SARS epidemic situation and sustaining great price rise of the raw materials, the Company grabbed the opportunity that the state applied the policy of putting more investment to economic growth, and achieved the following performances: the incomes on main business of 1,063.738 million yuan, with a comparable increase of 8.89%; the profit on main business of 176.037 million yuan, with a comparable increase of 33.27%; the profit on business of 30.035 million yuan, with a comparable increase of 53.71%; and the net profit of 86.634 million yuan, with a comparable increase of 22.84%. For the breakdown 8 of the incomes on main business listed on the basis of products, see the Explanatory Note 1 to the Accounting Report. In the report period, the Company contracted 14 package projects with more than five million yuan respectively, including six large package projects with more than ten million yuan respectively. In the report period, the Company attained a blowout-like increase of the sales volume of CJZT810C marine refrigeration compressors to 340 sets from less than one hundred sets in previous years. In the report period, the Company completed the application research on the household central air-conditioner heating system and the refrigerant substitutes and the development of 26 new products including the semi-hermetic screw type compressor. In the report period, the Company made new breakthroughs in joint venture and cooperation with foreign investors. For joint venture, the Company established Dalian Bingshan Ryosetsu Fast Frozen Equipment Co., Ltd. by joint investment with Japanese Ryosetsu Co., Ltd, and Dalian Fuji-Bingshan Vending Machine Co., Ltd. by joint investment with Japanese Fuji Electric Co., Ltd. For cooperation, the Company started cooperation with a well-known German corporation for production of panel-type heat exchangers, and cooperation with British London City University for research of new type compressors and new refrigerant substitutes. In the report period, the Company effectively controlled the costs through tapping internal potentials, well counteracted the negative influence brought by the great price rise of iron and steel and other raw materials, and attained a basically stable gross profit ratio. The three expenses totaled 157.197 million yuan, with a comparable increase of 31.471 million yuan. The operating expense increased by 23.48% due to more effort made to development of the market. The overhead expense increased by 28.57% due to the drawn provisions for bad debts and depreciation of the fixed assets. The financial expense decreased by 7.81% due to reduction of the short-term loan. ② The joint ventures By the end of 2003, the group of joint venture companies of the Company had the total assets of 2,896.78 million yuan, with a comparable increase of 4.64%; and had the net assets of 1,494.9 million yuan, with a comparable increase of 8.64%. In 2003, the group of joint venture companies of the Company made the sales income of 2,767.21 million yuan, with a comparable increase of 21.87%. The sales income on exported products was 374.5 million yuan, with a comparable increase of 63.70%. The Company earned the returns on investment of 88.81 million yuan, with a comparable increase of 6.44%. In the report period, there were four joint venture companies that made the returns on investment accounting for 10% or higher of the total net profit of the Company and they are Sanyo Air Conditioner, Sanyo Compressor, Sanyo Cold Chain, and Sanyo Refrigeration. In the report period, three of the joint venture companies of the Company made the sales income on main business with a comparable increase higher than 30%, two made the net 9 profit with a comparable increase higher than 30%, and five made the net asset income ratio higher than 15%. In the report period, Sanyo Compressor Scroll Compressor Plant went into normal production three months ahead of time; turned out the first scroll compressor using the new refrigerants R407C and R410A in China; and established the first postdoctoral station in Dalian Economic & Technical Development Zone. In the report period, Sanyo Cold Chain completed the acquisition of Sanyo Food Systems, which further consolidates its composite strength; put the third generation of new products including Series HL refrigeration-freezing showcases into the market; and formally cut through the videoconference system, which will greatly cut off the overhead expense of the Company. In the report period, Sanyo Refrigeration’s Type G lithium bromide absorption refrigerator was listed in the 2003 National Key New Product Plan; the GHP gas-combustion heat pump was put into trial production, by which, Sanyo Refrigeration becomes the first manufacturer of GHP gas-combustion heat pumps; and the integrated certification for the four systems of ISO9001, ISO14001, OHSMS18001 and CCMS was passed. 6.2 Statement of core business classified according to industry or product (Unit: RMB’000) Increase/decr Increase/decr Increase/decr ease of ease of gross Classified ease of cost revenue profit ratio according to Gross profit compared Revenue Cost compared compared industry or ratio with the with the with the product previous year previous year previous year (%) (%) (%) Refrigeration 1,063,738 887,701 16.55 8.89 5.08 22.41 equipment Total 1,063,738 887,701 16.55 8.89 5.08 22.41 Including: amount of 101,143 83,696 16.55 27.96 22.44 22.41 related transaction Rule of pricing of related Complete price of market transaction Explanation of Normal transaction necessity and duration of 10 related transaction 6.3 Particulars about core business classified according to area (Unit: RMB’000) Increase/decrease of revenue compared with the Area Revenue previous year（％） Northeast 1,063,738 8.89 China area Total 1,063,738 8.89 6.4 Particulars about the customers of purchase and sales (Unit: RMB’0000) Total amount of purchase of the Proportion to the total 32.23% 29,511 top five suppliers amount of purchase Total amount of sales of the top Proportion to the total 8.3% 8,741 five sales customers amount of sales 6.5 Operation of share-holding companies (applicable to the situation of investment equity’s taking over 10% of net profit) (Unit: RMB’0000) √Applicable □Inapplicable Name of share-holding Dalian Sanyo Air Conditioner Co., Ltd. company Proportion to the Returns on investment in the 1,867.00 net profit of the 21.67% report year Company Business Producing and selling air conditioners Share-holding scope company Net profit 5,187.00 Name of share-holding Dalian Sanyo Compressor Co., Ltd. company Proportion to the Returns on investment in the 1,732.00 net profit of the 20.10% report year Company 11 Business Producing and selling semi-hermetic compressors and rotary Share-holding scope compressors company Net profit 4,708.00 Name of share-holding Dalian Sanyo Cold-chain Co., Ltd. company Proportion to the Returns on investment in the 1,413.00 net profit of the 16.40% report year Company Business Producing and selling refrigerators for supermarkets Share-holding scope company Net profit 3,524.00 Name of share-holding Dalian Sanyo Refrigeration Co., Ltd. company Proportion to the Returns on investment in the 1,246.00 net profit of the 14.46% report year Company Business Producing and selling lithium bromide refrigerators Share-holding scope company Net profit 3,314.00 6.6 Explanation of reason of material change of core business and its structure □Applicable √Inapplicable 6.7 Explanation of reason of material change of profitability capability of core business (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 Analysis of reason of material change of the whole financial position compared with the previous year □Applicable √Inapplicable 12 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 (Unit: RMB’0000) √Applicable □Inapplicable Business targets Results of operations Sales income 100,000 104,310 Total amount of profit 9,700 10,076 Explanation of the difference Through hard working, the Company has satisfactorily attained these business targets. 6.12 Application of the raised proceeds (Unit: RMB’0000) √Applicable □Inapplicable Total amount of raised proceeds that were used in the 501.00 Total amount of report year 36,000 raised proceeds Total amount of raised 28,714.936 proceeds that have been used Changed Tallied with Amount Amount Amount of Projects committed project the plan committed really used earnings (Yes/No) (Yes/No) The expansion 16,126 No 10,894.936 ９８０．００ No project of Dalian Sanyo Compressor Co., Ltd. The project of 6,000 No 6,000 ５４０．００ Yes developing the large screw compressor Explanations of It was originally planned to make one-off investment to the expansion failure to attain the project of Dalian Sanyo Compressor Co., Ltd. but delayed investment 13 schedule and the addition by the foreign partner to the joint venture caused the project income target delayed. Particulars about the change projects □Applicable √Inapplicable 6.13 Application of the proceeds not raised through share offering(Unit: RMB’0000) √Applicable □Inapplicable Progress of Earning Name of project Amount of project project of project Dalian Bingshan Ryosetsu Fast Frozen Established on 580 None Equipment Co., Ltd. May 6, 2003 Dalian Fuji-Bingshan Vending Machine Established at the 4,342 None Co., Ltd. end of 2003 6.14 Explanation of the “Non-standardized 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 Revenue: RMB 1.2 billion；Total amount of profit：RMB 120 million。 (1) Bringing up the Company’s competence in international market. We should aim at our competitors in international market and narrow the gap in terms of technical content in the products and other aspects as soon as possible while maintaining our advantage of low product price. (2) Accelerating the process of joint venture and cooperation. We should rapidly extend the industrial chain and increase the technical content in products and the market shares through joint venture and cooperation with large corporations in the world. (3) Putting more efforts to development of new products and technical transformation. We will complete 21 new product development projects and 29 technical transformation projects. (4) Promoting the campaign of all-round cost reduction to ensure the cost reduction of 29 million yuan. (5) Accelerating the informatization progress of the Company. 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 As audited by Dalian Hualian Certified Public Accountants, the after-tax profit of the Company in 2003 was 86.148 million yuan. In accordance with the relevant regulations of the state and the Articles of Association of the Company, 10% of the after-tax profit, i. e. 8.726 million yuan, shall be set aside as the legal surplus public reserve, another 10%, i. e. 8.726 million yuan, as legal public welfare fund and 1.47 million yuan as the consolidated reserves for the subsidiary 14 companies. A total of 18.922 million yuan was drawn. With the undistributed profit of 79.345 million yuan carried forward from the previous year, the profit available for distribution to shareholders is 146.571 million yuan. As audited by Price WaterHouseCoopers Zhongtian Certified Public Accountants, the after-tax profit of the Company in 2003 was 86.634 million yuan. With the remaining after-tax profit after drawing legal surplus public reserve, legal public welfare fund, consolidated reserves for the subsidiary companies plus the undistributed profit of 43.26 million yuan carried forward from the previous year, the profit available for distribution to shareholders is 110.972 million yuan. In accordance with the Articles of Association of the Company and relevant regulations, the lower of the aforesaid distributable profits shall be distributed. Therefore, the profit available for distribution to the shareholders for this year is 110.972 million yuan, 10% of which, i. e. 8.726 million yuan, will be drawn as the optional surplus public reserve, and 35.001 million yuan for payment of the dividends. The balance of 67.245 million yuan will be carried forward to the next year for distribution. The profit distribution preplan of the Company for 2003: With 350,014,975 shares in total by the end of 2003, cash dividend of one yuan (including tax) for each ten shares will be paid. The cash dividends for B-shares will be converted into HK$ for payment. No capital public reserve is to be converted into additional shares in this year. This preplan should be presented to and reviewed and adopted at the 2003 shareholder general meeting. §7 Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable 7.3 Important guarantee □Applicable √Inapplicable The amount of guarantee issued by the 0 Company for the holding subsidiary The amount of guarantee issuance of the 0% of the net assets of the Company Company by breaching the regulations The total amount of guarantee issued by the 0% of the net assets of the Company Company 7.4 Current related credits and liabilities √Applicable □Inapplicable For details, see the Certified Public Accountants’special description about the Company’s using the funds of its holding shareholder and other associated parties. 7.5 Entrusted financing □Applicable √Inapplicable 7.6 Implementation of projects committed √Applicable □Inapplicable 15 At the 7th meeting of the third Board of Directors, the Company estimated the profit distribution policy for 2003 as follows: the profit is distributed once at the end of year and not distributed in the mid year; the profit is distributed at 40% to 60% of the annual profit distributable to the shareholders (including the profit realized in the current year and the profit undistributed in the past year); the dividends are paid in the form of cash or bonus stock or in combination of the two forms and, however, the proportion of dividends in cash to the distributed dividends is not lower than 50%. The Company's profit distribution preplan for 2003 tallies with the above estimation. 7.7 Significant lawsuit and arbitration □Applicable √Inapplicable 7.8 Particulars about the performance of obligations of Independent Directors Now the Company has three independent directors. These independent directors duly attended the meetings of the Board of Directors of the Company and actively presented their independent opinions, well performing their duties and protecting the legal rights and interests of minor shareholders of the Company. §8 Report of the Supervisory Committee The Supervisory Committee considered that the Company operated according to laws and there existed no problems in terms of the financial status, use of raised capital, purchase and sales of assets and related transactions of the Company. §9 Financial Report 9.1 Auditor’s Report: The financial report has been audited by Price WaterHouseCoopers Zhongtian Certified Public Accountants who has presented unqualified opinion audit report. 9.2 Accounting statement (attached hereunder) 9.3 Explanation on change of consolidation scope in the report period compared with the latest annual report On May 6, 2003, the Company established Dalian Bingshan Ryosetsu Fast Frozen Equipment Co., Ltd. through joint investment with Japanese Ryosetsu Industrial Co., Ltd and holds 70% of its shares. That company has been included in the range of the consolidated accounting statements this year. On Sept. 30, 2003, the Company established Shanghai-Bingshan Refrigerator & Air-Conditioner Package Sale Service Co., Ltd. through joint investment with Shanghai Judian Trading Co., Ltd., Shanghai Kaikai Energy Technology Co., Ltd. and the natural individuals Chen Xianglin, and holds 45% of its shares and the substantial control power. That company has been included in the range of the consolidated accounting statements this year. Board of Directors of Dalian Refrigeration Co., Ltd. April 20,2004 16 DALIAN REFRIGERATI ON COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in Renminbi (“RMB”) thousands, except for earnings per share) Year ended 31 December Notes 2003 2002 Sales, net 1,21(c) 1,063,738 976,884 Cost of sales 21(c) (887,701) (844,791) Gross profit 176,037 132,093 Distribution costs (55,146) (44,661) Administrative expenses (96,550) (75,098) Other operating income, net 5,694 7,206 Profit from operations 30,035 19,540 Finance costs, net 2 (5,501) (5,967) Share of profit of associates before tax 8 88,809 83,438 Dividend income from long-term investments 2,586 500 Subsidy income 524 - Profit before tax and minority interests 3 116,453 97,511 Income tax expense 4 (28,072) (24,267) Profit before minority interests 88,381 73,244 Minority interests 16 (1,747) (2,720) Net profit 86,634 70,524 Earnings per share - Basic 5 RMB 0.25 RMB 0.20 - Diluted Not applicable Not applicable The accompanying accounting policies and notes form an integral part of these consolidated financial statements. 17 DALIAN REFRIGERATION COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2003 (All amounts in RMB thousands) As of 31 December Notes 2003 2002 ASSETS Non-current assets Leasehold land 6 40,274 41,224 Property, plant and equipment 7 293,329 298,082 Investments in associates 8 580,946 505,658 Available-for-sale investments 9 41,301 47,116 955,850 892,080 Current assets Inventories 10 265,332 261,743 Gross amount due from customers for contract work 11 50,259 19,926 Divedends receivable 9,724 - Prepayments and other current assets 30,860 20,871 Due from related parties 21(d) 18,212 43,066 Trade receivables 12 198,750 215,701 Cash and cash equivalents 20(b) 396,079 427,255 969,216 988,562 Total assets 1,925,066 1,880,642 18 DALIAN REFRIGERATION COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEET (CONTINUED) AS OF 31 DECEMBER 2003 (All amounts in RMB thousands) As of 31 December Notes 2003 2002 EQUITY AND LIABILITIES Equity Share capital 13 350,015 350,015 Reserves 14,15 896,178 844,477 1,246,193 1,194,492 Minority interests 16 30,992 29,343 LIABILITIES Non-current liabilities Long-term bank borrowings 19(b) 79,000 79,000 Deferred tax liabilities 4(iii) 14,264 10,474 93,264 89,474 Current liabilities Gross amount due to customers for contract work 17 11,409 27,693 Dividends payable 2,949 9,235 Due to related parties 21(d) 40,604 24,225 Trade and other payables 18 351,655 278,180 Short-term bank borrowings 19(a) 148,000 228,000 554,617 567,333 Total equity and liabilities 1,925,066 1,880,642 The accompanying accounting policies and notes form an integral part of these consolidated financial statements. 19 DALIAN REFRIGERATION COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in RMB thousands) Reserves Statutory Statutory Discretionary Share Capital surplus public surplus reserve Unappro-pri Total capital reserve reserve fund welfare fund fund ated profits reserves Total equity (Note 13) (Note 14(a)) (Note 14(b)) (Note 14(c)) (Note 1 4(d)) (Note 15) Balance at 1 January 2002 350,015 555,805 89,854 53,543 29,857 78,848 807,607 1,157,622 Appropriations to discretionary surplus reserve fund relating to 2002 - - - - 8,639 (8,639) - - Dividends relating to 2002 - - - - - (35,001) (35,001) (35,001) Net p rofit for 2002 - - - - - 70,524 70,524 70,524 Appropriations to statutory reserves: - statutory surplus reserve fund - - 8,569 - - (8,569) - - - statutory public welfare fund - - - 8,569 - (8,569) - - Profit appropriations to statutory reserves by subsidiaries (Note 14(a)) - - 1,182 8 - (1,190) - - Other(Note 14(a)) - 1,347 - - - - 1,347 1,347 Balance at 31 December 2002 350,015 557,152 99,605 62,120 38,496 87,104 844,477 1,194,492 Appropriations to discretionary surplus reserve fund relating to 2003 - - - - 9,696 (9,696) - - Dividends relating to 2003 - - - - - (35,001) (35,001) (35,001) Net p rofit for 2003 - - - - - 86,634 86,634 86,634 Profit appropriations to statutory reserves: - statutory surplus reserve fund - - 9,480 - - (9,480) - - - statutory public welfare fund - - - 9,479 - (9,479) - - Appropriations to statutory reserves by subsidiaries (Note 15(b)) - - 1,472 1 - (1,473) - - Other(Note 14(a)) - 68 - - - - 68 68 Balance at 31 December 2003 350,015 557,220 110,557 71,600 48,192 108,609 896,178 1,246,193 20 DALIAN REFRIGERATION COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in RMB thousands) Year ended 31 December Notes 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 20(a) 128,338 99,354 Interest income received 2,999 7,896 Interest expense paid (8,500) (12,676) Income tax paid (12,025) (3,408) Net cash generated from operating activities 110,812 91,166 CASH FLOWS FROM INVESTING ACTIVITIES: Increase in investments in associates (45,185) (55,012) Increase in long-term investments (1,755) (1,805) Proceeds from disposal of long-term investments - 30 Purchase of leasehold land and property, plant and equipment (20,091) (11,750) Proceeds from disposals of property, plant and equipment 246 108 Dividends received from associates 43,596 43,071 Dividends received from long-term investments 2,586 350 Net cash (used in) generated from investing activities (20,603) (25,008) CASH FLOWS FROM FINANCING ACTIVITIES: Net decrease in short-term bank borrowings (80,000) (27,850) Capital contributions from minority shareholders 2,342 1,014 Dividends paid (41,287) (23,948) Dividends paid to minority shareholders (2,440) (3,054) Net cash (used in) generated from financing activities (121,385) (53,838) Net increase in cash and cash equivalents (31,176) 12,320 Cash and cash equivalents at beginning of year 20(b) 427,255 414,935 Cash and cash equivalents at end of year 20(b) 396,079 427,255 The accompanying accounting policies and notes form an integral part of these consolidated financial statements. 21