中鲁Ｂ(200992)ST2003年年度报告摘要（英文版）

SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD. SUMMARY OF ANNUAL REPORT 2003 §1. Important Notes 1.1 Board of Directors of Shandong Zhonglu Oceanic Fisheries Co., Ltd. (hereinafter referred to as the Company) 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 2003 annual report is abstracted from the full text of annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 No director stated that they couldn’t ensure the correctness, accuracy and completeness of the contents of the Annual Report or have objection for this report. 1.3 Independent director Liu Baoyu was absent from the Board meeting due to some reasons; independent director Jiang Jin, Director Wang Zhao’an and Shao Shijie respectively entrusted in writing independent director Wang Hanmin and Director Li Wenyi to attend and vote on his behalf. 1.4 Hubei Da Xin Certified Public Accountants Ltd. and Horwath International CPA Limited (China Hubei) issued an Auditors’ Report with reserved opinion and paragraph of emphasis events. The Board of Directors and the Supervisory Committee of the Company made explanations on the relevant matters in details, the investors are suggested to notice the content. 1.5 Liu Changsuo, Chairman of the Board, Zhang Jinqing, CFO of the Company, and Wu Shuxian, Person in Charge of Accounting Organ hereby confirm that the Financial Report enclosed in the Annual Report is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock ST ZHONGLU B Stock code 200992 Listed stock exchange Shenzhen Stock Exchange Registered address and office address No. 43, Heping Road, Jinan, Shandong Post code 250014 Internet web site of the Company Nil E-mail of the Company zlzqb@163.com 2.2 Contact person and method Representative in charge of Secretary of the Board of Directors Securities Affairs Name Zhou Feng Jiang Peng Contact address No. 43, Heping Road, Jinan, No. 43, Heping Road, Jinan, Shandong Shandong Telephone (86)531-6553278 (86)531-6553276 Fax (86)531-6943084 (86)531-6943084 E-mail zlzqb@163.com zlzqb@163.com §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 318,865,044.00 310,982,756.00 2.53% 332,560,732.00 Total profit -215,140,076.00 -230,549,060.00 - 7,302,234.00 Net profit -213,472,451.00 -225,282,438.00 - 5,507,444.00 Net profit after deducting -193,771,219.00 -182,613,478.00 - 5,680,295.00 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 562,738,775.00 804,879,214.00 -30.08% 1,020,809,474.00 Shareholder’ s equity (excluding 72,396,580.00 277,937,637.00 -73.95% 496,028,469.00 minority interests) Net cash flow arising from -21,817,255.00 47,911,169.00 -145.54% 88,595,922.00 operating activities 3.2 Major financial indexes (Unit: RMB) Increase/decrease over 2003 2002 2001 last year（％） Earnings per share -0.80 -0.85 -- 0.02 Earnings per share (calculated base on new -0.80 -- -- -- share capital if share capital was changed) Return on equity -294.87% -81.06% -- 1.10% Return on equity as calculated based on net profit after deducting non-recurring gains -267.65% -65.70% -- 2.28% and losses Net cash flow per share arising from -0.08 0.18 -145.56% 0.33 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 0.27 1.04 -73.96% 1.86 Net assets per share after adjustment 0.25 1.02 -75.49% 1.86 3.3 Difference of net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Unit: In RMB’0000 CAS IAS Net profit -21,347.25 -20,939.80 2003 Net assets Net profit RMB’000 RMB’000 Amount of accounting statement as reported Explanation on the under Accounting System for Business Enterprise 72,398 -213,472 difference Adjustment in accordance with IAS: 1. Adjustment of organization expenses of Yantai Foods - 13 2. Adjustment of unrealized loss on investment - 4,061 Amount after adjustment according to IAS 72,398 -209,398 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital (Unit: share) Before the Increase / decrease After the change in this time (+, -) change I. Unlisted shares 1. Sponsor’ s shares 128,071,320 0 128,071,320 Including: State-owned share 127,811,320 0 127,811,320 Domestic legal person’ s shares 260,000 0 260,000 Foreign legal person’ s shares 0 0 0 Others 0 0 0 2. Raised legal person’ s shares 0 0 0 3. Inner employees’shares 0 0 0 4. Preference shares or others 0 0 0 Total unlisted shares 128,071,320 0 128,071,320 II. Listed shares 1. RMB ordinary shares 0 0 0 2.Domestically listed foreign shares 138,000,000 0 138,000,000 3. Overseas listed foreign shares 0 0 0 4. Others 0 0 0 Total listed shares 138,000,000 0 138,000,000 III. Total shares 266,071,320 0 266,071,320 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Total number of shareholders at the end of report year 21,446 Particulars about shares held by the top ten shareholders Number of Nature of Increase / Shares held Type of shares share shareholders decrease in at the Proportion Full name of Shareholders (Circulating/No pledged/ (State-owned the report year-end (%) n-circulating) frozen shareholder/foreign year (share) (share) (share) shareholder) Shandong Group Corporation of Fishery State-owned 0 125,731,320 47.25 Non-circulating 125,731,320 Enterprises shareholder COREPACIFIC-YAMAICHI Unknown 6,046,649 2.27 Circulating Unknown Foreign shareholder NTERNATIONAL (H.K.) LIMITED KINGSWAYFINANCIAL SERVICES Unknown 3,353,105 1.26 Circulating Unknown Foreign shareholder GROUP LIMITED-CLIENTS’A/C China Heavy Automobile Group Jinan State-owned 0 1,950,000 0.73 Non-circulating Unknown Truck Company Limited* shareholder Liu Dan Unknown 1,498,290 0.56 Circulating Unknown Foreign shareholder Yin Ying 0 1,078,200 0.41 Circulating Unknown Foreign shareholder Chen Yuanfeng 0 855,200 0.32 Circulating Unknown Foreign shareholder NATWEST SECURITIES HONG KONG Unknown 773,230 0.29 Circulating Unknown Foreign shareholder LIMITED IP,HUNG FEI 349,000 700,000 0.26 Circulating Unknown Foreign shareholder Liao Qiang 0 615,000 0.23 Circulating Unknown Foreign shareholder Explanation on associated relationship Note: a. China Heavy Automobile Group Jinan Truck Company Limited* is sponsor’ s among the top ten shareholders or shareholder of the Company, whose name was changed into China Heavy Automobile consistent action Group Jinan Truck Co., Ltd. during the report period with listed in Shenzhen Stock Exchange; its short form of the stock is *ST Heavy Auto and stock code is 000951. b. Among the top ten shareholders, Shandong Group Corporation of Fishery Enterprises and China Heavy Automobile Group Jinan Truck Co., Ltd. are sponsor’ s shareholders of the Company, there exists no associated relationship between them, or they do not belong to the consistent actor regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies; the other shareholders are ones of domestically listed foreign shares, the Company is unknown whether there exists associated relationship, or whether the rest shareholders belong to the consistent actor regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies. Particulars about shares held by the top ten shareholders of circulation share No Name of shareholders (full name) Number of circulation shares held Type (A-share, B-share, at the year-end (share) H-share and other) COREPACIFIC-YAMAICHI 6,046,649 1 B-share NTERNATIONAL(H.K.)LIMITED KINGSWAYFINANCIAL SERVICES 3,353,105 2 B-share GROUP LIMITED-CLIENTS’A/C 3 Liu Dan 1,498,290 B-share 4 Yin Ying 1,078,200 B-share 5 Chen Yuanfeng 855,200 B-share NATWEST SECURITIES HONG 773,230 6 B-share KONG LIMITED 7 IP,HUNG FEI 700,000 B-share 8 Liao Qiang 615,000 B-share 9 Liang Yuzhen 572,600 B-share 10 Weng Zhengwen 558,800 B-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 Name of the controlling shareholder: Shandong Group Corporation of Fishery Enterprises Legal representative: Liu Changsuo Date of foundation: Nov. 1988 Registered capital: RMB 380,000,000 Nature of Company: state-owned enterprise Structure of equity: Shandong Province State-owned Assets Administration Office holds 100% equity of Fishery Enterprise Business scope: marine catching, aquiculture, resource development and technical service of aquatic product; sales of aquatic products and fishery resource (excluding special operating products); import and export business with the approval scope; sales of steels and woods; sending of work personnel of the fishery business to overseas. Note: In the report year, the controlling shareholder of the Company remained unchanged. §5. Particulars About Directors, Supervisors, Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Shares held at Share held Reason the year-begin at the for Name Title Sex Age Office term (share) year-end change (share) Chairman of the Male 0 0 Yu Fenghua 52 Sep. 2002-May 2003 Board Wang Aimin Director Male 62 Sep. 2002-May 2003 0 0 Liu Shijun Director Male 52 Sep. 2002-May 2003 0 0 Xie Meilan Director Female 53 Sep. 2002-Jul. 2003 0 0 Liu Qingfeng Director Male 56 Sep. 2002-Jul. 2003 0 0 Liu Chairman of the Male 0 0 51 May 2003-Sep. 2005 Changsuo Board Wang Director Male 0 0 51 Sep. 2002-Sep. 2005 Zhao’an Li Wenyi Director Male 47 Sep. 2002-Sep. 2005 0 0 Shao Shijie Director Male 57 Sep. 2002-Sep. 2005 0 0 Wang Independent Director Male 0 0 43 Sep. 2002-Sep. 2005 Hanmin Liu Baoyu Independent Director Male 40 Sep. 2002-Sep. 2005 0 0 Jiang Jin Independent Director Male 35 Sep. 2003-Sep. 2005 0 0 Zhou Feng Secretary of the Board Male 49 Sep. 2002-Sep. 2005 0 0 Li Junmei Supervisor Female 36 Sep. 2002-Oct. 2003 0 0 Zhang CFO Male 0 0 49 Jul. 2003-Sep. 2005 Jinqing Yin Jixian Supervisor Male 44 Sep. 2002-Oct. 2003 0 0 Zheng Supervisor Male 0 0 60 Sep. 2002-Sep. 2005 Guimin Shang Supervisor Female 0 0 34 Oct. 2003-Sep. 2005 Qinghua Zhang Lei Supervisor Male 31 Sep. 2002-Jul. 2005 0 0 Huang Qi Supervisor Male 30 Sep. 2002-Sep. 2005 0 0 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Name Shareholding company Title Office term Drawing the payment from the Listed Company (Yes / No) Liu Changsuo Shandong Group Corporation of Chairman of the Board, Apr. 2003 to now No Fishery Enterprises General Manager Li Wenyi Shandong Group Corporation of Deputy General Sep. 2003 to now No Fishery Enterprises Manger Shao Shijie Shandong Group Corporation of General Manager of Jan. 1998 to now Yes Fishery Enterprises subsidiary company Qingdao Ocean Fisheries Company Yin Jixian Shandong Group Corporation of Sector of HR Nov. 2003 to now Yes Fishery Enterprises 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 359,000 Total annual payment of the top three directors RMB 129,000 drawing the highest payment Total annual payment of the top three senior RMB 129,000 executives drawing the highest payment Allowance of independent director RMB 20,000 per person/year Other treatment of independent directors The Company paid extra allowance of RMB 300 for based on actual working day to independent directors when they attended the Board meeting and shareholders’ general meeting. The Company reimbursed reasonable expenses that independent directors exercised their functions and powers according to actual situation. Name of directors and supervisors receiving no Director Shao Shijie, Supervisor Yin Jixian payment or allowance from the Company Payment Number of persons RMB 45,000 ～ RMB 60,000 2 RMB 30,000 ～ RMB 45,000 3 RMB 20,000 ～ RMB 30,000 5 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In the report period, the Company further deepened the enterprise reform with adjusting industrial structure and optimizing and integrating assets as the main line, improved the legal person’ s administrative structure and tried hard to increase income from main operations through reducing the redundant staffs and cutting down three expenses. Under the situation of very shortage in cash flow, the whole economic benefits increased obviously over the last year. The Company continued committing itself to catching oceanic fish in the upper and middle of the layer, which has strengthened the processing and export of aquatic products and lease and management of refrigeration sails, and disposed fishers with low income and high cost. In the whole year, the oceanic fishing volume reached 36,000 tons and the sales volume of fish goods reached 39,700 tons. The Company realized income from main operations amounting to RMB 318.87 million and profit from main operations amounting to RMB 53.84 million, an increase of RMB 26.80 million over year 2002. In the report period, the net profit was RMB-213.47 million, an increase of RMB 11.80 million over year 2002. In 2003, the Company encountered various unprecedented difficulties in the operation: firstly, SARS impacted relatively large influence on the processing export, resulting in whole losses in the three refrigeration processing enterprises; secondly, the sources in the offing was further dried up, which pushed that the processing of materials supplied from offing was transferred into the processing of materials supplied from foreign countries, resulting in the increase in expenses and decrease in profits. For instance, Longkou Processing Plant purchased Spanish Mackerel to be processed, while crude fish decreased from nearly a thousand tons in previous years to lack of a hundred tons in the last year; thirdly, international fishery organization became tighter and tighter on the classification, supervision and control on the fishing ground, which resulted that the fisher task and fishing ground was restricted and volume of fish goods decreased; fourthly, the Company transferred the equity of Double Whale Pharmaceutical, which resulted in the decrease in the income from this assets. Besides, the negative report of all newspapers and media on the Company at the beginning of the year resulted the banks did not provided but just withdrew loans from us. Thus, the Company faced great pressure in the serious shortage of capital, which resulted that the Company could not realize the predicted operating objectives. Moreover, the large shareholder occupied the Company’ s capital in long term by large quantities and was unable to refund it, the Company was hard to absorb the large quantities of bad debts depending on itself force and all equity of the controlling shareholder was frozen by the judiciary. Thus, the Company faced much larger pressure. At present, it just can be expected to settle the said problems through effective assets reorganization. However, due to the interest balance, the reorganization had no progress behindhand. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 Classified according to Income from Cost of main Gross Increase/decrease Increase/decreas Increase/decrease industries or products main operations profit in income from e in cost of main in gross profit ratio operations (RMB) ratio (%) main operations operations over over the last year (RMB) over the last year the last year (%) (%) (%) Fishery 15,888.00 11,940.00 24.85 -8.97 -32.69 26.76 Processing of aquatic 3,613.00 3,076.00 14.86 -32.11 -23.43 -9.80 products Other wholesale and 9,522.00 9,235.00 3.01 125.47 155.90 -11.53 retail trade Manufacture of 2,863.00 1,636.00 42.86 -30.17 -27.99 -1.20 biological medicine Including: related 344.00 520.00 -51.16 -88.66 -88.97 4.16 transactions Cod-liver oil products 2,863.00 1,636.00 42.86 -30.17 27.99 -1.71 Including: related 0.00 0.00 -- 0.00 0.00 0.00 transactions Tunny 9,838.00 8,460.00 14.01 24.00 -8.00 29.52 Scad 3,737.00 1,894.00 49.32 6.00 -45.00 47.14 Other fish goods 9,190.00 8,271.00 10.00 117.62 129.18 -9.43 Pricing rules for related The prices of related transactions are confirmed based on the principle of “openness, fairness, justness, transactions equivalence and with compensation”, not disobeying the standard of independent third party in the market in principle. For those related transactions hard to compare the market price or restricted in pricing, the both parties make confirmation with negotiations. Necessity and durative (1) Purchase of fishing goods and sales of goods between the Company and the related parties are the most of related transactions common business between fishery operating enterprises. In the future, the Company shall continue to develop this kind of business with all related parties based on the principle of fair transaction with profitability as the purpose. (2) For businesses relevant to boats lease, though their profit take a relatively large proportion in the Company’s total profit, the recovery of capital is comparatively slow, which easily forms relatively large current arrearage of related parties. Thus, the Company has stopped these kind of businesses in April 2003. 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 (%) Mainland of China 15,267.00 858.38 Taiwan of China 6,706.00 75.69 Japan 5,117.00 24.47 Argentina 232.00 0.00 Ghana 70.00 0.00 Korea 80.00 0.00 America 766.00 0.00 Nigeria 3,648.00 3.17 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase 7,322.00 Proportion in the total 52.00% of the top five suppliers amount of purchase Total amount of sales of the 14,461.00 Proportion in the total 45.00% top five sales customers amount of sales 6.5 Operation of share-holding companies (applicable to the situation where investment equity takes over 10% of its net profit) □Applicable √Inapplicable 6.6 Explanation on reasons of material changes in main operations and its structure √Applicable □Inapplicable (1) Lease business of fishing sails. Due to slow recovery of capital and in order to reduce the related transactions at the same time, the Company stopped a series of lease agreements on April 1, 2003, resulting in the decrease in lease of fishing sails. (2) Production of oceanic biological pharmaceutical and healthcare products. In the report period, the Company sold and transferred all its equity of Qingdao Double Whale Pharmaceutical Co., Ltd. considering from the long-term interests and reduced the main operations of pharmaceutical and healthcare products since July 1, 2003. Besides, there was no other great change in the main operations and their structures, products and services in the report period. 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 Company’ s gross profit ratio of main operations was 10.76% in 2002 and was 18.81% in 2003, which was mainly due to the increase in international price of fish over the last year and selling oceanic fishing boats with relatively high fixed cost in the period. 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year √Applicable □Inapplicable 1. In the aspect of oceanic fishing industry, due to the increase in international price of fish over the last period, the income from sales of oceanic fishing boats increased while its cost decreased in the period, which resulted that the profit from main operations increased by RMB 26.80 million. 2. The provision for bad debts increased by RMB 170.92 million and impairment loss of long-term investment was RMB 9.90 million in the period, which resulted in the loss amounting to RMB 213.47 million in the period. Analysis to reasons of material changes in the whole financial position than that in the last year √Applicable □Inapplicable Total assets decreased by 30.08% over the last year, which was due to appropriating provisions for bad debts and estimated liabilities to arrearages of related parties and appropriating impairment loss of long-term equity investment of Southern Securities. Shareholders’equity decreased by 73.95% over the last year, which was due to the loss. Profit from main operations increased by 84.96% over the last year, which was due to the increase in international price of fish over the last period and sales of oceanic fishing boats with relatively high fixed cost. Net profit increased by 5.24% over the last year, which was due to the increase in international price of fish over the last period and sales of oceanic fishing boats with relatively high fixed cost. Cash and cash equivalents decreased by 847.27% over the last year, which was due to the refund of bank loans. 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 Unit: RMB’0000 Total amount of raised 25,534.00 Total amount 6.00 Total amount of raised 22,213.50 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 not amount of earnings planned progress and input input estimated earnings or not Project of ultra-low No No temperature tuna long-line 4,343.00 4,474.00 -663.00 fishing in South Pacific* Project of marine Yes Yes pharmaceutical and healthcare 4,783.00 1,462.50 0.00 products series Project of purse seine for tuna Yes Yes 4,991.00 0.00 0.00 fishing in Indian Ocean Project of hooks and poles for No Yes 3,984.00 1,240.00 858.00 tuna fishing in Guinea Bay Project of importing large No No 4,929.00 2,466.80 208.20 cold-storage boat Project of building No Yes 4,100.00 4,102.00 735.00 refrigeration dory trawlers* Total 27,130.00 - 13,745.30 1,138.20 - Explanation on not reaching 1. Project of ultra-low temperature tuna long-line fishing in South Pacific. This project has been planned progress and earnings finished in investment and has been put into production in successive. In the report period it realized operating profit amounting to RMB 0.56 million. Since the market countries of main products such as Japan etc. saw a successive depression in economy and the fish price declined, thus the income declined, adding the factors of fluctuating international oil price and increase of maintenance expense etc. resulted that the cost mounted up, which made the project incur a loss. 2. Project of building refrigeration dory trawlers. Totally four refrigeration dory trawlers were invested and constructed in this project. During the implementation of this project, due to the change of Russian fishery policy, the Company did not gain the fishing certificate of this fishing ground and thus these four fishing boats could not enter into this fishing ground to do fishing. According to the boat sales contract, the Company sold 2 of the 4 fishing boats with the price of USD 160,000. Ended the end of the report period, the total payments recovered were USD 800,000. The other two boats were sent to West African to do some catching in July of 2003. Ended Dec. 31, 2003, the preparation relevant to production of the said two fishing boats in the prophase had been accomplished and they would be put into production formally since year 2004. Explanation on reasons and 1. Project of marine pharmaceutical and healthcare products series: This project was construction procedures of change expansion to the original production scale of Qingdao Double Whale Pharmaceutical Co., Ltd. (hereinafter referred to as Qingdao Double Whale) and the detailed implementation was burdened by Qingdao Double Whale. Since the Company has transferred all the equity of Qingdao Double Whale (For details, please refer to Public Notice on Resolutions of the 9th Meeting of the 2nd Board of Directors dated Aug. 23, 2003 and Public Notice on Implementation of Equity Transfer dated Sept. 27, 2003 of the Company published on Securities Times and Ta Kung Pao), the capital was not necessary to be put into this project. This project was approved for construction by Shandong Plan Commission with LJNJZ [1998] No. 989 document on Sept. 29, 1998 and the planned amount of input was RMB 47.83 million with predicted annual total profit amounting to RMB 13.75 million. Ended Aug. 2003, the actual input was RMB 14.625 million and the balance of capital in this project was RMB 33.205 million. The 11 th Meeting of the 2nd Board of Directors of the Company held on Dec. 30, 2003 considered and approved to agree to supplement the Company’s current capital with the partial capital, which should still be submitted to Shareholders’General Meeting for approval. 2. Project of hooks and poles for tuna fishing in Guinea Bay: In order to enhance the capital use efficiency, after being considered and approved by Annual Shareholders’General Meeting 2000, the Company suspended the implementation of “Project of hooks and poles for tuna fishing in Guinea Bay” and established “Qingdao Zhonglu OUQD Aihua Pharmaceutical Co., Ltd.” with this partial raised proceeds amounting to RMB 43.20 million. 3. Since there was capital amounting to RMB 27.44 million carried down from “Project of importing large cold-storage boat”and rest capital optimized amounting to RMB 6.71 million from “Project of hooks and poles for tuna fishing in Guinea Bay”, after being considered and passed by Annual Shareholders’General Meeting 2000, the Company used the said capital to establish “Shandong Zhonglu Oceanic Foods (Yantai) Co., Ltd.”. Particulars about the changed projects √Applicable □Inapplicable Unit: RMB’0000 Total amount of capital 3,320.50 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 Shangdong Zhonglu There was capital Yes Oceanic (Yantai) Foods amounting to RMB Co., Ltd. 27.44 million carried down from “Project of 3,415.00 0.00 0.00 importing large cold-storage boat”and rest capital optimized amounting to RMB 6.71 million from “Project of hooks and poles for tuna fishing in Guinea Bay”. Qingdao Zhonglu Project of hooks and Yes OUQD Aihua poles for tuna fishing 4,320.00 0.00 0.00 Pharmaceutical Co., in Guinea Bay Ltd. Supplementing current Project of marine Yes capital pharmaceutical and 3,320.50 0.00 0.00 healthcare products series Total - 11,055.50 0.00 0.00 - Explanation on not Inapplicable 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 “Qualified Opinion”made by the Certified Public Accountants √Applicable □Inapplicable Since Hubei Daxin CPAs Co., Ltd. has audited the Company’ s accounting statements in 2003 and has presented auditors’report with reservation and emphasized events, now the Board of Directors of the Company made the following explanations on the events involved in the auditors’report respectively: 1.Explanation on the reservation in the auditors’report: The Board of the Company considered that the event that SGCFE Seawater Culturing Company provided guarantee for Shandong Shanhai Fishery Business Center, a subsidiary of SGCFE was real, which probably impacted influence on the Company’ s estimated liabilities. The Board of the Company is actively seeking for basic approach for settling the problem so as to protect the interests of the Company’ s shareholders from violation in a maximum way and the Board shall timely disclose the progress of guarantee settlement. 2. Explanation on the emphasized events in the auditors’report: At present, the Company’ s production and operation is normal. However, since the Company continued to incur losses in 2002 and 2003, all relevant credit banks has adopted cautious policies of granting loans to the Company, thus the Company’ s cash flow is restricted and shortage of operating capital is the biggest difficult the Company faces. The Board of the Company shall actively seek for the support from the local government, try for external reorganization and try its best to coordinate the relationships between the bank and enterprise so as to continuously gain capital support from the bank, ensure the Company’ s continuous operating capability and thus realize the profitability finally. 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 Audited by Hubei Daxin CPAs Co., Ltd. and Horwath International Certified Public Accountants (Hubei, China) according to Chinese Accounting Standards and International Accounting Standards respectively, the net profit realized by the Company in 2003 was RMB-213,472,451 and RMB-209,398,000 respectively and the profit available for distribution for all shareholders in the year was RMB-416,728,523 and RMB-416,707,000 respectively. After research, the Board of Directors decided neither to distribute profits nor convert capital reserve into share capital. The said preplan should still be submitted to Shareholders’General Meeting 2003 for approval. §7. Significant Events 7.1 Purchase of assets √ Applicable □ Inapplicable Unit: RMB’0000 Contribution to net profit of Related the Company transaction or of the assets Transaction parties and Date of Purchase not (if yes, purchased the assets purchased purchase price identify the from the rated year-beginning principle to the date of purchase Related transaction, The Company was Both parties Assigned 17.31% shares conducted the Jan.3, of Shangdong Zhonglu 935.71 0.00 transaction 2003 Oceanic (Yantai) Food base on Co., Ltd held by SGCFE confirmed value after evaluation 7.2 Sales of assets √ Applicable □ Inapplicable Unit: RMB’0000 Contribution to net profit of the Gains or Related Transaction parties and the Date of Company of the Sales price losses from transaction assets sold sales assets sold from sales or not the year-begin to the date of sales The Company signed Vessel Business Agreement with Mar.31, Morocco G..A.T company 298.00 58.00 -88.00 No 2003 and sold 3 vessels of Type 8154. The Company signed Vessel Business Agreement with Jun.26, Qingdao Huanhai Marine 65.00 0.00 -135.09 No 2003 Co., Ltd. to sell “Taijin” trawler The Company signed the equity transfer agreement with Zhong Chan Jing Investment Co., Ltd. to Aug. 23, 137.50 0.00 236.78 No transfer 95% share equity of 2003 Qingdao Double Whale Pharmaceutical Co., Ltd. held by the Company The Company signed Vessel Business Agreement with Shadui Dulian Rolling Mill, Mar. 502.00 0.00 -370.00 No Xinhui District, Jiangmen, 25,2003 Guangdong to sell “Taihe” trawel The Company signed Vessel Business Agreement with Feb.19, 130.00 0.00 -197.01 No Taiwan Yunman Fishing Co., 2003 Ltd. to sell “Taihui 1”trawler Influence on consistence of business and stability of managers caused by issues about the purchase and sale of assets The aforesaid purchase and sale of assets facilitated optimizing the structure of the company, reduced the factors impacting the achievements of the Company and had no influence on the consistency of business and the stability of the management of the Company. 7.3 Important guarantee √ Applicable □ Inapplicable Unit: RMB’0000 Date of Name of the happening Guarantee for Amount of Guarantee Complete Company (date of Guarantee term related party or guarantee type Implementation or not guaranteed signing not agreement) Qingdao Meilai Collateral Oct.22, 2003- Oct.22, 2003 25.00 No Yes Foods Co., Ltd. responsibility Oct.22, 2004 Qingdao Haiyu Fisheries Co., Ltd. (the Collateral Aug.1, 2001- subsidiary of Dec.1, 1998 2,151.00 No Yes responsibility July1, 2003 the controlling shareholder SGCFE) SGCFE Aquaculture Company, which is the predecessor of Trading Branch of the Company Collateral Mar.1, 2002- before the Mar.31, 2002 7,027.00 No Yes responsibility Sep.1, 2003 Reorganisation of the Group and has not deregistered as required by the reorganisation agreement Shangdong Zhonglu Collateral Jan.1, 2003- Oceanic Jan.1, 2003 827.67 No Yes responsibility Feb.1, 2004 (Yantai) Food Co., Ltd Shangdong Zhonglu Collateral Feb.1, 2003- Oceanic Feb.1, 2003 3,150.00 No Yes responsibility Oct.1, 2004 (Yantai) Food Co., Ltd Total amount of guarantee 13,180.67 Total balance of guarantee 13,180.67 Including: total balance of related guarantee 9,203.00 Total amount of guarantee provided by the List Company to the 3,977.67 Holding subsidiaries The total amount of guarantee out of line 2,151.00 The proportion of the total amount of guarantee in the net assets 182.05 7.4 Related credits and liabilities transaction √ Applicable □ Inapplicable Unit: RMB’0000 Funds related parties supplied to the Funds provided to related parties Related parties Company Occurred amount Balance Occurred amount Balance Prodesur -206.00 323.88 0.00 0.00 S.A.(Argentine) Shandong Aquatic Products Enterprise 2,733.00 21,775.50 0.00 0.00 Group Corporation Shandong Shanhai Aquatic Product 449.78 486.39 0.00 0.00 Trade Center Qingdao Oceanic -900.00 5,321.00 0.00 0.00 Fisheries Co., Ltd. Qingdao Anning Vessel Engineering 18.74 253.99 0.00 0.00 Co., Ltd. Qingdao Meilai International -49.47 316.99 0.00 0.00 Foodstuff Co., Ltd. Shangdong Longkou Aquatic Product 0.00 638.30 0.00 0.00 Integrated Company Qingdao Haiyu -62.86 803.76 0.00 0.00 Fisheries Co., Ltd. Qingdao Aquatic Products Machining 29.85 785.78 0.00 0.00 Factory Qingdao Animal -5.00 34.55 0.00 0.00 Medicine Factory Longkou Tenglong Aquatic Products -146.89 1,405.78 0.00 0.00 Co., Ltd. Qingyu Haifeng 29.35 79.39 0.00 0.00 Shipping Co., Ltd. Qingdao Lubao Aquatic Foodstuff -0.55 40.28 0.00 0.00 Co., Ltd. Qingdao Zhengxin Export and Import 0.00 0.00 0.00 100.00 Co., Ltd. Qingdao Zhengyuan Vessel Building Co., 0.00 0.00 -10.00 15.46 Ltd. SGCFE S.A. 81.19 2,236.25 0.00 0.00 Total 1,971.14 34,501.84 -10.00 115.46 7.5 Entrusted assets management □ Applicable √Inapplicable 7.6 Implementation of commitment items □ Applicable √ Inapplicable 7.7 Significant lawsuit and arbitration √Applicable □Inapplicable 1.In the report period, the Company appealed to the court against the controlling shareholder SGCFE because of the arrears conflict and claimed to judge the defendant to pay back the arrearage RMB 50,232,114.37 immediately and bear the total litigate costs. The relevant details were disclosed in the significant lawsuit public notice published in Securities Times and Ta Kung Pao dated Feb. 28, 2003. Up to now, according to (2003) LMC No.747 written civil ruling issued by the People’ s Court of Lixia District, Jinan dated Aug.26, 2003, SGCFE should pay back advance RMB 50,232,114.37 and interest. The significant lawsuit availed to protect the Company and the shareholders’interest and didn’t affect the profit of the report period and caused little effect on the profit after the period. 2. In the report period, 3 pieces of land of the Company located in Qingdao were sequestrated. The details were disclosed in the significant lawsuit public notice published in Securities Times and Ta Kung Pao dated July 15,2003. Up to now, there is no progress about the lawsuit. 3.In the report period, “Tai Xing”Trawler owned by the subsidiary of the Company Shandong Zhonglu Oceanic Fisheries Transportation Co., Ltd, (Zhonglu Transportation) was ordered and distraint by Qingdao Court of Admiralty. The details were disclosed in the significant lawsuit public notice published in Securities Times and Ta Kung Pao dated Aug. 20, 2003. This resulted in the increase of debt $2,157,212.65 of Zhonglu Transportation. Meanwhile, the profit of the Company was affected. 4. In the report period, the Company received the arbitration notification about “No.G20030234 Vessel Business Agreement Dispute issued by China International Economic and Trade Arbitration Commission (hereinafter referred as CIETAC), in which Japan San Wa Trading Co., Ltd. claimed the Company to pay back USD643,324.76 composing of 20% remaining payment for buying vessels in the Vessel Business Agreement (hereinafter referred as “the agreement”) between the Company and Japan San Wa Trading Co., Ltd. in Feb, 2001 and current payment of small amount; Japan San Wa Trading Co., Ltd. also claimed the Company to pay USD60,000 for interest and penalty and bear the arbitration costs etc.. However, through the research of the Company, the Company found there existed some problems about the quality of the vessels consigned by Japan San Wa Trading Co., Ltd.; some vessels fell short of the promises in the agreement; five vessels were unable to be approved by the departments of the State to get registered in China because of age problems; the obligations fulfilled by Japan San Wa Trading Co., Ltd. were not complete----the documents about the vessels were not complete etc.; there existed some problem about effectiveness of that part of the agreement. Therefore, the Company proposed written plea and counterclaimed CIETAC to judge part of the agreement took no effect and also counterclaimed Japan San Wa Trading Co., Ltd. to compensate for the economic loss USD616,000. CIETAC heard the vessel business dispute case for the fist time, and conciliated in court: to dissolve the dispute for one and for ever the Company should pay USD450,000 to the opposite party totally. At present both parties are still in the negotiation and conciliation beyond the court. 5. On Jan.18, 2004, the Company received (2003) QMSCZ No.378 court verdict issued by the Middle People ‘s Court of Qingdao, Shangdong. The court judged “Japan Pingcheng Trading Co., Ltd. recovered in the suit about the loan agreement of $500, 000 between Qingdao Fishing Branch of the company and Japan Pingcheng Trading Co., Ltd. at the first instance. The Company believed that the verdict deviated from the fact because the matter occurred in the establishment of Qingdao Fishing branch of the Company. The Company has appealed to the Supreme Court of Shangdong Province. At present there is no progress about the lawsuit temporarily. 7.8 Particulars about the performance of obligations of Independent Directors In the report period, strictly according to Articles of Association of the Company, Independent Directors System and relevant regulations of CSRC, the three independent directors of the Company fully exerted their specialty, performed duties in an honest, diligent and independent way, attended the meetings of the Board of Directors and the Shareholders’General Meeting, expressed independent opinions on the significant related transactions, nomination, appointing and removing of Directors, engagement and disengagement of senior executives and other significant events based standpoint of independent judgement, performed active function on the scientific decision-making and normative operation of the Board of Directors and maintained the whole interest of the Company and legal right and interest of medium and small shareholders. §8. Report of the Supervisory Committee (I) Meetings held in the report year In the report year, the Supervisory Committee had held five meetings with the details as follows: 1.On Apr.24, 2003, the Company held the 3rd Meeting of the 2nd Supervisory Committee, which examined and approved: (1) Proposal on Withdrawing Reserve for Doubtful Debts and Impairment of Assets; (2) Work Report 2002 of the Supervisory Committee; (3) Financial Settlement Report 2002; (4) Profit Distribution Preplan 2002; (5) Annual Report 2002and Summary; (6) 1st Quarterly Report 2003. 2.On May 16, 2003, the Company held the 4th meeting of the 2nd Supervisory Committee, which examined and approved: (1) Proposal on Reengaging the PrincewaterCoopers Zhongtian Certified Public Accountants as 2002 overseas and domestic auditors submitted at 2002 Shareholders’ General Meeting; (2) Proposal on Authorizing the Board of the Company Carte Blanche to Handling the Engagement of 2003 Certified Public Accountants as Overseas Auditors and Domestic Auditors and Determination of the Remuneration submitted at 2002 Shareholders’ General Meeting, and later confirmed at the next Shareholders’General Meeting. 3.On July 29, 2003, the Company held the 5th meeting of the 2nd Supervisory Committee, which examined and approved: (1) Proposal on Semi-Annual Report 2003 of the Company and the summary; (2) Proposal on the Resignation Application of Supervisor Mr. Zhang Lei 4.On Oct. 29, 2003, the Company held the 6th meeting of the 2nd Supervisory Committee, which examined and approved: (1) 3rd Quarterly Report 2003; (2) Proposal on Resignation Application of Several Supervisors. 5.On Dec.30, 2003, the Company held the 7th meeting of the 2nd Supervisory Committee, which examined and approved: (1) Proposal on Adjusting Use of Part Raised Capital; (2) Proposal on Changing Certified Public Accountants; (II) Independent opinions expressed by the Supervisory Committee on the related affairs of the year 2003: 1. Operation according to laws. In the report period, the significant decisions of the Company accords with the requirements of the Articles of the Association and the decision-making procedure abides by the law; the Company establishes perfect internal control system in substance while there still exists certain distance towards fulfillment and implementation, and the Company is not totally separated from the controlling shareholder in five aspects, and one or two senior executives concurrently take the post in the controlling shareholder’ s company; In the business ,there exists mixed operation between the Company and the controlling shareholder’ s company. When the directors, general manager and other senior executives performed their duties, they were probity, autonomic, self-conscious, devoted and made contribution for the development of the Company. 2. Inspection of financing. The Company paid attention to the work of financing, improved consistently the quality of financial personnel and consummated the financial management systems. Hubei Daxin Certified Public Accountants audited the financial statements of the Company in 2003 and issued auditor’ s report with reserved opinion and emphasizing matters. We believed that the auditor’ s report reflected the financial status and operation result in 2003. To Auditors’Report with reserved opinion and emphasizing matters issued by auditors in charge of the auditing of the Company from the cautious point of view, the Supervisory Committee unanimously agreed. 3. Use of raised capital of the Company. The raised capital from domestically listed foreign shares in 2000 was put into use in conformity with the items disclosed in Prospectus according to the actual situation. In the report period, the Company adjusted use of part raised capital. We believed that it was in conformity with Company Law, Securities Law and Articles of Association of the Company. 4. Purchase and sale of assets. Concerning the purchase and sale of assets occurred in the report period, the transaction was fair and the price was reasonable. There found no internal transactions or behavior of damaging the right and interest of the shareholders. 5. Related transaction. The related transactions involved in the report period were mainly purchase and sale of trade, receiving and paying of rent of vessel and so on. We believed that related transaction had a distance towards standardization and up to now the Company hadn’t got breakthroughs on the problem that there still existed capital occupation by the big shareholders. 6. The Board of the Company gave the explanations on the auditor’ s report with reserved opinion and emphasizing matters issued by the Certified Public Accountants. We give assent the explanation of the Board and we will supervise and urge the Board to propose dissolving schemes on the existent problem to protect the interests of the shareholders of the Company utmost. §9.Financial Report 9.1 Auditors’Report To the Shareholders of Shandong Zhonglu Oceanic Fisheries Co., Ltd. We were engaged to audit the accompanying consolidated balance sheet of Shandong Zhonglu Oceanic Fisheries Co., Ltd. (the “Company”) and its subsidiaries (the “Group”) as of 31 December 2003 and the related consolidated income statement, statement of changes in shareholders’equity and cash flow statement for the year then ended, prepared in accordance with International Financial Reporting Standards. These consolidated financial statements are the responsibility of the Company’ s management. As of 31 December 2003, SGCFE Aquaculture Company, which is the predecessor of Trading Brach of the Company before the Reorganisation of the Group and has not deregistered as required by the reorganization agreement and still operate by the name of SGCFE Aquaculture Company. As set forth in the section “Contingencies”, SGCFE had bank borrowings of RMB 70,270 thousand guaranteed by SGCFE Aquaculture Company. The banks may hold the group responsible for these borrowings if SGCFE default on the repayments. We are unable to obtain evidence on whether the Group would be held liable for the aforementioned borrowings. Except for the aforementioned qualified matter, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31st December, 2003, the result of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards promulgated by the International Accounting Standards Board. We would mention the investor to notice that the consolidated financial statements are prepared on the basis of going concern assumption. As set forth in the sectinon “GOING CONCERN ASSUMPTION”, the Group incurred a net loss 209,398 thousand for the year ended 31 December 2003. As of that date, the Group’ s current liabilities exceeded its current assets RMB209,565 thousand. Although the group has disclosed intended improvement measures in the section “GOING CONCERN ASSUMPTION”, it still exist material uncertainty for the Group’ s ability to continue as a going concern. HORWATH CHINA (HUBEI) Certified Public Accountants March , 2004 9.2 Financial statement (attached) 9.3 Explanation of the change on accounting policy, accounting estimation and settlement compared with the latest annual report. 1. There is no change on accounting policy. 2. The detail explanation on accounting estimation. According to NYF [2002] No.8 Vessel Rejection Provisional Regulation issued by the Agriculture Department and State Administration of Work Safety and the NYF [2003] No.20 Notification about Implementation of Vessel Rejection Provisional Regulation and relevant problems, the Company adjusted the estimated serviceable life of vessels serving for the fisheries and withdrew depreciation based on the adjusted estimated serviceable life. The accounting estimation would adopt future applicable method, which resulted in the difference of RMB –3,252,034 in the total profit of the report year. 3. There is no change on accounting settlement. 9.4 Change of consolidation scope in the report period compared with the latest annual report In 2003, the Company signed the equity transfer agreement of Qingdao Double Whale Pharmaceutical Co., Ltd. with Zhong Chan Jing Investment Co., Ltd. to transfer 95% share equity of Qingdao Double Whale Pharmaceutical Co., Ltd. held by the Company with the transferring price RMB 1,374,964. According to the relevant regulations, date of transferring share equity was fixed on Jun.30, 2003, so the consolidation scope of the financial statements in the report period includes the income statement of Qingdao Double Whale Pharmaceutical Co., Ltd. from Jan. to June of 2003. Board of Directors of Shandong Zhonglu Oceanic Fisheries Co., Ltd. Mar. 31, 2004 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in RMB thousands, except for (losses) earnings per share) Ｎｏｔｅ ２００３ ２００２ Sales, net ２ 317,230 309,065 Cost of sales 258,887 277,522 Gross profit 58,343 31,543 Other operating income 1,244 2,969 Distribution costs 29,269 35,385 Administrative expenses 23(c) 216,952 214,725 Other operating expenses 10,044 4,498 (Loss) profit from operations (196,678) (220,096) Finance cost, net 3 17,075 18,649 Investment income from trading and long-term 6 23 investments Gain on disposal of investment in a subsidiary 1,350 7,235 Subsidy income 0 1,191 (Loss) profit before tax and minority interests 4 (212,397) (230,296) Income tax expense 5 1,654 1,059 (Loss) profit before minority interests (214,051) (231,355) Minority interests 21 4,653 2,197 Net (loss) profit (209,398) (229,158) (Losses) earnings per share - Basic 6 RMB(0.79) RMB(0.86) - Diluted The accompanying notes are an integral part of the financial statements. CONSOLIDATED BALANCE SHEET FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in RMB thousands) Note 2003 2002 ASSETS Non-current assets Leasehold lands 8 9,315 9,550 Property, plant and equipment 9 303,181 349,262 Intangible assets 10 73 2,378 Long-term investments 11 23,207 33,157 335,776 394,347 Current assets Inventories, net 12 75,060 84,252 Due from related parties, net 23(c) 76,869 214,499 Prepayments and other current assets 3,242 1,993 Other receivables, net 13 34,896 16,190 Trade receivables, net 14 20,065 38,248 Trading investments 15 56 62 Restricted bank deposits 22(b) 1,158 Cash and cash equivalents 22(b) 16,788 54,131 226,976 410,533 Total Assets 562,752 804,880 EQUITY AND LIABILITIES Shareholders’equity Share capital 19 266,071 266,071 Reserves 20 (193,673) 11,651 72,398 277,722 Minority interests 21 16,568 21,221 LIABILITIES Non-current liabilities Long-term bank borrowings, non-current portion 18 37,245 69,740 Long-term payables 136 37,245 69,876 Current liabilities Current portion of long-term bank borrowings 18 12,415 36,290 Taxes payable 9,693 11,549 Due to related parties 23(c) 1,155 1,217 Other payables and accruals 16 83,560 42,883 Dividends payable 7 459 509 Advances from customers 5,323 9,800 Trade payables 25,176 40,431 Short-term borrowings 17 298,760 293,382 436,541 436,061 Total liabilities 473,786 505,937 Total Equity and Liabilities 562,752 804,880 Approved by the Board of Directors on 29 March 2004 Liu Chang Suo Zhang Jin Qing Director & General Manager Director & Finance Controller The accompanying notes are an integral part of the financial statements. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in RMB thousands) Note 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 22(a) (19,047) 47,893 Income taxes paid (1,291) (2,727) Interest expenses paid (18,345) (21,901) Net cash generated from operating activities (38,683) 23,265 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (37,447) (137,117) Purchase of intangible assets (65) (2,563) Cash paid for trading investments (4) 0 Proceeds from disposal of subsidiary, net of cash disposed (1,364) 44,440 Proceeds from investment income of trading investments 0 Proceeds from investment income of long-term investments 1 23 Proceeds from disposal of trading investments 7 72 Proceeds from disposal of property, plant and equipment 18,050 21,757 Interest income received 1,479 1,751 Net cash used in investing activities (19,343) (71,637) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid 50 (7,017) Net (decrease) increase in borrowings 22,514 40,636 Proceeds from capital injection of minority shareholder 10,822 Proceeds from acquisition of a subsidiary 0 others (1,900) Net cash generated from financing activities 20,664 44,441 Currency translation difference 20 (11) Net decrease in cash and cash equivalents (37,342) (3,942) Cash and cash equivalents, beginning of year 54,131 58,073 Cash and cash equivalents, end of year 22(b) 16,789 54,131 The accompanying notes are an integral part of the financial statements. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2003 (All amounts in RMB thousands) Reserves Statutory Unappro-priated Total Translation Statutory public profits Share capital Capital reserve Total reserves shareholders’ reserve surplus reserve welfare (accumulated equity reserve losses) (Note19) Note(20(a)) Note(20(b)) Note(20(b)) Balance as of 1 January 2003 - As previously reported 266,071.00 59.00 197,088.00 14,511.00 7,255.00 -207,262.00 11,651.00 277,722.00 - As reported 266,071.00 59.00 197,088.00 14,511.00 7,255.00 -207,262.00 11,651.00 277,722.00 Currency translation difference Net loss for 2003 -209,398.00 -209,398.00 -209,398.00 Pricing difference associated with related party 4,074.00 4,074.00 4,074.00 transactions Profit appropriations - Appropriations to reserves by subsidiaries 31.00 16.00 -47.00 - Dividends (Note 7) Balance as of 31 December 2003 266,071.00 59.00 201,162.00 14,542.00 7,271.00 -416,707.00 -193,673.00 72,398.00 The accompanying notes are an integral part of the financial statements.