深物业A(000011)ST深物业2003年年度报告摘要（英文版）

SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LTD. SUMMARY OF ANNUAL REPORT 2003 §1. Important Notes 1.1 Board of Directors of Shenzhen Properties & Resources Development (Group) Ltd. 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 Three directors were absent from the Board meeting due to some reasons, but they examined the relevant information before the meeting; among them, Director Guo Yuanxian and Yang Shuncheng entrusted Chairman of the Board Mr. Tian Chenggang and at the same time Zhang Jianjun entrusted Kong Yuquan to vote on his behalf with the aye to all proposals involved in the said meeting respectively. 1.3Wuhan Zhonghuan CPAs Ltd. issued an unqualified Auditors’ Report with explanatory notes for the Company; and the Board of Directors and the Supervisory Committee of the Company made the corresponding explanations in details for the relevant matters, the investors are suggested to notice the content. 1.4 Chairman of the Board of the Company Tian Chenggang, General Manager Fang Yibing and Manager of Financial Department Zhang Wei hereby confirm that the Financial Report enclosed in the Annual Report is true and complete. 1.5This report has been prepared in Chinese version and English version respectively. In the event of difference in interpretation between the two versions, the Chinese report shall prevail. §2. Company Profile 2.1 Basic information Short form of the stock ST Shen Wuye, ST Wuye-B Stock code 000011, 200011 Listed stock exchange Shenzhen Stock Exchange Registered address and office address 39/F and 42/F, International Trade Center, Ren Min South Road, Shenzhen Post code 518014 E-mail of the Company szprd@163.com 2.2 Contact person and method Secretary of the Board of Authorized Representative in Directors charge of the Securities Affairs Name Guo Yumei Dong Wei Contact address 42/F, International Trade Center, 42/F, International Trade Center, Ren Min South Road, Shenzhen Ren Min South Road, Shenzhen Telephone (86) 755-82211020 (86) 755-82211020 Fax (86) 755-82210610 (86) 755-82212043 §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 1,079,474,318.91 781,284,955.43 38.17 1,021,639,372.64 Total profit 121,676,376.73 44,508,865.86 173.38 105,881,181.71 Net profit 77,001,831.44 34,622,176.84 122.41 86,206,309.75 Net profit after deducting 124,021,158.47 35,892,303.95 245.54 82,422,278.91 non-recurring gains and losses Increase/decrease At the end of At the end of At the end of from the end of 2003 2002 2001 previous year（％） Total assets 2,437,227,899.69 2,607,979,385.36 -6.55 2,440,084,079.97 Shareholder’s equity (excluding 474,222,712.97 337,903,702.25 40.34 277,151,339.50 minority interests) Net cash flow arising from 187,629,855.85 -34,585,671.37 - 133,563,365.47 operating activities 3.2 Major financial indexes Unit: RMB Increase/decrease over 2003 2002 2001 last year（％） Earnings per share 0.142 0.064 121.88 0.159 Earnings per share * 0.142 0.064 121.88 0.159 Return on equity 16.24% 10.25% 58.44 31.10% Return on equity calculated based on net profit after deducting non-recurring gains 26.15% 12.19% 114.52 35.42% and losses Net cash flow per share arising from 0.346 -0.064 - 0.247 operating activities Increase or decrease At the end At the end At the end from the end of of 2003 of 2002 of 2001 previous year（％） Net assets per share 0.875 0.624 40.22 0.512 Net assets per share after adjustment 0.513 0.146 251.37 0.076 3.3 Difference of net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Differences of net profit calculated based on domestic and international accounting system for enterprise business are as following: Unit: RMB’000 Items Net profit (as of year 2003) As calculated in accordance with CAS 77,002 Switching back into fixed assets from amortization payment 170 Adjustment of amortization of expenses -2,714 Other As calculated in accordance with IAS 74,458 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital Unit: share Increase/decrease in this time (+, - ) Before the Capitalization After the Rationed Bonus Additional Sub- change of public Others change share shares issuance total reserve I. Unlisted shares 1. Sponsors’shares Including: State-owned share 323,747,713 323,747,713 Domestic legal person’s shares 65,200,850 65,200,850 Foreign legal person’s shares Others 2. Raised legal person’s shares 3. Inner employees’ shares 4. Preference shares or others Total unlisted shares 388,948,563 388,948,563 II. Listed shares 1. RMB ordinary 91,355,000 91,355,000 shares 2.Domestically listed foreign shares 61,459,312 61,459,312 3. Overseas listed foreign shares 4. Frozen shares held by senior executives 36,300 36,300 Total listed shares 152,850,612 152,850,612 III. Total shares 541,799,175 541,799,175 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Number of shareholders at the end of By the end of the report period, the Company had totally 44208 shareholders, including report year 35813 ones of A-share and 8395 ones of B-share. Particulars about shares held by the top ten shareholders Increase / Shares held Share Type of shares decrease in at the Proportion pledged/ Nature of Full name of Shareholders (Circulating/No the report year-end (%) frozen shareholders n-circulating) year (share) (share) (share) SHENZHEN CONSTRUCTION 0 323,747,713 59.75 Non-circulating Naught State-owned share INVESTMENT HOLDINGS COMPANY SHENZHEN INVESTMENT HOLDING 0 56,628,000 10.45 Non-circulating Naught Legal person’ s share CORPORATION LABOR UNION OF SHENZHEN 0 2,516,800 0.46 Non-circulating Naught INTERNATIONAL TRADE PROPERTY Legal person’ s share MANAGERMENT COMPANY SHENZHEN SPECIAL DISTRICT 0 1,573,000 0.29 Non-circulating Naught Legal person’ s share DUTY-FREE COMMODITY CO. YOU XIAN HUI 1,088,174 1,088,174 0.20 Circulating Naught Public share of A-share SHANGHAI ZHAODA INVESTMENT 0 1,010,000 0.19 Non-circulating Naught Legal person’ s share CONSULTANT CO., LTD. CHINA EAGLE SECURITIES CO., LTD. 0 786,500 0.15 Non-circulating Naught Legal person’ s share SHANGHAI KUNLING INDUSTRY & 0 629,200 0.12 Non-circulating Naught Legal person’ s share TRADE CO., LTD. SHANGHAI ZHIZHEN INVESTMENT 0 480,000 0.09 Non-circulating Naught Legal person’ s share CONSULTANT CO., LTD. YUEN, SUI 430,700 430,700 0.08 Circulating Naught B-share Explanation on associated relationship There exists no associated relationship among the top three shareholders. For other among the top ten shareholders or shareholders, the Company did not know their relationship. consistent action Particulars about shares held by the top ten shareholders of circulation share Name of shareholders (full name) Number of circulation shares held at the Type (A-share, B-share, H-share and other) year-end (share) YOU XIAN HUI 1,088,174 A YUEN, SUI 430,700 B LI YA JIE 416,600 A ZHOU TING 414,917 A RIGHT INDUSTRIAL COMPANY 401,608 B CORE PACIFIC-YAMAICHI 400,000 B INTERNATIONAL (H.K.) LTD. DENG SHAO PING 392,898 B FENG WEN BIN 361,208 B YANG TIAN DING 360,000 A HUANG JUN QUAN 340,010 B Explanation on associated relationship The Company did not know whether there exists associated relationship among the top among the top ten shareholders of ten shareholders of circulating share or not. circulation share 4.3 Particulars about controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in controlling shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for controlling shareholder and other actual controller The controlling shareholder of the Company is Shenzhen Construction Investment Holdings Company (“the holding company”), who was established in July 1986; its legal representative is Mr. Zhang Yijun and the registered capital is RMB 1.5 billion. The holdings company is an assets management company owned by the whole people, and involve in industry, general undertaking of construction material for civil use, development of real estate and property management, etc. As one of three largest state assets management companies, Shenzhen Construction Investment Holdings Company exerted the investors’rights for state assets of the Company within the limits authorized by the municipal government and was entrusted by Shenzhen municipal government. The permanent organization of Shenzhen Municipality State Assets Management Committee is Shenzhe n Municipality State Assets Management Office (“Municipality State Assets Office”), who implemented management for three largest state assets management companies of Shenzhen on behalf of Shenzhen municipal government. Thus, the actual controller of Shenzhen Construction Investment Holdings Company is Municipality State Assets Office with locating at Investment Bldg., Shen Nan Av., Futian District, Shenzhen and postcode “518026”. §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Holding Holding Reason shares at shares at for Name Title Sex Age Office term the the change year-begin year-end Tian Chairman of the Jun. 2001- Male 50 0 0 - Chenggang Board Jun. 2004 Director, General Feb. 2003- Fang Yibing Male 42 0 0 - Jun. 2004 Manager Feb. 2003- Guo Yuanxian Director Male 52 0 0 - Jun. 2004 Zha Director, Deputy Jun. 2001- Male 55 18150 18150 - Jun. 2004 Shengming General Manager Yang Director, Deputy Jun. 2003- Male 56 0 0 - Jun. 2004 Shuncheng General Manager Director, Chairman Jun. 2001- He Wenhua Male 58 18150 18150 - Jun. 2004 of Labor Union Director Jun. 2001- Li Zhen Male 39 0 0 - Jun. 2004 Director Feb. 2003- Wang Huimin Female 37 0 0 - Jun. 2004 Jun. 2002- Zhang Jianjun Independent Director Male 38 0 0 - Jun. 2004 Jiang Jun. 2003- Independent Director Male 39 0 0 - Jun. 2004 Changlong Jun. 2003- Kong Yuquan Independent Director Male 39 0 0 - Jun. 2004 Chairman of the Jun. 2001- Cao Ziyang Supervisory Male 53 0 0 - Jun. 2004 Committee Supervisor, Manager Jun. 2001- Tong Qinghuo Male 40 0 0 - Jun. 2004 of Human Resource Supervisor, Deputy Secretary of the Jun. 2001- Liu Jiake Male 54 0 0 - Jun. 2004 Discipline Committee Supervisor, Deputy Jun. 2001- Jin Chenggui Manager of Auditing Male 56 0 0 - Jun. 2004 Department Supervisor, Leader of Jun. 2001- Ma Deqin Female 50 0 0 - Jun. 2004 Labor Union Vice secretary of the Party Committee, Jun. 2003- Xiu Xuguang Secretary of the Male 49 0 0 - Jun. 2007 Discipline Committee Deputy General Jan. 2003- Luo Junde Male 53 0 0 - Jun. 2004 Manager Mar. 2003- Liu Yinhua Chief Engineer Male 43 0 0 - Jun. 2004 Secretary of the Board, Director of Jun. 2001- Guo Yemei Female 44 0 0 - Jun. 2004 the Board of Directors Office 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 Shareholding Company Company Company (Yes / No) Shenzhen Construction Guo Yuanxian Vice-president Jun. 2002 to now No Investment Holding Company Wang Huimin Shenzhen Construction Manager of HR Nov. 2002 to now No Investment Holding Company Shenzhen Investment Holding Assistance president, Li Zhen Nov. 2001 to now No Corporation director of Office 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 5,900,500 Total annual payment of the top three directors RMB 1,699,600 drawing the highest payment Total annual payment of the top three senior RMB 1,336,700 executives drawing the highest payment Allowance of independent director RMB 30,000 Other treatment of independent directors Naught Name of directors and supervisors receiving no Guo Yuanxian, Wang Huimin and Li Zhen payment or allowance from the Company Scope of payment Number of persons Over RMB 470,000 3 Over RMB 350,000 6 Over RMB 270,000 5 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In 2003, the Company realized income from main operations, profit from main operations and net profit amounting to RMB 1,079,474,318.91, RMB 363,255,274.91 and RMB 77,001,831.44 respectively, an increase of 38%, 60% and 122% respectively over the last year. Ended the end of the report period, the shareholders’ equity was RMB 474,222,712.97, increasing somewhat over the beginning of the year, which was mainly because: 1. Partial projects of real estate reached the condition of completion and settlement, resulting in the increase of net profit. 2. In the report period, the Company increased capital reserve, including earnings from liabilities reorganization amounting to RMB 39,029,293.21, payables on account to be paid in long term amounting to RMB 20,197,224.05 transferred and non-cash assets donation amounting to RMB 90,662.02 accepted by the affiliated subsidiaries. 3. In the year, the net amount of cash flow from operating activities was RMB 187.63 million, which was because that the Company reinforced the sales and assets withdrawal and turned the situation that this index was negative in the last year. 6.2 Statement of main operations classified according to industries or products Unit: RMB’000 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 (RMB) ratio (%) main operations operations over over the last year (RMB) over the last year the last year (%) (%) (%) Real estate development 899838 525832 41.56 69.90 47.30 27.48 Property management 123633 98781 20.10 2.77 9.96 -20.65 and lease Commercial retail 37980 34966 7.94 -62.53 -50.51 -73.79 Tax passenger transport 28359 7249 74.44 -15.49 -16.20 0.30 Tourism and food 5942 2857 51.92 3.25 35.13 -17.93 Including: related 82040 - - - - - transactions Pricing rules for related Negotiated and confirmed by the both parties of the transaction according to the market price transactions Necessity and durative This transaction would impact active influence on reducing stock properties of the Company, improving of related transactions status of working capital and enhancing profitability capability. 6.3 Particulars about main operations classified according to areas Unit: RMB’000 Areas Income from main operations Increase/decrease in income (RMB) from main operations over the last year (%) Shenzhen 845270 13.9 East China 211730 229.14 Hainan 22470 -40.84 6.4 Particulars about the customers of purchase and sales Total amount of sales of the - Proportion in the total 1% 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 Name of share-holding company Shenzhen Huangcheng Real Estate Co., Ltd. Investment earnings contributed in RMB 150.467 Proportion in net - the period million profit of the listed company Share-holding Business scope Development, construction, operation and management of company auxiliary commercial service facilities of Huanggang Port Net profit RMB 150.467 million Name of share-holding company Shanghai Shenzhen Property Development Co., Ltd. Investment earnings contributed in RMB 49.684 Proportion in net - the period million profit of the listed company Share-holding Business scope Development and operation of real estate company Net profit RMB 49.684 million 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 The reason for great increase in profitability of main operations was that the sales of real estate increased and the income was carried forward in the report period. 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previo us year √Applicable □Inapplicable Proportion of earnings and expenses in total profit Amount (RMB’000) Proportion in total profits (%) In 2003 In 2002 In 2003 In 2002 Total amount of profit 121,676 44,509 - - Profit from main 363,255 226,583 298.54 509.07 operations Profit from other 1,579 11,723 1.30 26.33 operations Period expense 182,500 194,604 149.99 437.22 Invest earnings -15,362 -15,266 -12.63 -34.30 Subsidy income 0 0 0.00 0.00 Net amount of -45,297 16,073 -37.23 36.11 non-operating income and expenditure Explanations: 1. In the report period, total profit increased by 173% over the same period of last year, which was mainly due to the increase in sales of real estate in the report period, resulting in the income carried forward. 2. Period expense decreased by RMB 121.04 million over the same period of last year, which was mainly because that the Company reinforced the control on cost and expense. 3. There was no obvious change in investment earnings over the last year. 4. In the year, net amount of non-operating income and expenditure changed by a relatively large margin, which was mainly because that there was estimated liabilities of lawsuits amounting to RMB 50,002,304.07 in the non-operating expenditure in the report period. Analysis to reasons of material changes in the whole financial position than that in the last year √Applicable □Inapplicable In the report period, the Company’ s operating business increased steadily and the assets quality was enhanced with steady financial position. The development projects confirmed within the year have provided a solid foundation for the sustainable development of the Company. Unit: RMB’000 Items Amount of the Amount of the Amount of Increase/decrease report year previous year increase/decrease rate Total assets 2,437,228 2,607,979 -170,751 -6.55% Inventories 1,422,358 1,461,647 -39,289 -2.69% Long-term 227,484 353,857 -126,373 -35.71% liabilities Shareholders’ 474,223 337,904 136,319 40.34% equity Profit from main 363,255 226,583 136,672 60.32% operations Net profit 77,002 34,622 42,380 122.41% Net increase in 26,782 -38,068 - - cash and cash equivalents Explanations: ① Decrease in total assets was mainly because that the Company reinforced the dunning of accounts receivable in the year, resulting in the decrease in accounts receivable. ② Decrease in inventories was mainly because that the Company sold commercial housing and carried forward corresponding cost in the year. ③ Decrease in long-term liabilities was mainly because that the Company has refunded part of long-term bank loans. ④ Increase in shareholders’equity was mainly because that the Company realized net profit amounting to RMB 77,001,831.44 and earnings from liabilities reorganization amounting to RMB 39,029,293.21; accounts payable on account to be paid in long term amounting to RMB 20,197,224.05 were transferred in and non-cash assets donation amounting to RMB 90,662.02 was accepted by the affiliated subsidiaries. ⑤ Increase in profit from main operations was mainly due to sales of real estate and income carried forward. ⑥ Increase in net profit was mainly due to increase in profit from main operations. ⑦ Increase in net increase amount of cash and cash equivalents was mainly due to the sales of real estate and capital returned. 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 6.13 Application of the proceeds not raised through shares offering (For details, please refer to 7.1 in this report) √Applicable □Inapplicable Unit: RMB’000 Name of project Amount of Progress of project Earning of Earnings rate of project project project City Golden Castle Partial peak cover Not completed - 113000 Project at the end of the at the end of year the year District B of Huang Completed and 51% sold 20% 342670 Yu Yuan occupied at the end of the year The 4th and 5th Stage Completed in the 100% sold in 19% 110000 of Shanghai 4th Stage and peak the 4th Stage Pastoral City cover in the 5th State Total - - - 565670 6.14 Explanation of the Board of Directors on the “Qualified Opinion” made by the Certified Public Accountants √Applicable □Inapplicable As stated in Notes to Accounting Statements (VIII) 1 (1), after the application of retrial on lawsuits of real estate trade contract with such eight owners as Haiyi Industrial (Shenzhen) Co., Ltd. and etc. presented by the Company to Guangdong Higher People’ s Court was rejected in 2003, such eight owners as Haiyi Industrial (Shenzhen) Co., Ltd. still did not apply for forcible implementation to Guangdong Higher People’ s Court. At present, the Company is actively applying for retrial to the Supreme Court of the P.R.C.. The Company has predicted relevant losses amounting to RMB 41,772,906.07 according to the appropriation of book value of property. As stated in Notes to Accounting Statements (VIII) 1 (2), in July 2001, Guangdong Higher People’s Court judged Shenzhen Jiyong Property Development Company to pay the Company transfer account amounting to RMB 143.86 million and sealed the property amounting to 28,000 sq. m. of the opposing party by forcible implementation. Later, since Industrial & Commercial Bank of China Zhejiang Branch had objection that the Company sealed the property, Guangdong Higher People’ s Court judged to release the Company’ s seal of property of Shenzhen Jiyong Property Development Company approximately amounting to 10,000 sq. m.. The Company has put forward objection to Guangdong Higher People’ s Court and the said objection is under examination. As stated in Notes to Accounting Statements (VIII) 1 (3), according to (2002) YGFMYZZ No. 90 Judgment issued by Gua ngdong Higher People’ s Court, the Company should pay principal amounting to RMB 10.80 million and corresponding interests to Hubei Foreign Economic Cooperation Hall Shenzhen Office. In the period, the Company predicted relevant losses amounting to RMB 8,229,398. As stated in Notes to Accounting Statements (VIII) 1 (4), the lawsuit case between Huang Fumin and the Company was still under inquisition. As stated in Notes to Accounting Statements (VIII) 1 (5), since Shenzhen Luohu Great Hotel Co., Ltd. was bank rupt and cleared, the Company has appropriated provision for bad debt amounting to RMB 6,950,000.00 to the book debt amounting to RMB 33,950,771.58 receivable from Shenzhen Luohu Great Hotel Co., Ltd. and it was estimated that the Company could withdraw amount of RMB 27 million. As stated in Notes to Accounting Statements (VIII) 2 (1), the Company provided guarantee for Gintian Industry (Group) Co., Ltd. (Hereinafter referred to as Gintian Company) to get loan amounting to RMB 59 million from Communication Bank Changchun Branch. Since Gintian Company was unable to repay the accounts at its expiration, Communication Bank Changchun Branch required the Company to take on the joint guarantee responsibility. During the inquisition of the case, the Company found the property in corresponding amount from owned by Gintian Company and provided the said property to Jilin Higher People’s Court and creditor Communication Bank Changchun Branch and Jilin Higher People’s Court has sealed up the said property. With the application of this Branch, Jilin Higher People’ s Court sealed up 18 sets of property of the Company in International Trade Commercial Building in Dec. 2003 and sealed up 169 sets of property under construction in Junfeng Lishe developed by the Company in Mar. 31, 2004. The Company considered that the said sealing belonged to excessive sealing, thus the Company brought forward objection on this to Jilin Higher People’ s Court and required to release the property sealed. Besides, the Company also provided guarantee for Gintian Company to get loan amounting to RMB 6 million from Agricultural Bank of China Shenzhen Branch International Sub-branch (Hereinafter referred to as International Trade Agricultural Bank). Gintian Company did not refund the loan at its expiration and the Company took on the joint responsibility. During the implementation, with the application of International Trade Agricultural Bank, Shenzhen Intermediate People’ s Court has sealed up the legal person’ s shares of Chuantouchanggang owned by the Company. The Company has found out the property in corresponding amount of Gintian Company and has provided to International Trade Agricultural Bank, which was sealed up by Shenzhen Intermediate People’s Court. Agricultural Bank of China agreed not to require the Company to take on the joint responsibility temporarily. For the said issues, the Company has predicted relevant losses reasonably. As stated in the auditors’report presented by Wuhan Zhonghuan Certified Public Accountants: The said interpretative issues do not belong to conditions that obviously disobey the accounting rules, system and criterion relevant to information disclosure stipulated in Preparation Rules No. 14 of Information Disclosure of Companies Publicly Issuing Securities – Qualified Auditing Opinion without Reservation and Disposal on its Involved Issues and are explained specially in the auditors’report just to remind the investors to pay special attention. They do not form any reservation to the accounting statements and do not influence on the type of auditing opinion released. 6.15 Business plan as of the next year of the Board of Directors (If it has) √Applicable □Inapplicable In 2004, the Company shall tightly surround the operating integration guideline with development and operation of real estate and property lease as the core and with property management, automobile transport and operation of dietetic service as the accessory, further standardize the enterprise operation and management and push and organize the reform of personnel system and information construction so as to catch the opportunity and speed up the development. In 2004, the Company shall really do the work in the following several aspects well: 1. To practically reinforce the construction and sales of key real estate projects with cost management as the core, strict the management on the project responsibility letter and fully enhance the level of all management so as to ensure the profit growth of the main operation, namely development of real estate. 2. To continue to improve the departmental objective responsibility of the headquarter of the Company and management on “Double Civilizations”responsibility letter and real estate project responsibility letter of the 2nd grade companies so as to enhance the level of operating management. 3. To reinforce the lease and operation of earning properties and establish lease department operated according to divisional system and specialized in lease business. 4. To tighten the land reserve and reinforce the aftereffect of sustainable development. 5. To actively make progress and expand and innovate facing the great situation of reform of state-owned enterprises with full consideration of the interests of the Company and its shareholders. 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 After researched and determined by the Board, the Company did not distribute profits or convert capital reserve into share capital in 2003. The profit earnings were used to offset the losses in the previous years. This preplan would be submitted to Annual Shareholders’General Meeting for consideration. §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets √Applicable □Inapplicable Transaction parties Contribution to net Profit or loss from Related Date of sale Sale price and the assets sold profit of the Company sale transaction or of the assets sold from not (if yes, the year-beginning to explain the date of sale principle of pricing) MEI HONG, LIN HKD Commercial buildings Jan. 2003 - HKD 535,600 No 13,505,600 of Sydney, Australia Commercial Bank, the RMB first floor of Fumin Aug. 2003 - RMB 39,030,000 No 65,580,000 Building The Company sold the above assets (1) to clean up the left problems in the history; (2) to liquidize remnant assets. It played an active role in the callback of investment and improvement of capital situation and has no influence the consistence of business and stabilities of the management team of the Company. 7.3 Important guarantee √Applicable □Inapplicable Guarantee Name of the Date of happening Complete Amount of Guarantee for related Company (date of signing Guarantee term Implementation guarantee type party (yes or guaranteed agreement) or not not) Gintian June 1998 RMB 6 million Guarantee 11 months No No Company Gintian Oct. 1998 RMB 59 million Guarantee 6 months No No Company Total amount of guarantee RMB 65 million Total balance of guarantee RMB 65 million Total amount of guarantee the listed company provided for its share-controlling RMB 70 million subsidiaries Total amount of guarantee breaking regulations 0 Proportion of total amount of guarantee in net assets of the Company 13% 7.4 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Related parties supplied funds to the Supply funds to related parties Related parties Company Occurred amount Balance Occurred amount Balance Shenzhen Construction 765 Investment Holdings 765 Shenzhen Construction Group 0 2,000 Financing Company Shenzhen Construction -2,600 0 Investment Holdings Shenzhen Construction -1,000 0 Investment Holdings Shenzhen Construction -2,945 0 Investment Holdings 7.5 Entrusted assets □Applicable √Inapplicable 7.6 Implementation of commitment items □Applicable √Inapplicable 7.7 Significant lawsuit and arbitration √Applicable □Inapplicable 1. Concerning the “Haiyi Company”lawsuit disclosed in 2000 Annual Report, 2001 Annual Report and 2002 Annual Report of the Company, because the 2nd trial unclearly cognized truth and improperly applied for laws, Guangdong Higher Court decided to retry the case in Aug. 1999 under the Company’ s application. According to the decision of the retrial, Shenzhen Intermediate Court ended the execution of the case after the Company provided possession’ s drawing. At the end of 2003, Guangdong Higher Court overruled the application of the Company after check. After the retrial application was overruled, the eight owners including Haiyi Industrial (Shenzhen) Co., Ltd. have not applied the compulsive execution for Guangdong Higher Court. At present, the Company is dealing with the item of retrial application for the Supreme People’ s Court. 2. Concerning “Jiyong Company” lawsuit disclosed in 2000 Annual Report, the provisional public notice dated Apr. 12, 2001, 2001 Annual Report and 2002 Annual Report of the Company, Guangdong Higher Court judged according to laws the transfer contract signed by the Company and Jiyong Company was valid and Jiyong Company should pay the transfer payment amounting to RMB 0.14 billion stated in the contract to the Company. The Company has applied compulsive execution for Guangdong Higher Court and the case is the process of execution. 3. Concerning “Huang Fuming” lawsuit disclosed in the provisional public notice dated Aug. 18, 2001, 2001 Annual Report, 2002 Annual Report and the provisional public notice dated Jan. 29, 2003 of the Company, it is still in process of cognizance. 4. Concerning “Luohu Hotel’ s Bankruptcy”lawsuit disclosed in 2001 Annual Report, 2002 Annual Report and the provisional public notice dated July 23, 2003 of the Company, the Company has reported credit of over HKD 32 million and RMB 22 million to Shenzhen Intermediate People’s Court. The case is in the process of check and callback of bankrupted possession. The liquidation team of Luohu Hotel primarily confirmed the total amount of the Company’ s credit was RMB 38,431,233.92 on July 4, 2003. In the auction on July 17, 2003 held by Guangdong Xutongda Auction Co., Ltd., the noumenon section of the hotel building of Luohu Hotel was sold as the price of RMB 73.50 million. Concerning the credit reported by the Company, it is estimated that RMB 27 million can be taken back. 7.8 Particulars about the performance of obligations of Independent Directors In the report period, Mr. Jiang Changlong and Mr. Kong Yuquan were elected as independent directors of the Company at annual Shareholders’General Meeting. At present, the Company carries complete three independent directors: Mr. Zhang Jianjun, Mr. Jiang Changlong and Mr. Kong Yuquan. The numbers and membership of the independent directors accord with the requirements of CSRC. Since the three independent directors held their posts, according to Articles of Association of the Company and the relevant regulations of the State Administration, they performed their duties and expressed independent opinions on whether related transaction, sale of assets and other significant matters were in accordance with relevant regulations and Articles of Association of the Company and damaged the interest of the minority shareholders or not. §8.Report of the Supervisory Committee The opinion of the Supervisory Committee on the explanation of the Board of Directors on non-standard opinion is as follows: Wuhan Zhonghuan Certified Public Accountants issued the unqualified auditor’ s report with emphasized items. The Supervisory Committee patiently inquired about the situation involved in the emphasized items in Auditor’ s Report and believed that the explanations of the Board of Directors and the management team of the Company on the stated events was in accordance with the actual situation and the adopted relevant accounting disposal method was in accordance with the financial and accounting policy. §9. Financial Report(ATTACHMENT) 9.1Comparative Balance Sheet, Profit Statement and Cash Flow Statement of consolidation and the parent company (attachment) 9.2 Explanation on change of consolidation scope compared with the latest annual report: Change of the consolidated units this year: Name of company Registered place Consolidated or not Reason of change Shenzhen International Trade Shenzhen No Shutout Marketplace Co., Ltd. Shenzhen Property Engineering Planned to change Shenzhen No Construction system Supervision Co., Ltd. Sichuan Tianhe Invested and newly Zhan Jiang Yes Industrial Co., Ltd. established Board of Directors of ShenZhen Properties & Resources Development (Group) Ltd. April 19, 2004