*ST中华A(000017)ST中华Ｂ2003年年度报告摘要（英文版）

SHENZHEN CHINA BICYCLE COMPANY (HOLDINGS) LIMITED 2003 ANNUAL REPORT SUMMARY §1. Important Notes 1.1 Board of Directors of the Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) and its members 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 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 Due to business, Director Mr. Shi Zhanxiong and Mr. Wan Nianqing were absent from the Board meeting, in which the 2003 Annual Report was examined, and respectively entrusted Mr. Li Hai and Mr. Yi Xiaoming to execute on his behalf. 1.4 K.C.OH & Company Certified Public Accountants issued a qualified Auditors’ Report with reservation, the Board of Directors and the Supervisory Committee of the Company made explanations on the relevant matters in details; the investors are suggested to notice the content. 1.5 Mr. Zhang Xiaofeng, Chairman of the Board, Mr. Liu Linfeng, General Manager and Ms. Hu Eryi, Chief Accountant hereby confirm that the Financial Report of the Annual Report is true and complete. 1.6 This report was prepared in both Chinese and English. Should there be any difference in interpretation between the two versions, the Chinese version shall prevail. §2. Company Profile 2.1 Basic information Short form of the stock ST ZHONGHUA –A, ST ZHONGHUA – B Stock code 000017, 200017 Listed stock exchange Shenzhen Stock Exchange Registered address and Office address No. 3008, Buxin Road, Shenzhen Post code 518019 Internet web site of the Company www.szcbc.com E-mail of the Company dmc@szcbc.com 2.2 Contact person and method Secretary of the Board of Directors Name Li Hai Contact address Shenzhen China Bicycle Company (Holdings) Limited, No. 3008, Buxin Road, Shenzhen Telephone (86)755-25516998 Fax (86)755-25516620 E-mail dmc@szcbc.com §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB’000 2002 Increase/decrease 2003 After Before over last year adjustment adjustment （％） Turnover 99,015 71,590 71,590 38.31 Other income 19,932 49,362 49,362 -59.62 Profit before taxation 340,767 6,807 8,218 4,906.13 Profit attributable to shareholders 340,820 6,780 8,191 4,926.84 Shareholders’equity -1,687,614 -2,028,434 -1,985,702 -16.80 Net cash inflow arising from -10,495 -232,079 -233,498 -95.48 operating activities 3.2 Difference of net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Unit: In RMB’000 CAS IAS Net profit -32,947.18 340,820.45 1. Reversal of loss from minority interests of RMB –54,493.41 2. Debt restructuring income of RMB 357,993,665.24 Explanation on the difference 3. Interest expense waived of RMB 16,999,013.25 4. Absorption of operating loss in a subsidiary of RMB –1,169,922.18 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital (Unit: share) Increase / decrease in this Before the After the time (+, -) change change Other Subtotal I. Unlisted Shares 1. Sponsors’shares 224,060,354 -19,447,518 -19,447,518 204,612,836 Including: State-owned share 0 0 Domestic legal person’s shares 111,607,002 0 111,607,002 Foreign legal person’s shares 112,453,352 -19,447,518 -19,447,518 93,005,834 Others 0 0 2. Raised legal person’s shares 0 0 3. Inner employees’shares 135,000 0 135,000 4. Preference shares or others 0 0 Total Unlisted shares 224,195,354 -19,447,518 -19,447,518 204,747,836 II. Listed Shares 1. RMB ordinary shares 76,617,000 0 76,617,000 2. Domestically listed foreign 178,620,649 19,447,518 19,447,518 198,068,167 shares 3. Overseas listed foreign 0 0 shares 4. Others 0 0 Total Listed shares 255,237,649 19,447,518 19,447,518 274,685,167 III. Total shares 479,433,003 0 0 479,433,003 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Total number of shareholders at the end of report year 46,256 Particulars about shares held by the top ten shareholders Number of Nature of Increase / Holding shares Type of shares share shareholders decrease in Proportion Full name of Shareholders at the year-end (Circulating/No pledged/ (State -owned the report (%) (share) n-circulating) frozen shareholder/foreign year (share) (share) shareholder) China Huarong Assets Management 0 65,098,412 13.58 0 State-owned Non-circulating Company shareholder Hong Kong Zhuorun Technology 0 62,003,890 12.93 57,899,644 Foreign shareholder Non-circulating Co., Ltd. Hong Kong (Link) Bicycles Limited 0 26,000,000 5.42 Non-circulating 26,000,000 Foreign shareholder Guangdong Sunrise Group Co., Ltd. 0 18,968,590 3.96 18,968,590 State-owned Non-circulating shareholder -8,169,646 11,277,872 2.35 0 Foreign shareholder STEPHEN &PARTNERS LIMITED Circulating Shanghai Xinliyi Investment 0 11,200,000 2.34 0 State-owned Non-circulating Management Co., Ltd. shareholder Airline Trust and Investment Co., 0 10,340,000 2.16 0 State-owned Non-circulating Ltd. shareholder Shenzhen International Trust & 0 6,000,000 1.25 0 State-owned Non-circulating Investment Co., Ltd. shareholder Jingchao Investment Co., Ltd. 0 5,001,944 1.04 Non-circulating 0 Foreign shareholder XAMMAX INTERNATIONAL 1,645,563 1,645,563 0.34 0 Foreign shareholder Circulating LIMIT Explanation on associated Among the top ten shareholders, Guangdong Sunrise Group Co., Ltd. and Shenzhen relationship among the top ten International Trust & Investment are subsidiary companies of Shenzhen Investment Holding shareholders or consistent Corporation; Hong Kong Zhuorun Technology Co., Ltd. is subsidiary company indirectly action controlled by Shenzhen Investment Holding Corporation. Except for these, there exists no associated relationship among the top ten shareholders. Particulars about shares held by the top ten shareholders of circulation share Name of shareholders Circulating shareholders Types of circulating shares held in the year-end (share) (A-share, B-share, H-share or others) CHEN YUAN FENG 1,631,040 B-share JIANG LAN 1,200,000 B-share CHEN XIONG 1,074,868 B-share WANG LI SI 1,001,803 B-share HUANG CAI XIANG 1,000,000 B-share NGAI KWOK PAN 747,600 B-share LIAO XIAO YAN 742,228 B-share GU SHU MING 700,050 B-share DENG GE 685,999 B-share DBS VICKERS (HONG 647,600 B-share KONG) LTD A/C CLIENTS Explanation on associated The Company was unaware of whether there existed any relationship among the top ten associated relationship among the top ten circulation shareholders of circulation shareholders and whether there existed consistent actionist share regulated in the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies. 4.3 Partic ulars 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 China Huarong Assets Management Company is a state-owned sole company limited, which was wholly-owned company possessed by the Ministry of Finance of PRC. Its registered capital is RMB 10 billion; legal representative is Mr. Yang Kaisheng. China Huarong Assets Management Company was located in No. 10, Baiyun Road, Xicheng District, Beijing. Business scope: purchase and operation of bad assets peeled off from China Industrial and Commercial Bank, recovery of debts, replacement of assets, transfer and sale; reorganization of debts and enterprise; debt-to-equity; staggered holding share, securitization of assets, listing recommendation, underwriting of bond and shares in the scope of assets management; direct investment; issuance of bond; commercial loan; loan from finance organization, application of reloan from People’ s Bank of China; investment, finance and law consultation; evaluation of assets and project; bankruptcy liquidation and enterprise auditing; and the other business approved by the financial supervisory department. §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Holding shares Holding Reason for Name Title Sex Age Office term at the shares at the change year-begin year-end Zhang Xiaofeng Chairman of the Board Male 33 Apr. 2002 – 0 0 Naught May 2004 Pan Shiming Director Male 33 May 2001 – 0 0 Naught May 2004 Liu Linfeng General Manager Male 47 May 2001 – 0 0 Naught May 2004 Ye Qing Director Male 42 Apr. 2002 – 0 0 Naught May 2004 Hu Eryi Director Female 40 May. 2001 – 0 0 Naught May 2004 Shi Zhanxiong Director M ale 60 May 2001 – 75,000 75,000 Naught May 2004 Yi Xiaoming Director Male 43 Apr. 2002 – 0 0 Naught May 2004 Wan Nianqing Director Male 30 Sep. 2003– 0 0 Naught May 2004 Yang Lixun Independent Director Male 41 May 2001 – 0 0 Naught May 2004 Wang Fuqing Independent Director Male 37 Sep. 2003– 0 0 Naught May 2004 Ma Hong Independent Director Male 37 Sep. 2003– 0 0 Naught May 2004 He Xiongsen Supervisor Male 44 Jun. 2002 – 0 0 Naught Jun. 2005 Lan Qihua Supervisor Male 53 Jun. 2002 – 0 0 Naught Jun. 2005 Peng Tiesheng Supervisor Male 54 Jun. 2002 – 0 0 Naught Jun. 2005 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) China Huarong Assets Management Huang Junmin Senior Manager Since Apr. 2001 Yes Company, Shenzhen Office Pan Shiming Guangdong Sunrise Group Co., Ltd. General Manager Since May 2002 Yes China Huarong Assets Management Yi Xiaoming Senior Manager Since Sep. 2000 Yes Company, Shenzhen Office Wan Nianqing China Huarong Assets Management Manager Since Nov. 2001 Yes Company, Shenzhen Office China Huarong Assets Management He Xiongsen Senior Manager Since Jan. 2002 Yes Company, Shenzhen Office 5.3 Particulars about the annual remuneration of directors, supervisors and senior executives Total annual payment RMB 637,100 Total annual payment of the top three directors RMB 435,800 drawing the highest payment Total annual payment of the top three senior RMB 435,800 executives drawing the highest payment Allowance of independent director RMB 20,000 per person/ year Other treatment of independent directors The Company reimbursed the expenses for business trips according to the actual situation, which independent directors attended the Board meeting and shareholders’ general meeting. Name of directors and supervisors receiving no Director: Zhang Xiaofeng, Pan Shiming, Yi Xiaoming payment or allowance from the Company and Wan Nianqing Convener of the Supervisory Committee: He Xiongsen Payment Number of persons Over RMB 150,000 1 RMB 100,000 ～ RMB 150,000 3 Under RMB 100,000 1 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period The Company was mainly engaged in the production and sales of production and sales of bicycles and accessories and fittings. In 2003, the Company faced the market and firmly implemented the mode of production, supply and sales of “Confirming production with sales, confirming supply with production and ready money and merchandise on hand”. In the whole year, totally 25,288 pieces of electric bicycles and 187,000 pieces of bicycles were sold respectively, an increase of 61% and 85% respectively compared with the last year. At the same time, piercing progress was gained in the liabilities reorganization. The Company’s financial institutions and creditors’cutting liabilities had no obstacle in policies. At present, the said creditors has exempted and stopped calculating all interests owed by the Company amounting to RMB 392 million. However, the operating results in the whole year was still not satisfactory since the whole operating environment of the Company was not improved basically. The Company realized income from main operations amounting to RMB 99.015 million, profit from main operations amounting to RMB 8.052 million and profit amounting to RMB 340.820 million. 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 (%) (%) (%) Manufacture of bicycles 9,472.00 8,742.00 7.71 38.19 42.57 -26.85 Including: related 0.00 0.00 - 0.00 0.00 0.00 transactions Bicycles 4,232.00 4,172.00 1.42 19.87 45.49 -92.22 Electric bicycles 5,240.00 4,570.00 12.79 73.05 113.36 -49.90 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 (%) Shandong 2,187.00 54.12 Jiangsu 1,429.00 62.55 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase Proportion in the total 1,980.00 66.00% of the top five suppliers amount of purchase Total amount of sales of the Proportion in the total 1,351.00 14.00% 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 Decrease in total assets in the period was mainly due to the settlement in the 2nd stage of engineering in Zhonghua Garden. Decrease in liabilities and increase in owners’ equity was due to the interests’exemption in liabilities reorganization. 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 The Board of the Company agreed the auditors’report presented by K.C.Oh & Company Certified Public Accountants. Since the Company’ s liabilities reorganization was still not accomplished finally in 2003 and liabilities risks with great amount still existed, the Certified Public Accountants expressed doubt to the Company’ s sustainable operating capability in the auditors’report and expressed reserved opinion. Thus, the Board of the Company made explanation as follows: Since China Huarong Assets Management Company, the largest creditor of the Company, occupied Shenzhonghua formally since Mar. 2002, based on gaining progress in the last year, the Company has gained piercing progress again in the liabilities reorganization, namely the Company’ s financial institutions and creditors’ cutting liabilities had no obstacle in policies. At present, the said creditors has exempted and stopped calculating all interests owed by the Company amounting to RMB 392 million. While gaining progress of liabilities reorganization, the Company’ s main operations also had increase by great margin and main operations continued to realize profitability. Thus, the Board of the Company considered that the Company’ s pressure in short-term payments was reduced greatly and the sustainable operating capability had been improved in a relatively great margin. Along with the continuous progress of the Company’ s liabilities and assets reorganization and the continuous increase in the Company’ s achievements, the Company’s operating environment and operating position would be further improved. 6.15 Business plan as of the next year of the Board of Directors (If it has) √Applicable □Inapplicable 1. Quicken the general reorganization progress including liabilities reorganization in order to improve the wicked internal and external operating environment of the Company in the several years. 2. Further enlarge the present scale of production and sale of main business and make efforts to realize the increase with high speed of main business. 3. Strengthen the power of technology research and development of electric bicycles; quicken the step of research and development. 4. Continue to quicken liquidizing the present remnant assets to supple current capital for the production and operation and further relax the intense situation of current capital. 5. Further perfect legal person administration structure and establish high-efficiency encouragement and binding mechanism. 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 distrib ution or capitalization. §7. Significant Events 7.1 Purchase of assets □ Applicable √ Inapplicable 7.2 Sales of assets □ Applicable √ Inapplicable 7.3 Significant guarantee □ Applicable √ Inapplicable 7.4 Current related credits and liabilities √ Applicable □ Inapplicable Unit: RMB’0000 Provided capital to related Provided capital to listed companies by Related parties parties related parties Occurred Balance Occurred Balance Hong Kong (Link) Bicycles Limited 0.00 62,905.44 0.00 0.00 Diamond Back (HongKong) Co., Ltd. 0.00 24,155.70 0.00 0.00 Zhigao Resource International Co., 0.00 13,939.64 0.00 2,491.76 Ltd. Hong Kong Huajiaming Industry Trade 0.00 0.00 0.00 896.20 Co., Ltd. Shenzhen Canghai Industrial Co., Ltd. 0.00 0.00 0.00 18.94 Shenzhen Danxia Bicycle Accessory 0.00 0.00 0.00 45.66 Co., Ltd. Jiangsu Huaiyin Huayu Bicycle 0.00 0.00 0.00 496.53 Accessory Factory Co., Ltd. Shantou Economic Special Zone 0.00 0.00 0.00 689.74 Dapeng Industrial Co., Ltd. China Complex Material Products 80.36 6,261.87 0.00 0.00 (Shenzhen) Co., Ltd. Shenzhen Huajiaming Industry Trade 0.00 3,558.02 0.00 0.00 Development Co., Ltd. China Huarong Assets Management 0.00 0.00 -23,731.62 71,865.61 Corporation Guangdong Sunrise Group Co., Ltd. 0.00 0.00 1,939.90 23,240.74 Shenzhen Jinhuan Printing Format Co., 0.00 0.00 0.00 60.00 Ltd. Daming International Co., Ltd. 0.00 0.00 0.00 1,083.44 Shenzhen Jianian Industrial Co., Ltd. 0.00 0.00 1,002.69 1,289.69 Total 0.00 110,820.67 -21,791.72 102,178.31 7.5 Entrusted financing □ Applicable √ Inapplicable 7.6 Implementation of projects committed □ Applicable √ Inapplicable 7.7 Significant lawsuit and arbitration □ Applicable √ Inapplicable 7.8 Implementation of duties of Independent Directors The Company has established independent director system and engaged 3 independent directors in the Board of Directors. The independent directors performed their rights and obligations in their office term strictly according to the Articles of Association of the Company and the Guide Opinions of Establishing Independent Director System in Listed Company issued by CSRC, attended the Board Meeting and Shareholders’General Meeting actively and seriously and expressed independent opinions regarding the Company’ s administration and operation status. The three independent directors fulfilled the obligations better. §8. Report of the Supervisory Committee The Supervisory Committee agreed the explanation of the Board of Directors of the Company on qualified auditor’s report issued by K.C. Oh & Company Certified Public Accountants. §9. Auditor’ s Report 9.1 Auditor’ s opinion Report of the auditors to the members of Shenzhen China Bicycle Company (Holdings) Limited (A joint stock limited company incorporated in the People’ s Republic of China) We have audited the accompanying balance sheet of the Group as of December 31, 2003 and the related statements of income, cash flows and changes in equity for the year then ended. These financial statements are the responsibility of the Group’ 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. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. However, the evidence available to us was limited in the following manner. As explained in note 2 to the financial statements, the company’ s adoption of going concern basis is based on the probable outcome of the debt restructuring as well as the resulting improvement in the financial position. As we were unable to obtain sufficient evidence and explanation to assess the adequacy of the going concern basis, our opinion is qualified in this respect. In addition, we were unable to estimate the financial impact on the Group should the going concern basis not be adopted. Except for the matter as referred to above, in our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2003 and the results of its operations and its cash flows for the year then ended, in accordance with International Financial Reporting Standards. K. C. Oh & Company Certified Public Accountants Hong Kong : April 19, 2004 9.2 Accounting statement Shenzhen China Bicycle Company (Holdings) Limited Consolidated income statement for the year ended December 31, 2003 Note 2003 2002 RMB’000 RMB’000 Restated Turnover (5) 99,015 71,590 Cost of sales ( 90,963 ) ( 64,278 ) Gross profit 8,052 7,312 Other revenue 19,932 49,362 27,984 56,674 Distribution costs ( 9,104 ) ( 8,713 ) Administrative expenses ( 27,882 ) ( 30,892 ) Other operating expenses ( 477 ) ( 190 ) Operating profit/(loss) ( 9,479 ) 16,879 Finance costs ( 3,906 ) ( 21,278 ) Operating loss before exceptional items (6) ( 13,385 ) ( 4,399 ) Exceptional items (7) 355,831 12,625 Operating profit after exceptional items 342,446 8,226 Share of loss from associates ( 1,679 ) ( 1,419 ) Profit before taxation 340,767 6,807 Taxation (8) ( 2) - Profit after taxation 340,765 6,807 Minority interests 55 ( 27 ) Profit for the year 340,820 6,780 Earnings per share (9) RMB0.7109 RMB0.0141 Shenzhen China Bicycle Company (Holdings) Limited Consolidated balance sheet as at December 31, 2003 2002 2003 RMB’000 Note RMB’000 Restated Non-current assets Fixed assets (10) 262,108 310,919 Interests in associates (11) 19,059 20,738 Other investments (12) 6,903 8,603 288,070 340,260 Current assets Inventories (13) 68,882 73,441 Accounts receivable (14) 8,887 14,477 Others receivable and prepayments (15) 60,042 49,301 Amounts due from related companies (16) - - Bills receivable 275 150 Cash and bank balances 5,585 6,800 143,671 144,169 Total assets 431,741 484,429 Capital and reserves Share capital (17) 479,433 479,433 Reserves ( 2,167,047 ) ( 2,507,867 ) ( 1,687,614 ) ( 2,028,434 ) Minority interests (18) - - Non-current liabilities Long-term loans due to related companies (19) 951,063 1,177,321 Loan-term borrowings (20) 532,975 601,491 Provision for loss on guarantees (21) 166,271 166,271 1,650,309 1,945,083 Current liabilities Amounts due to related companies 59,408 59,408 Accounts payable 120,738 118,497 Bills payable 716 - Others payable and receipts in advance 210,292 190,108 Accruals 44,156 165,991 Tax payable 33,736 33,776 469,046 567,780 Total equity and liabilities 431,741 484,429 Shenzhen China Bicycle Company (Holdings) Limited Consolidated statement of changes in equity for the year ended December 31, 2003 Share Capital Statutory surplus Discretionary Statutory public Accumulated capital reserve reserve surplus reserve welfare fund loss Total RMB’000 RMB’ 000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance as at January 1, 2002 479,433 588,205 185,011 24,284 32,673 ( 3,303,499 ) ( 1,993,893 ) Prior period adjustments (note 24) - - - - - ( 41,321 ) ( 41,321 ) Restated balance 479,433 588,205 185,011 24,284 32,673 ( 3,344,820 ) ( 2,035,214 ) Profit for the year - - - - - 6,780 6,780 Reclassification - ( 588,205 ) ( 185,011 ) ( 24,284 ) - 797,500 - Balance as at December 31, 2002 479,433 - - - 32,673 ( 2,540,540 ) ( 2,028,434 ) Balance as at January 1, 2003 479,433 - - - 32,673 ( 2,497,808 ) ( 1,985,702 ) Prior year adjustment (note 24) - - - - - ( 42,732 ) ( 42,732 ) Restated balance 479,433 - - - 32,673 ( 2,540,540 ) ( 2,028,434 ) Profit for the year - - - - - 340,820 340,820 Balance as at December 31, 2003 479,433 - - - 32,673 ( 2,199,720 ) ( 1,687,614 ) According to the Company’ s Articles of Association and the PRC’s relevant laws and policies, as well as after making up the Company’ s loss, the Company is required to make a transfer at the rate of 10% from the profit after taxation, determined in accordance with the PRC accounting standards, of the Company to the statutory surplus reserve until the reserve balance has reached 50% of the registered capital of the Company. Again, after making up the loss, the Company is also required to transfer 5% from the profit after taxation to the statutory public welfare fund. The statutory surplus reserve and the capital reserve may be applied only for the following purposes : i may be used to make up loss; and ii may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by them, but when the statutory surplus reserve is converted into share capital, the amount remaining in the reserve shall be no less than 25% of the newly increased registered capital. In 2002, the directors approved to make up the accumulated loss by transferring all balances from capital reserve, statutory surplus reserve and discretionary surplus reserve. The directors do not recommend the payment of any dividend in respect of the year ended December 31, 2003. The statutory public welfare fund shall only be applied for the collective welfare of the Company’ s employees, and upon utilisation, an amount equal to expenditure spent on the collective staff welfare shall be transferred from the statutory public welfare fund to discretionary surplus reserve. Prior to making up the Company’ s loss and the relevant appropriations to the statutory surplus reserve and the statutory public welfare fund, no dividend shall be payable. Shenzhen China Bicycle Company (Holdings) Limited Consolidated cash flow statement for the year ended December 31, 2003 2003 2002 RMB’000 RMB’000 Restated Cash flow from operating activities Operating profit before taxation 340,767 6,807 Adjustment items : Interest income ( 38 ) ( 32 ) Interest expense 3,906 20,719 Depreciation 15,914 18,699 Debt restructuring income ( 374,993 ) - Share of loss from associates 1,679 1,419 Provision for impairment loss of property, plant and equipment reversed - ( 3) Profit on disposal of property, plant and equipment ( 10,773 ) ( 40,086 ) Provision for impairment loss of construction in progress reversed ( 2,320 ) - Provision for impairment loss of other investments 1,700 40 Provision for impairment loss of obsolete inventories made/(reversed) 3,909 ( 10,407 ) Provision for doubtful debts made/(reversed) 9,518 ( 2,203 ) Provision for loss on minority interests made/(reversed) 55 ( 27 ) Net operating cash outflow before movement in working capital ( 10,676 ) ( 5,074 ) Decrease in amounts due from associates - 2,892 Decrease in inventories 650 125 (Increase)/decrease in accounts receivable 4,452 ( 5,670 ) (Increase)/decrease in others receivable and prepayments ( 18,820 ) 2,125 (Increase)/decrease in amounts due from related companies ( 281 ) 13,655 Increase in bills receivable ( 125 ) - Increase in amounts due to related companies - 10,028 Increas e in accounts payable 2,241 6,701 Increase/(decrease) in bills payable 716 ( 100 ) Increase/(decrease) in others payable and receipts in advance 12,684 ( 17,655 ) Decrease in accruals ( 1,116 ) ( 239,146 ) Net cash outflow from operating activities before interest and income tax payments ( 10,275 ) ( 232,119 ) Interest paid ( 178 ) - Income taxes recovered/(paid) ( 42 ) 40 Net cash outflow from operating activities c/f ( 10,495 ) ( 232,079 ) Investing activities Interest received 38 32 Proceeds from disposal of property, plant and equipment 1,516 75,556 Payment for acquisition of property, plant and equipment ( 594 ) ( 905 ) Proceeds from construction in progress 2,320 - Net cash inflow from investing activities 3,280 74,683 Net cash outflow before financing activities ( 7,215 ) ( 157,396 ) Financing activities (*) Increase in long-term loans due to related companies 6,000 161,630 Decrease in long-term borrowings - ( 728 ) Net cash inflow from financing activities 6,000 160,902 Increase/(decrease) in cash and cash equivalents ( 1,215 ) 3,506 Cash and cash equivalents as at beginning of the year 6,800 3,294 Cash and cash equivalents as at end of the year 5,585 6,800 (*) Cash flow from financing Long-term loans due Long-term to related companies borrowings RMB’000 RMB’000 Balance as at beginning of the year 1,170,528 601,491 Cash flows from financing activities 6,000 - Debt restructuring income (note 7) ( 243,346 ) - Increase in others payable 11,088 ( 18,088 ) Proceeds from disposal of property, plant and Equipment - ( 50,428 ) Balance as at end of the year 944,270 532,975 9.3 Accounting policy, accounting assessment and settlement method has no change compared with the latest annual report. 9.4 Consolidation scope has no change compared with the latest annual report. Board of Directors of Shenzhen China Bicycle Company (Holdings) Limited Apr. 21, 2004