大东海A(000613)ST东海Ｂ2003年年度报告摘要（英文版）

Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Summary of the Annual Report 2003 (Overseas Report) §1 Important Statements： 1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. This is the summary abstracted from the complete version of Annual Report 2003, for details please refer to the complete version. 1.2 No Director(s) declares disagreement on the truthfulness, accuracy and completeness. 1.3 Directors of Chen Haixiong and Xie Zhuang absent the Board meeting, Director Zheng Jirong entrusted Director Huang Qingwang to exercise his right of voting. 1.4 Hainan Chongxin CPA and Grant Thornton CPA issued auditors’reports with “unable to form an opinion” for the financial statement of the Company. The Board of Directors and Supervisory Committee have made detailed presentation on the events referred in the auditor’ s report. 1.5 The Chairman of the Board – Mr. Li Shanhu, the General Manager – Mr. Li Yuanbin, the CFO – Mr. Li Wei hereby declare: the truthfulness and completeness of the report are guaranteed. §2 Company Profile 2.1 Basic Information Stock Name ST Donghai A、ST Donghai B Stock Code 000613, 200613 Stock Exchange Shenzhen Stock Exchange Registered location and office address Dadonghai, Sanya, Hainan Prov. P. C. 572021 Website N/A Email N/A 2.2 Liaisons Secretary of the Board Representative of Stock Affairs Name Liu Juntao Li Caijie Address Dadonghai, Sanya, Hainan Prov. Dadonghai, Sanya, Hainan Prov. Tel 0898-88219888-8264 0898-88219888-8264 Fax 0898-88212298 0898-88212298 Email hnddht@21cn.com hnddht@21cn.com §3 Financial Highlights 3.1 Major accounting data (in thousand RMB) Change of current year 2003 2002 2001 than prev. year Major business 13,333 24,280 (45.09) 13,333 revenue Total profit (54,752) 4,775 (1,246.64) (54,752) Net profit (54,752) 4,775 (1,246.64) (54,752) Net profit deducted non-recurring (17,318) (1,070) (1,518.50) (17,318) gain/loss Change of end of current End of 2001 End of 2003 End of2002 year than end of prev. year Total Assets 154,934 201,974 (23.29) 154,934 Shareholders’ equity ( minority (42,624) 12,128 (451.45) (42,624) shareholders’ equity not included) Net cash flow generated by business (3,873) 11,679 (133.16) (3,873) operation 3.2 Major accounting indices (in thousand RMB) Change of current year than 2003 2002 2001 prev. year Earnings per share (0.15) 0.013 (1,253.85) 0.012 Earnings per share (0.15) 0.013 (1,253.85) 0.012 Net earnings / capital 128.45 39.37 226.26 58.81 ratio Net earnings per share ratio based on 40.63 (8.82) (560.66) (201.59) deducting of non-recurring gain/loss Net Cash flow generated by business (0.011) 0.03 (136.67) (0.04) operation Change of current year than End of 2003 End of 2002 End of 2001 end of prev. year Net asset per share (0.117) 0.033 (454.55) 0.020 Net asset per share (0.118) 0.020 (690.00) 0.006 adjusted 3.3 Discrepancy of domestic and international accounting standards □Applicable √Non –Applicable §4. Change of Share Capital and Shareholders 4.1 Change of shares (in thousand shares) End of prev. Changed by End of current year (+,-) year I. Non-current Shares 1. Promoters’shares 109,857 109,857 Including: 96,327 -60,000 36,327 State-owned shares 13,530 60,000 73,530 Domestic corporate shares Foreign corporate shares Others 2. Raised corporate shares 121,143 121,143 3. Employees’shares 4. Preferred Shares or others Total non-current shares 231,000 231,000 II. Current Shares 1. RMB conventional shares 45,100 45,100 2. Domestically listed foreign investment 88,000 88,000 shares 3. Overseas listed foreign investment shares 4. Others Total current shares 133,100 133,100 III. Total Shares 364,100 364,100 4.2 Top 10 shareholders (in thousand shares) Total capital shares at the end of report term: ２１，００７ Name of Shareholder Changed in Shares Share Category of share Frozen Property of share the current held at the portion (current / year end of year non current) Haikou Grocery Co., Ltd. 60,000 60,000 16.48 Non-current N/A Legal person shares China Great Wall Assets Management Co., Ltd. -60,000 36,327 9.98 Non-current N/A State-owned shares Hainan Shanya Yinnong Industrial Development Co., N/A 9,900 2.72 Non-current N/A Legal person shares Ltd. Yangpu Jinyu Industrial Co., Ltd. N/A 6,666 1.83 Non-current N/A Legal person shares Huaxia Security Co., Ltd. N/A 6,600 1.81 Non-current 6,600 Legal person shares Shanghai Jinxian Investment Co., Ltd. N/A 4,973 1.37 Non-current N/A Legal person shares China International Trade Trust & Investment Co., Ltd. N/A 3,960 1.09 Non-current N/A State-owned shares Hainan Hongkong-Macau International Leasing Co., N/A 3,894 1.07 Non-current 3,894 State-owned shares Ltd. Sanya Zhongxing Development Co., Ltd. N/A 3,630 1.00 Non-current N/A Legal person shares China Agriculture Bank Haikou Jinmao Branch N/A 3,300 0.91 Non-current N/A State-owned shares Statement on associated There isn’t any associated relationship between the 1st shareholder relationship or “acting in concert”. and the other shareholders among the top-10 list. None of them are regarded as “acting in concerts” in accordance with “The rules of information disclosure on change of shareholding.” Shareholders beyond the top-10 list are unknown for their condition of “associated relationship”and “acting in concert”. Top 10 holders of current shares at the end of the report term (in thousand shares) Name of the shareholder Shares held (B shares) Share category LIU ZILI 2,904, B shares FENG LINGMIN 2,016, B shares LIN MINGYU 1,275 B shares XIANG XINGLIANG 1,069 B shares JIANG HUORONG 937 B shares ZHANG CHI 920 B shares SEUNG YEOL PARK 763 B shares LI JINGZHI 761 B shares YANG YAOQIANG 750 B shares LIU AIHUA 744 A shares Statement on associated There isn’t any associated relationship between the 1st shareholder relationship or “acting in and the other shareholders among the top-10 list. None of them concert”. are regarded as “acting in concerts”in accordance with “The rules of information disclosure on change of shareholding.” Shareholders beyond the top-10 list are unknown for their condition of “associated relationship”and “acting in concert”. 4.3 Controlling shareholders and practical controllers 4.3.1 Change of controlling shareholders and practical controllers. □Applicable √Non –Applicable 4.3.2 Particulars about controlling shareholders and practical controllers: N/A §5 About the Directors, Supervisors, Senior Managements, and Employees 5.1 Change of share holding Name Position Gender Age Term Shares held at Shares held at the the beginning of end of year year Li Shanhu Chairman of the Board Male 64 2002-2005 0 0 Zheng Jirong Vice Chairman Male 44 2002-2005 2673 2673 Li Yuanbin Director, GM Male 52 2002-2005 0 0 Huang Director, Vice GM Male 33 2002-2005 0 0 Qingwang Liu Juntao Director, Vice GM, Secretary of the Male 35 2002-2005 0 0 Board Li Wei Director, Vice GM CFO Male 41 2002-2005 0 0 Zhu Xinglie Director Male 44 2002-2005 0 0 Chen Haixiong Director Male 42 2002-2005 2640 2640 Zhao Man Independent Director Female 52 2002-2005 0 0 Leng Mingquan Independent Director Male 49 2002-2005 0 0 Xie Zhuang Independent Director Male 50 Huang Wencai Chairman of Supervisory Committee Male 35 2002-2005 0 0 Li Caijie Supervisor Male 41 2002-2005 0 0 Wang Guobin Supervisor M ale 33 2002-2005 0 0 Luo Weneng Supervisor Male 58 2002-2005 0 0 Ming Jinhua Supervisor Female 35 2002-2005 0 0 Chen Liurong Vice GM Male 40 2002-2005 0 0 5.2 Particulars about directors and supervisors take job position in any of the shareholders. √Applicable □Non –Applicable Name Holds position in Position Job term Takes salary or allowance from the Company? Zheng Jirong China Greatwall Assets Management Co., Vice section director Feb. 2001 to No Ltd. Haikou Office present 5.3 Annual payroll of the directors, supervisors and senior management (in RMB10 thousand) Overall annual payrolls 21.71 The annual payrolls of the top -3 directors 12.60 The annual payrolls of the top -3 managements 4.09 The allowances for independent directors 1.2 / people.year Extra benefits for independent directors The directors and supervisors who are not taking Li Shanhu, Zhen Jirong, Huang Qingwang, Zhu Xinglie, and salaries from the Company Chen Haixiong. Supervisors who are not taking salaries from the Company are: Huang Wencai, Wang Guobin and Luo Wen’en. They takes salaries from the shareholders or relevant entities. Range of salary Number of people 40~50 thousand 4 20~40 thousand 1 below 20 thousand 1 §6. Report of the Board of Directors 6.1 Analyzing of overall business status for the report term The business revenue of the company in 2003 was decreased in a large scale comparing with the same term in last year. The loss of this year mainly was affected by the following factors: (1) Many hotels were built in Sanya city in 2003, while the customer sources of the travel market was not increased distinctively, which results in a more fierce competition and worse business environment. South China Hotel has been established for more than ten years with comparatively old facility, the competitive capability of the hardware have been decreasing. (2) Due to the occurrence of unexpected “SARS”, from the Central Committee of CPC, State Department to every province and municipal district, the strict management and controlling measurement were taken. The central Committee put forward many relevant policies including the notice to restrict the traveler to travel in other cities, and cancel the “golden week”travel plan in May 1st holiday of 2003. As the company mainly handles with travel and hotel business, the company was the first objective of the violent strike. So, the company suspend the business for 3 months. And the market gradually recovered to the previous level until October and the business finally came back. (3) The debt recombination work of 2003 did not make the substantial progress. The liabilities burden was not relieved. As refunding capacity of short term liability was weak, the finance expense was highly loaded, which severely affect the profit capability of the company. (4) Due to the market change, the hold by the company devalued greatly. Pursuant to and , the devalued assets must be accounted into bad debt preparation. Therefore, the company predicted RMB 21,586,000 into the bad debt preparation provision, arising to 70%. Due to the said causes, the main business sales in 2003 materialized is RMB 13,333,000 that falling 45.09% in contrast with last year. The net profit is RMB(54,752,000), decreasing (1,246.64%) 6.2 Distribution of major business on categories of business or products (in thousand RMB) Change of Major Change of Major Change of gross Industry or Major business Major business Gross profit ratio business revenue business cost over profit ratio over products revenue cost % over the last year the last year ％ the last year ％ ％ Tourism 13,333 2,196 83.53 (45.08) 22.82 (9.83) Incl. Related 0.00 0.00 -- 0.00 0.00 0.00 transaction Hotel 9,348 517 94.47 (42.96) 4,600 (5.46) Restaurant 2,643 1,605 39.27 (29.18) (8.18) (26.14) Leasing & others 1,341 74 94.48 (67.76) 155.17 (4.85) Incl. Related 0.00 0.00 -- 0.00 0.00 0.00 transaction Pricing principle of related At market price transaction Necessity and continuous of related Occasionally expenses transaction 6.3 Major business distribution in territories: (in thousand RMB) Region Turnover Changed over previous year（％） Sanya 13,333 (45.08) 6.4 Major purchase and sales Total of purchase from top -5 vendors 0.00 Portion in the total purchase 0.00% Total of sales to top -5 buyers 0.00 Portion in the total sales 0.00% 6.5 Operation of the shareholding companies (applicable for the company which the investment earnings takes more than 10% or over.) □Applicable √Non - Applicable 6.6 Causations of significant changes occurred on the major business and its structure. □Applicable √Non - Applicable 6.7 Causations of significant changes occurred on the profitability of major business comparing with the previous year □Applicable √Non - Applicable 6.8 Causations of significant change of the operation result and profit structure comparing with the previous year □Applicable √Non –Applicable Causations of significant change occurred in the entire financial status comparing with the previous year. □Applicable √Non –Applicable 6.9 Influence on the business operation of the company from the changing of business environment, macro policies, laws and regulations □Applicable √Non –Applicable 6.10 Fulfilling of profitability forecasting □Applicable √Non –Applicable 6.11 Fulfilling of the business target □Applicable √Non –Applicable 6.12 Utilizing of raised fund √Applicable □Non –Applicable The company totally raised net amount of RMB 124,050,000 of Stock A, and B issued in 1996 and 1997, of which RMB 19,860,000 was approved to invest in other project through legal process, the residue amount was occupied by Hainan Dadonghai Tourism Centre Group Co., Ltd. partially at RMB 90,690,000 and Hainan Dadonghai Travel Co.,Ltd. partially at RMB 13,500,000. Particulars about changing of utilization □Applicable √Non –Applicable 6.13 Particulars about projects invested by non-raised fund □Applicable √Non –Applicable 6.14 Statement of the Board of Directors on the “non-standard comments” of the public accountant √Applicable □Non –Applicable 1. The involved affairs in audit report and basic suggestion of CPA on the affairs. Until December 31, 2003, Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. fell into the debt which amount to RMB19,194,370,000 among which the current liability is RMB 19,080.320,000 and net debt is RMB 4,262,420,000 ,the principal and interest of overdue debt owed bank and non- banking financial institution is RMB 163,270,000. The main creditor has already suited for this to the people's court and entered into the procedure of justice enforcement, the mainly management assets have been mortgaged and closed down by the court, once the main creditor execute compulsorily though the judicial procedure, the company has possibility of stopping operation. By the day of audit report, Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. expresses that they were recombinating debts actively. Because the debt recombination is still in implementing initial stage, we are unable to obtain the abundant, proper auditing evidence to judge whether they could improve the lasting management ability of Dadonghai shares. Consequently we are unable to tell the rationality of Dadonghai’s working out the accounting statement according to the lasting management; Due to the significant uncertainty about lasting management ability of Dadonghai influenced by the above-mentioned debts, we are unable to express the opinion on above-mentioned accounting statements. 2. Suggestions of the board of directors, the board of supervisors and administrative stratum of company on the affairs. The Board of directors, supervisors and administrative stratum think that the amount of company’ s overdued debt and accumulative operational loss is considerably enormous and the law cases are so many, main assets have already been closed down. Which caused by the former big shareholder Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. , who occupied the fund raised for shares, produced the decrease of major business revenue, shrank the running project yearly and weaken the ability to repay the debts; In addition, the company accumulative operational loss is so enormous, which caused by the decrease of major business revenue yearly as well as the adjustment on all kinds of tracking allowance based on the increase of suppositional profit according to the law from 1993 to 1997; 3. The measure and influence to remove this affairs; (1) Expand the market and make great efforts to explore the tourist business markets of tourist corporation, the enterprises and institutions in domestic north , southwest , midwest on the basis of consolidating the existing market, meanwhile develop the Russian tourist market to heighten the room rate and increase the relevant income, turn over the unfavorable situation occurred in the hotel industry of facing lower price competition in Sanya at present so as to expand sale and make the major serving business in hotel more larger and powerful. (2) Raise the fund to reconstruct the facility in hotel and improve the hardware competitiveness of hotels to face the competitive pressures from newly-increased hotels of east sea area. (3) The branch of Sanya management company continue to raise fund to develop new project. (4) Continue to strengthen the financial administration, push to clear up debts and control the cost &expenses. (5) The Sanya branch of Agricultural Bank of China, Hainan branch of Communications Bank, China eastern property management company and China Tourism Entrustment and Investment corporation negotiated on the plan of debt recombination. (6) Make great efforts to gain the capital of shareholder, other guarantee measurement and support from government functionial department. 6.15 Plan of the Board for the coming new year √Applicable □Non –Applicable 1. Carry on the negotiation with the creditors and government departments to release the burden of debts. 2. Full adopt the advantage of operation and management, operate the entrusted assets to develop new profit points and cut down the costs. 3. Stress on operation and managing of the major businesses, enforce the internal financial management, strictly control the budgets, implement full scale cost management, continues to develop potential capabilities. 4. Go all out on standardizing and systemizing of management. Perform good job in information disclosing and the works of “3-meetings”. 5. Push forward the enterprise culture construction, upgrade the employees to a higher level in business capability and overall diathesis. Profitability prediction for the coming new year □Applicable √Non –Applicable 6.16 Profit distribution or capitalization of capital public reserves for the current term The Board of directors has decided that neither profit distribution nor capitalizing of reserves will be implemented. §7. Significant Events 7.1 Assets acquisition □Applicable √Non –Applicable 7.2 Assets placing □Applicable √Non –Applicable 7.3 Significant guarantees □Applicable √Non –Applicable 7.4 Associated credits and debts □Applicable √Non –Applicable 7.5 Consigned financing □Applicable √Non –Applicable 7.6 Fulfilling of commitment event √Applicable □Non –Applicable 1. In the report period, the Company prepared 2003 Profit Distribution Proposal and implemented the proposal accordingly in 2003. 2.On December 5, 2001 China Great Wall Assets Management Co., Ltd. and Haikou Grocery Co., Ltd. entered into Equity Custody Agreement respectively. As approved by the Ministry of Finance with document Cai-Qi [2002]430, the public notice on the equity transfer was published on Securities Times and Hong Kong Commercial Daily dated January 15, 2003 and the equity transfer procedures were completed with China Securities Registration and Clearing Co., Ltd. Shenzhen Branch. After the equity transfer was finished, the Equity Custody Agreement entered in 2001 become ineffective automatically. 7.7 Significant lawsuit and arbitration √Applicable □Non –Applicable (1) According to the judgment of Hainan Higher People’s Court, the Company owed RMB 30,978,051.00 and payable interest of RMB 5,144,638 in arrears for completed projects to No.2 Engineering Bureau under the Ministry of Railways (No. 2 Bureau). As of December 31, 2001, the Company repaid RMB 34,678,270.00, not including the fee of title transfer. (2) The Company provided guarantee for the loan of RMB 10 million borrowed by the original shareholder Dadonghai Group Co. from Bank of Communications, Hainan Branch. The loan was overdue. Sanya Intermediate People’s Court judged that Company should bear the liability for guarantee and attached the Company’s real estate with title certificate No. of SHZFZZ No. 97. The Company stated the principal and interests of the loan as estimated liabilities in accounts. (3) The Company obtained loan of RMB 5 million and long-term credit loan of RMB 6 million from Bank of Communications, Hainan Branch by means of mortgage on December 23, 1997. The loan was overdue. Sanya Intermediate Court judged that Company should repay the principal and corresponding interests and attached the Company’s real estate with title certificate No. SHZFZZ No. 102. (4) The Company borrowed loans of RMB 11.430 million and USD 88,000 from Hainan Hong Kong and Macao International Trust Investment Co., Ltd. The loans were overdue. Haikou Intermediate Court judged that Company should repay the said principals and corresponding interest and attached the Company’s real estate with title certificate No. of SHZFZZ No. 96. On June 25, 2002, China Orient Asset Management Corporation replaced Hainan Hong Kong and Macao International Trust Investment Co., Ltd. and became the Company’ s creditor. (5) China Tourism International Trust Investment Co., Ltd. brought an action in Beijing Intermediate People’s Court against the Company in respect of the loan with the principal of RMB 20 million. After the Company appealed to Beijing Higher People’s Court, Beijing Higher People’s Court judged with (2000) GJZZ No. 20 Judgment that the Company should repay the principal of RMB 20 million and corresponding interests on March 30, 2000. (The Company has repaid RMB 9.2 million). 7.8 Particulars about the independent directors positions of independent directors were setup within the Board of Directors. Since the engaging of the independent directors, they presented the board meeting and the shareholders’ general meeting actively, and issued independent opinions on the significant decision making in accordance with the relevant regulations. 7.9 This report is prepared both in Chinese and English. When there is any conflict between the two versions, the Chinese version shall prevail. §8 Report of the Supervisory Committee 1. Operation According to the Law In the report period, the Supervisors attended all the Board meetings as non-voting delegates. In the opinion of the Supervisory Committee, the Company conducted its operation in a stadandardized way, implemended various resolutions in a practical way, the decision-making procedures complied with the relevant provisions of the PRC Company Law and the Articles of Association of the Company; the Company established complete internal control system; directors and senior executives did their jobs with due diligence in a work-respecting and honest way, and performed no action against the laws, regulations, the Articles of Association or harmful to th einterest of the Company. 2. Financial Inspection Hainan Cong Xin Certified Public Accountants and Grant Thornton Certified Public Accountants audited the Company’s 2003 Financial Report according to the Chinese Accounting Standards and the International Accounting Standards and produced auditor’ s report with “unable to form an opinion”. In the opinion of the Supervisory Committee, the Auditor’s Report truly reflected the Company’s financial position and operation result of the year. 3. The year the Company made the latest issue is 1997. Except the small amount which has been invested in the projects as committed, most of the proceeds raised through the issuing has been diverted by the original principal shareholders. Reserve for bad debts has been fully provided and the projects have been stopped as they have become out of date. 9. Financial Report Auditors' report To the members of Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. (incorporated in the People's Republic of China with limited liability) We have audited the financial statements of Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. (the "Company") for the year ended 31 December 2003 on pages 2 to 17 which have been prepared in accordance with International Financial Reporting Standards as promulgated by the International Financial Reporting Standards Board. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing issued by the International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As more fully explained in note 2 to the financial statements, although the Company reported net current liabilities of RMB176,420,000 and net liabilities of RMB42,624,000 as at 31 December 2003, the financial statements have been prepared on a going concern basis, the validity of which is dependent on the successful completion of formal debt restructuring agreement between the Company and its bankers and other lenders in order to enable the Company to continue as a going concern. Had the going concern basis not been used, adjustments would have to be made to reclassify non-current assets as current assets and non-current liabilities as current liabilities, reduce the value of assets to their recoverable amounts and provide for any future liabilities which might arise. Such adjustments may have a consequential significant effect on the Company's net liabilities as at 31 December 2003 and its loss for the year then ended. We consider that appropriate disclosure have been made but the fundamental uncertainty relating to whether the going concern basis is appropriate is so extreme that we have disclaimed our opinion. Because of the significance of the matters referred to in the preceding paragraph, we are unable to form an opinion as to whether the financial statements give a true and fair view of the Company's state of affairs as at 31 December 2003 or of its loss for the year then ended. In our opinion the financial statements give a true and fair view of the cash flows of the Company for the year ended 31 December 2003. Grant Thornton Certified Public Accountants Hong Kong １３ Ａｐｒｉｌ ２００４ Income statement for the year ended 31 December 2003 Notes 2003 2002 RMB'000 RMB'000 Turnover 4 13,333 24,280 Cost of sales (2,196) (3,121) Gross profit 11,137 21,159 Other income 5 438 5,845 Selling, general and administrative expenses (23,504) (18,038) Provision for impairment of land use right (12,305) - Provision for impairment of land exchange right (21,586) - (Loss)/Profit from operations (45,820) 8,966 Net finance costs 6 (8,932) (4,191) (Loss)/Profit before taxation 7 (54,752) 4,775 Taxation 8 - - (Loss)/Profit for the year (54,752) 4,775 (Loss)/Earnings per share (RMB Fen) 9 (15.04) 1.31 Balance sheet as at 31 December 2003 Notes 2003 2002 RMB'000 RMB'000 ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 10 97,940 105,431 Land use right 11 36,776 50,222 134,716 155,653 Current assets Land exchange right 12 9,251 30,837 Inventories 13 612 1,857 Trade and other receivables 14 3,814 1,931 Tax recoverable 5,468 6,011 Cash at banks and in hand 1,073 5,685 20,218 46,321 Current liabilities Bank loans 15 105,128 105,128 Trade and other payables 91,290 84,630 Finance lease – current portion 16 220 - 196,638 189,758 Net current liabilities (176,420) (143,437) Non-current liabilities Bank loans 15 35 88 Finance lease – non-current portion 16 885 - 920 88 Net (liabilities)/assets (42,624) 12,128 CAPITAL AND RESERVES Share capital 17 364,100 364,100 Reserves 18 (406,724) (351,972) (Capital deficits)/Shareholders’ funds (42,624) 12,128 Cash flow statement for the year ended 31 December 2003 2003 2002 RMB'000 RMB'000 Cash flows (used in)/from operating activities (Loss)/Profit before taxation (54,752) 4,775 Adjustments for : Depreciation 5,103 5,391 Provision for doubtful receivables 185 1,067 Amortisation of land use right 1,141 1,142 Provision for impairment of land use right 12,305 - Provision for impairment of land exchange right 21,586 - Interest income (2) (3) Interest expense 8,934 4,194 Loss/(Gain) on disposal of property, plant and equipment 4,181 (244) Operating (loss)/profit before changes in working capital (1,319) 16,322 Increase in trade and other receivables (2,068) (1,232) Decrease in inventories 1,245 460 Decrease in tax recoverable 543 880 Decrease in trade and other payables (2,274) (4,751) Cash used in operations (2,554) (4,643) Net cash (used in)/generated from operating activities (3,873) 11,679 Cash flows from/(used in) investing activities Purchases of property, plant and equipment (734) (216) Proceeds from disposal of property, plant and equipment 71 349 Interest received 2 3 Net cash (used in)/generated from investing activities (661) 136 Cash flows used in financing activities Repayment of bank loans (53) (1,675) Repayment of finance lease (25) - Repayment of other payables - (9,300) Net cash used in financial activities (78) (10,975) (Decrease)/Increase in cash (4,612) 840 Cash at beginning of year 5,685 4,845 Cash at end of year 1,073 5,685 Statement of changes in equity for the year ended 31 December 2003 Share Capital Accumulated capital reserve losses Total RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 January 2002 364,100 47,454 (404,201) 7,353 Profit for the year - - 4,775 4,775 Balance at 31 December 2002 and as at 1 January 2003 364,100 47,454 (399,426) 12,128 Loss for the year - - (54,752) (54,752) Balance at 31 December 2003 364,100 47,454 (454,178) (42,624) Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. April 13, 2004