威孚高科(000581)苏威孚Ｂ2003年年度报告摘要（英文版）

WEIFU HIGH-TECHNOLOGY CO., LTD. 无锡威孚高科技股份有限公司 (Incorporated in the People’s Republic of China with limited liability) SUMMARY OF ANNUAL REPORT 2003 §1. IMPORTANT HINTS 1.1 The Board of Directors of Weifu High-Technology Co., Ltd. collectively and individually accept full responsibility for the authenticity, accuracy and completeness of the information contained in this report and confirm that there are no false statements and material omissions which would make any statement in this report misleading. The reader is advised that this is a summary for the annual report 2003. For more details, please read the original annual report. 1.2 No director expressed an uncertain opinion or a disagreement for the authenticity, accuracy and completeness of the information contained in this report. 1.3 All directors of the Company attended meetings of the Board of Directors. 1.4 PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd. issued the unqualified Auditors’ Report for the Company. 1.5 Mr. Xu Liangfei, legal representative of the Company, Mr. Han Jiangming, General Manager of the Company, and Ms. Sun Qingxian, Deputy General Manager as well as person in charge of Financing confirm that the Financial Report enclosed in the Annual Report is true and complete. §2. COMPANY INFORMATION 2.1 General information Short Form of the Stock: Weifu High- Tech, Su Weifu-B Stock Code: 000581,200581 Stock Exchange Listed with: Shenzhen Stock Exchange Registered Address: Plot 46, Wuxi National High-Tech Industrial Development Zone Head Office: No.107, Renmin West Road, Wuxi Postal Code 214031 Homepage: http://www. weifu.com.cn Company’s E-Mail web@weifu.com.cn 2.2 Contact person and method: Secretary of the Board Authorized Representative Name: Mr. Liu Yonglin Mr. Zhou Weixin Contact Address: No.107, Renmin West Road, Wuxi No.107, Renmin West Road, Wuxi Tel: (86) 510-2719579 (86) 510-2719579 Fax: (86) 510-2751025 (86) 510-2751025 1 E-mail: Wfjt @ public1.wx.js.cn Wfjt @ public1.wx.js.cn §3. SUMMARY OF ACCOUNTING AND BUSINESS DATA 3.1 Major accounting data as of year 2003 (In RMB’000) Items 2003 2002 Increase/decrease 2001 over last year （％） Income from main 1,612,093 1,499,973 7.47 1,019,062 operations Total profit 275,018 216,696 26.91 177,889 Net profit 239,557 197,646 21.21 159,590 Net profit after deducting non-recurring gains and 239,557 197,646 21.21 159,590 losses Increase/decrease At the end of At the end of from the end of At the end of 2003 2002 previous year 2001 （％） Total assets 2,888,951 2,508,934 15.15 2,178,645 Shareholder’s equity (excluding minority 2,046,544 1,894,260 8.04 1,781,310 interests) Net cash flow from 8,659 118,790 -92.71 140,373 operating activities 3.2 Key financial indexes (In RMB) Increase/decrease Items 2003 2002 over last year 2001 （％） Earnings per share 0.55 0.45 22.22 0.37 Earnings per share (calculated based on new 0.55 0.45 22.22 0.37 share capital if share capital was changed) Return on net assets (%) 11.71 10.43 12.27 8.96 Return on net assets calculated based on net profit after deducting 11.71 10.43 12.27 8.96 non-recurring gains and losses (%) Net cash flow per share arising from operating 0.02 0.27 -92.71 0.32 activities Items At the end of At the end of Increase/decrease At the end of 2 2003 2002 from the end of 2001 previous year （％） Net assets per share 4.69 4.34 8.06 4.08 Net assets per share after 4.69 4.33 8.31 4.07 adjustment 3.3 Difference in net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable In RMB’000 CAS IAS Net profit 238,104 239,557 Reorganization of investment income (loss) under equity method Explanation on the difference amounting to RMB 1,452,600 §4. SHARE CAPITAL AND SHAREHOLDERS 4.1 Change in share Unit: share Before the Increase / decrease in this After the change time (+, -) change Other Subtotal I. Unlisted shares 1. Sponsor’s shares 121,566,150 0 0 121,566,150 Including: State-owned shares 121,566,150 0 121,566,150 Share held by domestic legal person 0 0 Share held by foreign legal person 0 0 Others 0 0 2. Raised legal person’s shares 10,400,000 0 10,400,000 3. Inner employees’shares 0 0 4. Preference shares or others 0 0 Total unlisted shares 131,966,150 0 0 131,966,150 II. Listed shares 1. RMB ordinary shares 215,893,100 28,800 28,800 215,921,900 2. Domestically listed foreign shares 88,400,000 0 88,400,000 3. Overseas listed foreign shares 0 0 4. Others 106,900 -28,800 -28,800 78,100 Total listed shares 304,400,000 0 0 304,400,000 III. Total shares 436,366,150 0 0 436,366,150 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulating share Total shareholders at the end of report period 69,133 Particulars about shares held by the top ten shareholders 3 Nature of Share Increase / shareholders S hares held at Type of shares held decrease Proportion (State-owne Name of Shareholder the year-end (Circulating/No pledged in the (%) d share or (share) n-circulating) or frozen report year foreign (share) shareholder) 1.WUXI WEIFU GROUP State-owned 0 121,566,150 27.86 Non-circulating 0 COMPANY LIMITED shareholder 2. ROBERT BOSCH GMBH Foreign 0 14,144,000 3.24 Circulating Unknown shareholder 3. HUAAN INNOVATION Circulating Unknown SECURITIES INVESTMENT -7,308,924 9,005,698 2.06 FUNDS 4. GT PRC FUND Circulating Unknown Foreign 6,294,938 6,294,938 1.44 shareholder 5. SHANGHAI BAOSTEEL Circulating Unknown 6,024,500 6,024,500 1.38 CHEMICAL COMPANY LTD. 6. RONGTONG NEW BLUE CHIP Circulating Unknown SECURITIES INVESTMENT 5,272,848 5,642,348 1.29 FUNDS 7. YUYANG SECURITIES Circulating Unknown 4,139,863 5,263,926 1.21 INVESTMETN FUNDS 8. KINGTAI SECURITIES Circulating Unknown -667,113 4,976,635 1.14 INVESTMETN FUNDS 9. TONGQIAN SECURITIES Circulating Unknown 2,159,328 4,697,950 1.08 INVESTMETN FUNDS 10. YUYUAN SECURITIES Circulating Unknown 1,159,271 3,940,217 0.90 INVESTMETN FUNDS Explanation on associated Among the top ten shareholders, Rongtong New Blue Chip Securities Investment relationship among the top ten Funds and Tongqian Securities Investment Funds belong to the same funds shareholders or consistent company; Yuyang Securities Investment Funds and Yuyuan Securities Investment action Funds belong to the same funds company. Particulars about shares held by the top ten shareholders of circulation share Holding circulating shares at Type of shares (A-share, B-share, Shareholders’name (full name) the year-end (share) H-share and other) ROBERT BOSCH GMBH 14,144,000 B-share HUAAN INNOVATION SECURITIES 9,005,698 A-share INVESTMENT FUNDS GT PRC FUND 6,294,938 B-share SHANGHAI BAOSTEEL CHEMICAL 6,024,500 A-share COMPANY LTD. RONGTONG NEW BLUE CHIP 5,642,348 A-share 4 SECURITIES INVESTMENT FUNDS YUYANG SECURITIES INVESTMETN 5,263,926 A-share FUNDS KINGTAI SECURITIES INVESTMETN 4,976,635 A-share FUNDS TONGQIAN SECURITIES 4,697,950 A-share INVESTMETN FUNDS YUYUAN SECURITIES INVESTMETN 3,940,217 A-share FUNDS BTFE-VALUE PARTNERS 3,879,734 B-share INTELLIGENT FD-CHINA B SHS FD Explanation on associated relationship Among the top ten shareholders, Rongtong New Blue Chip Securities Investment Funds and Tongqian Securities among the top ten shareholders of Investment Funds belong to the same funds company; Yuyang circulation share Securities Investment Funds and Yuyuan Securities Investment Funds belong to the same funds company. 4.3 Particulars about holding shareholders and actual controller of the Company 4.3.1 Particulars about change in holding shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for holding shareholder and other actual controller A shareholder who has the actual holding right to the Company is Wuxi Weifu Group Company Limited, as well as state-owned sole enterprise, whose legal representative is Mr. Xu Liangfei. The said company was founded on Dec. 14, 1994, its registered capital was RMB 134,830,000, and it was mainly engaged in Processing and manufacturing of general machinery, instruments and meters, import and export. In the report period, the holding shareholder remained unchanged. §5. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND STAFF 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Shares Shares held Reason held at Name Position Age Gender Office term at the for the year-begin change year-end Xu Chairman of the 59 Male Jun. 2002～Jun. 2005 12800 12800 Liangfei Board Vice Chairman of Han the Board, General 52 Male Jun. 2002～Jun. 2005 12800 12800 Jiangming Manager Li Director 60 Male Jun. 2002～Jun. 2005 12800 12800 Tonghua 5 Wang Director 38 Male Jun. 2002～Jun. 2005 8000 8000 Weiliang Gao Director 50 Male Jun. 2002～Jun. 2005 6500 6500 Guoyuan Shi Director, Deputy 41 Male Jun. 2002～Jun. 2005 2000 2000 Xingyuan General Manager Chen Director 46 Male Jun. 2002～Jun. 2005 - - Zhaolin Zhang Independent 60 Male Jun. 2002～Jun. 2005 - - Xiaoyu Director Ouyang Independent 45 Male Jun. 2002～Jun. 2005 - - Minggao Director Chen Independent 53 Male Jun. 2002～Jun. 2005 - - Qilong Director Chen Independent 64 Male Jun. 2002～Jun. 2005 - - Juchang Director Chairman of the Chen Supervisory 36 Male Jun. 2002～Jun. 2005 2000 2000 Xuejun Committee Li Supervisor 54 Male Jun. 2002～Jun. 2005 - - Guodong Zhang Supervisor 34 Male Jun. 2002～Jun. 2005 - - Jiming Wang Supervisor 54 Male Jun. 2002～Jun. 2005 - - Chuan Wang Supervisor 37 Male Jun. 2002～Jun. 2005 2000 2000 Xiaodong Deng Supervisor 40 Male Jun. 2002～Jun. 2005 4800 4800 Xijiang You Supervisor 36 Male Jun. 2002～Jun. 2005 6400 6400 Jianzhong Deputy General Sun Apr. 2002 ～ Jun. Manager, Person in 50 Female - - Qingxian 2005 charge of Financing Miao Deputy General Apr. 2003 ～ Jun. 40 Male - - Yuming Manager 2005 Liu Secretary of the 60 Male Jun. 2002～Jun. 2005 8000 8000 Yonglin Board 5.2 Particulars about the position held by directors, supervisors in Shareholding Company □Inapplicable √Applicable Name Shareholding Companies Position Office term Xu Liangfei Wuxi Weifu Group Company Limited Chairman of the Board Till now 6 Li Tonghua Wuxi Weifu Group Company Limited Director, Deputy General Manager Till now Wang Weiliang Wuxi Weifu Group Company Limited Director, Deputy General Manager Till now Gao Guoyuan Wuxi Weifu Group Company Limited Director, Deputy General Manager Till now Chen Zhaolin Bosch (China) Investment Co., Ltd. Executive supervisor Till now Li Guodong Wuxi Guolian Development (Group) Co. Manager of Investment & Till now Management Zhang Jiming State Investment Machinery and Light Business Manager Till now Industrial Co. Wang Chuan China Auto Industry General Co. Section Chief Till now Investment and Development Corp. 5.3 Particulars about the annual remuneration of directors, supervisors and senior executives In RMB’0000 Total annual payment 150.00 Total annual payment of the top three directors 50.00 drawing the highest payment Total annual payment of the top three senior 70.00 executives drawing the highest payment Allowance of independent director 5.00 per person/year Other treatment of Independent Directors Reimbursement for travel costs upon attending the meetings of the board of directors and shareholders Name of directors and supervisors received no Xu Liangfei, Li Tonghua, Wang Weiliang, Gao payment or allowance from the Company Guoyuan, Chen Zhaolin, Li Guodong, Zhang Jiming and Wang Chuan Payment Number of persons RMB 25,000-50,000 1 RMB 50,000-100,000 2 RMB 100,000-200,000 5 RMB 200,000-300,000 1 §6. REPORT OF THE BOARD OF DIRECTORS 6.1 Discussion and analysis to the whole operation in the report period The year 2003 was a year when the structural adjustment in the car industry in the State was conducted post. On the one hand, the whole car industry still developed in a relatively rapid speed. However, its development was still very unbalanced with detailed reflection as follows: Saloon cars continued to keep a trend of accelerative development while diesel cars developed in a slower way. On the other hand, structural adjustment in car industry was push in an accelerative way and structural adjustment of diesel cars was much more outstanding with its market inclined to two sides, namely being inclined to light trucks and heavy trucks. Aiming at this austere situation, the Board and the Management of the Company has adjusted the marketing strategy timely, firstly, speeding up the development of new products so as to adapt to the need of adjustment to market structure; secondly, carrying out quality standard of international car industry TS16949 with product quality as 7 the main line; thirdly, further deepening internal management and further fulfilling the measures of reducing the cost. Through the said efforts, the Company has still kept a certain growth in 2003 and totally realized income from main operations and net profit amounting to RMB 1,612.093 million and RMB 239.557 million respectively in the whole year, an increase of 7.47% and 21.21% respectively over the last year. 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 in Increase/decrease Increase/decrease in operations in cost of main industries or products main profit income from main gross profit ratio (RMB) operations over operations ratio (%) operations over the the last year (%) over the last year (RMB) last year (%) (%) Manufacture of other universal parts and 161,209.30 124,399.00 22.83 7.47 9.93 -7.04 components Including: related 0.00 0.00 - 0.00 0.00 0.00 transactions Fittings and accessories 145,258.18 106,361.12 26.78 6.19 8.09 -4.63 of gas engine Converter and muffler 5,515.57 4,116.02 25.37 273.30 259.39 12.85 Materials 10,435.55 13,921.86 -33.41 -11.04 2.18 48.13 Including: related 0.00 0.00 - 0.00 0.00 0.00 transactions Pricing rules for related Fair market price transactions Necessity and durative Other transactions between Weifu Group and the Company of related transactions The Company has the following agreements with Weifu Group: (a) Agreement on trademark use The Company sells products by using the trademark of Weifu Group and pays trademark use expense with 0.3% of the sales amount, not less than RMB 1.20 million per year. This agreement takes effect from Jan. 1, 1995 with term of ten years. (b) Agreement on lease of land use right The Company leases the land of Weifu Group and pays the lease expense of land use right. The rental for the first year is RMB 327,285 and it increases by 10% per year later. This agreement takes effect from Jan. 1, 1995 with term of ten year. 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Areas Income from main operations Increase/decrease in income (RMB) from main operations over the last year (%) Inside the Province 51,629.32 -3.51 8 Outside the Province 109,579.98 13.56 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase 38,769.74 Proportion in the total 35.92% of the top five suppliers amount of purchase Total amount of sales of 75,849.20 Proportion in the total 50.31% the top five sales amount of sales customers 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 the share-holding company Zhonglian Automobile Electronics Co. Investment earnings contributed in the period 8328.3739 Proportion in net profit of the listed company 34.77% Share-holding company Business scope Fittings and accessories of gas engine Net profit 41,669.8416 Name of the share-holding company Wuxi Euro-Asia Diesel Fuel Injection Co. Investment earnings contributed in the period 7,293.4881 Proportion in net profit of the listed company 30.45% Share-holding company Business scope Fittings and accessories of gas engine Net profit 15,194.7668 6.6 Explanation on reasons of material changes in main operations and its structure □Applicable √Inapplicable 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) than that in the last year □Applicable √Inapplicable 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year □Applicable √Inapplicable Analysis to reasons of material changes in the whole financial position than that in the last year □Applicable √Inapplicable 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment, macro-policies and regulations on the Company’s financial position and operating results 9 □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 Unit: RMB’0000 Total amount of raised 40,506.00 Total amount 17,763.00 Total amount of raised 40,506.00 proceeds of raised proceeds used proceeds used accumulatively in the report year Committed projects Planned Change Actual Accrued amount of Compliance with amount of projects or amount of earnings planned progress and input not input estimated earnings or not Project of “Converters No Yes and cleaners of automobile 40,506.00 22,743.00 260.29 tail gas with annual output of 2 million sets” Total 40,506.00 - 22,743.00 260.29 - Explanation on not reaching Naught planned progress and earnings (in detailed projects) Explanation on reasons and In 2000, the Company implemented the project on shares allotment and totally raised procedures of change (in the proceeds amounting to RMB 405.06 million, which would be used in the project of detailed projects) “Converters and cleaners of automobile tail gas with annual output of 2 million sets” according to commitment in the Prospectus. Ended the end of year 2002, the Company had invested RMB 227.43 million accumulatively. The investment of fixed assets has been finished and there was still raised proceeds amounting to RMB 177.63 million left, which would be mainly used in supplementing the working capital. In order to exert the use results of the raised proceeds in a better way, after approved by the 2nd Temporary Shareholders’General Meeting for 2002 held on July 18, 2002, the Company decided to change to invest the rest capital amounting to RMB 177.63 million in the said raised proceeds into “Technical reform project of PW2000 pump with annual output of 100,000 pieces”. The said resolutions of the Temporary Shareholders’General Meeting were published on Securities Times, China Securities and Ta Kung Pao dated July 19, 2002. Particulars about the changed projects √Applicable □Inapplicable Unit: RMB’0000 10 Total amount of capital 17,763.00 of changed investment projects Projects after change Corresponding Planned Actual amount Accrued Compliance with projects committed input of input amount of planned progress originally amount of earnings and estimated changed earnings or not projects Technical reform Project of “Converters Yes project of PW2000 and cleaners of pump with annual automobile tail gas 17,763.00 17,763.00 1,059.95 output of 100,000 with annual output of pieces 2 million sets” Total - 17,763.00 17,763.00 1,059.95 - Explanation on not Naught reaching planned progress and earnings (in detailed projects) 6.13 Application of the proceeds not raised through shares offering □Applicable √Inapplicable 6.14 Explanation of the Board of Directors on the “Non-standard Opinion”made by the Certified Public Accountants □Applicable √Inapplicable 6.15 Business plan as of the next year of the Board of Directors (If it has) □Applicable √Inapplicable 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 Profit distribution preplan for 2003 As audited by Jiangsu Gongzheng Certified Public Accountants Co., Ltd., the Company realized net profit totally RMB 238,104,400 in 2003, plus the retained profit at the end of 2002 amounting to RMB 313,933,700, the distributable profit for shareholders is RMB 552,038,200. According to the regulation of Articles of Association of the Company, after appropriating 10% as public reserve totaling 26,688,500 and 5% as welfare fund totaling RMB 13,344,200, the distributable profit for shareholders of the statutory account audited as Chinese Accounting System is RMB 512,005,500. The Board of Directors decided to distribute RMB 2 cash bonus (including tax) per ten shares based on the total share capital amounting to 436,366,150 shares at the end of 2003. The left distributable profit is carried forward to next year. §7. Significant Events 11 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable 7.3 Important guarantee □Applicable √Inapplicable 7.4 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Supply funds to related parties Related parties supplied funds to the Related parties Company Occurred amount Balance Occurred amount Balance Wuxi Weifu Group Co., Ltd. 19,144.73 0.00 22,984.77 36.82 Wuxi Weifu Jida New Material Application Development Co., 26.55 0.00 28.77 21.08 Ltd. Wuxi Weifu Mashan Fuel 6,354.60 0.00 6,522.10 72.15 Injection Co. Wuxi Weifu Chang’an Fuel 9,662.84 0.00 10,359.20 156.23 Injection Co. Wuxi Europe Asia Diesel Fuel 14,190.02 0.00 13,440.86 919.63 Injection Co., Ltd. Wuxi Weifu Exact Machinery 5,592.53 116.52 7,259.33 0.00 Manufacture Limited Total amount 54,971.27 116.52 60,595.03 1,205.91 7.5 Entrusted assets □Applicable √Inapplicable 7.6 Implementation of commitment items √Applicable □Inapplicable 1. The Company paid RMB 266,696,000 for construction of workshop and purchase of equipment in 2003. 2. Land use right of High-tech (Weifu Jinning) is the land use right of 200,000 sq.m. locating in Nanjing High-tech Industrial Development Zone that Weifu Jinning purchased according to Transfer Contract of State-owned Land Use Right signed with Nanjing High-tech Economic Development Corporation in Dec. 2002. 7.7 Significant lawsuit and arbitration □Applicable √Inapplicable 7.8 Particulars about the performance of obligations of Independent Directors Performance of obligations of Independent Directors Conformity to the requirements by the Guideline for setting up Independent Director System among Listed Companies and Administration rules on Listed Companies, the Company has engaged 4 independent directors and established the expert committees 12 involving strategy, auditing, nomination, remuneration and results assessment, among which independent directors held the post of Director Commissioner in the committees of auditing, nomination, remuneration and results assessment. Ever since they took office, the Company’s independent directors have consciously performed their duties to express independent opinions with regard to the significant policy decision upon attending the Board meetings and relevant meetings. §8. Report of the Supervisory Committee I. Work of the Supervisory Committee The Supervisory Committee held two meetings in the report period: 1. The 4th meeting of the 4th Supervisory Committee was held on Apr. 16, 2003 and the examined topics were Work Report of the Supervisory Committee in 2002, 2002 Annual Report of the Company and its Summary, Report of Financial Settlement and Profit Distribution Preplan for 2002 of the Company and the 1st Quarterly Report in 2002 of the Company; 2. The 5th meeting of the 4th Supervisory Committee was held on Aug. 15, 2003 and the examined topics were Semiannual Report in 2003 of the Company and its Summary and Report of Profit Distribution Preplan in the 1st Half Year of 2003. II. The Supervisory Committee expressed independent opinion for the following events: 1. Operation according to law. In 2003, the members of the Supervisory Committee were present at every meeting of the Shareholders’General Meeting and the Board of Directors and supervised over the decision-making and operation of the Company. The Supervisory Committee believes that every decision-making procedure of the Company this year were in accordance with laws, regulations and Articles of Association of the Company, the internal control system of the Company was perfect. When the Company’s directors and senior executives executed authorities, there found neither behavior of breaking laws, regulations and Articles of Association of the Company nor abusing authorities and damaging the interest of the Company and the Shareholders. 2. Check of the Company’s financing. The members of the Supervisory Committee attended every meeting of the Board of Directors this year and examined annual, semiannual and quarterly report and other documents submitted by the Board of Directors. The Supervisory Committee believes that the financial report in every period reflected objectively and truly the financial situation and operation result of the Company. 3. Usage of raised capital. The Supervisory Committee believes the invested projects in the latest raised capital of the Company were implemented according to relevant resolutions of the Shareholders’General Meeting in accordance with relevant statutory procedure. 4. Related transaction. The Supervisory Committee believes the related transaction occurred in the report period could incarnate the principle of market trading and did not damage the interest of the Company. §9. Financial Report 9.1 Auditor’s opinion We have audited the accompanying consolidated balance sheet of Weifu High-Technology Company Limited (hereinafter referred to as “the Company”) and its subsidiaries (hereinafter 13 together with the Company referred to as “the Group”) as of 31 December 2003 and the related consolidated statements of income, and cash flows for the year then ended. These consolidated financial statements set out on pages 2 to 42 are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of 31 December 2003 and the consolidated results of its operations and its cash flows for the year then ended, in accordance with International Financial Reporting Standards. PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd. 9.2 WEIFU HIGH-TECHNOLOGY 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) Notes 2003 2002 Sales, net 4,27 1,612,093 1,499,973 Cost of sales (1,243,990) (1,131,609) Gross profit 368,103 368,364 Other operating income 4 407 246 Distribution costs (78,217) (91,929) Administrative expenses (177,422) (148,844) Other operating expenses (5,324) (16,055) 14 Profit from operations 6 107,547 111,782 Finance cost, net 5 (7,489) (3,889) Share of results of associates before tax 13 162,785 116,573 Income from unconsolidated subsidiaries 14 3,943 4,363 Income from trading investments 6 - Government grants 21 8,226 - Impairment loss of investment 15 - (12,133) Profit before tax and minority interests 275,018 216,696 Income tax expense 7(b) (27,137) (15,849) Profit before minority interests 247,881 200,847 Minority interests 25 (8,324) (3,201) Net profit 239,557 197,646 Earnings per share 8 - Basic RMB 0.55 RMB 0.45 - Diluted Not applicable Not applicable WEIFU HIGH-TECHNOLOGY COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2003 (All amounts in RMB thousands) 31 December 31 December Notes 2003 2002 ASSETS Non-current assets Leasehold land 10 49,706 27,792 Property, plant and equipment, net 11 906,002 903,501 Intangible assets 12 32,370 23,373 Investments in associates 13 475,365 384,787 15 Investments in unconsolidated subsidiaries 14 41,769 37,826 Available-for-sale investments 15 43,520 43,520 Total non-current assets 1,548,732 1,420,799 Current assets Inventories, net 16 354,845 321,150 Due from related parties 27(e) 1,165 55,865 Prepayments 5,032 8,168 Trade and other receivables, net 17 491,920 326,787 Trading investments 26(b) - 28,000 Cash and bank deposits 26(b) 487,257 348,165 Total current assets 1,340,219 1,088,135 Total Assets 2,888,951 2,508,934 WEIFU HIGH-TECHNOLOGY COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEET (CONTINUED) AS OF 31 DECEMBER 2003 (All amounts in RMB thousands) 31 December 31 December Notes 2003 2002 EQUITY AND LIABILITIES Shareholders’equity Ordinary shares 22 436,366 436,366 Reserves 23 1,094,407 1,054,375 Retained earnings 24 515,771 403,519 Total shareholders’equity 2,046,544 1,894,260 Minority interests 25 77,310 58,519 Non-current liabilities Long-term bank borrowings 20(b) 160,000 - Long-term payables 21 47,538 12,660 Total non-current liabilities 207,538 12,660 Current liabilities Trade and other payables 18 333,144 357,214 Current-tax liabilities 5,846 (3,860) 16 Due to related parties 27(e) 9,564 16,688 Dividend payable 416 208 Short-term bank borrowings 20(a) 195,500 157,500 Accruals and other current liabilities 19 13,089 15,745 Total current liabilities 557,559 543,495 Total liabilities 765,097 556,155 Total Equity and Liabilities 2,888,951 2,508,934 WEIFU HIGH-TECHNOLOGY COMPANY LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in RMB thousands) Notes 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 26(a) 40,530 141,983 Interest paid (14,463) (11,115) Income tax paid (17,408) (12,078) Net cash from operating activities 8,659 118,790 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of a subsidiary, net of cash and bank acquired - (2,975) Purchase of leasehold land (5,836) - Purchase of property, plant and equipment (239,552) (225,948) Proceeds from disposals of property, plant and equipment 26(c) 137,386 214 Increase in investments in associates 13 - (21,577) Increase in available-for-sale investments 15 - (13,855) Increase in investments in unconsolidated subsidiaries 14 - (7,306) Proceeds from disposals of available-for-sale investments - 5,080 Proceeds from disposals of trading investments 6 - Interest received 4,447 17,201 Dividends received 66,307 27,106 Net cash used in investing activities (37,242) (222,060) 17 CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in short-term bank borrowings 38,000 (10,000) Increase in long-term bank borrowings 160,000 - Repayments of long-term bank borrowings - (1,500) Dividends paid (87,065) (87,273) Cash injection from minority shareholders - 6,000 Cash received from government grants 28,740 12,660 Net cash from financing activities 139,675 (80,113) Net increase (decrease) in cash and cash equivalents 111,092 (183,383) Cash and cash equivalents at beginning of year 376,165 559,548 Cash and cash equivalents at end of year 26(b) 487,257 376,165 WEIFU HIGH-TECHNOLOGY 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 Discretion- Share Capital surplus public ary surplus Total Retained capital surplus reserve fund welfare fund reserve fund reserves earnings Total equity Note 22 Note23(a) Note 23(b) Note 23(c) Note 24 Balance as at 1 January, 2002 436,366 908,919 73,272 36,711 1,785 1,020,687 324,257 1,781,310 Dividends declared after 1 January, 2002 from retained earnings as of 31st December, 2001 (Note 9) - - - - - - (87,273) (87,273) Donation received - 146 - - - 146 - 146 Increase in Subsidiary’s capital surplus - 2,431 - - - 2,431 - 2,431 18 –debts waived Net profit for 2002 - - - - - - 197,646 197,646 Appropriations: - statutory surplus reserve fund - - 20,741 - - 20,741 (20,741) - - statutory public welfare fund - - - 10,370 - 10,370 (10,370) - Balance as at 31 December, 2002 436,366 911,496 94,013 47,081 1,785 1,054,375 403,519 1,894,260 Dividends declared after 1 January, 2003 from retained earnings as of 31 December, 2002 (Note 9) - - - - - - (87,273) (87,273) Net profit for 2003 - - - - - - 239,557 239,557 Appropriations: - statutory surplus reserve fund - - 26,688 - - 26,688 (26,688) - - statutory public welfare fund - - - 13,344 - 13,344 (13,344) - Balance as at 31 December, 2003 436,366 911,496 120,701 60,425 1,785 1,094,407 515,771 2,046,544 9.3 Explanation on change of accounting policy, accounting assessment and settlement method compared with the latest annual report. 1. Accounting assessment has no change. 2. Settlement method has no change. 9.4 The consolidation scope has no change compared with the latest annual repor t. Board of Directors of Weifu High Technology Co., Ltd. Apr. 16, 2004 19