长虹美菱(000521)皖美菱Ｂ2004年年度报告摘要（英文版）

Hefei Meiling Co., Ltd. Summary of Annual Report 2004 §1. Important Notice 1.1 Board of Directors of Hefei Meiling Co., Ltd. (hereinafter referred to as the Company) and its directors individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions nor errors which would render any statement misleading. The summary of annual report 2004 is abstracted from the 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 Name list of Director having not attended the meeting Name of Directors having not Reason Assignee’name attended the Board meeting Gu Chujun Business trip Lin Ke 1.4 Shenzhen Pengcheng Certified Public Accountants Ltd. and Morison Heng Chartered Accountants Certified Public Accountants produced an unqualified Auditors’Report for the Company. 1.5 Chairman of the Board Mr. Gu Chujun, Vice-president Mr. He Jinqi and Secretary of Financial Dept. Mr. Zhong Weiyi hereby confirm that the Financial Report of the Annual Report is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock MEILINGDIANQI, WANMEILING-B Stock code 000521, 200521 Listed stock exchange Shenzhen Stock Exchange Registered address and office address Registered address: No.48, Wuhu Road, Hefei Office address: No.48, Wuhu Road, Hefei Post code Post code of registered address: 230001 Post code of office address: 230001 Internet web site of the Company http://www.meiling.com E-mail of the Company info@meiling.com 2.2 Contact person and method Securities Affairs Secretary of the Board Representative Name Xue Hui Qi Dunwei Contact address No.48, Wuhu Road, Hefei No.48, Wuhu Road, Hefei Telephone 86-551-2869394 86-551-2869394 Fax 86-551-2883122 86-551-2883122 E-mail wyxuehui@163.com secretary@meiling.com 1 §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB Increase/decrease 2004 2003 2002 over last year（％） Income from main operations 1,438,633,867.16 1,383,809,999.35 3.96% 1,261,882,198.34 Total profit 17,161,709.91 -197,834,320.80 108.67% 8,107,604.25 Net profit 16,767,740.47 -194,656,073.42 108.61% 8,107,604.25 Net profit after deducting 1,172,465.97 -180,929,418.47 100.65% 6,426,304.50 non-recurring gains and losses Net cash flow arising from 147,849,150.81 94,306,265.23 56.78% 64,391,468.34 operating activities Increase/decrease At the end of At the end of At the end of from the end of 2004 2003 2002 previous year（％） Total assets 2,357,408,266.18 2,245,189,884.42 5.00% 2,300,035,010.32 Shareholder’s equity (excluding 856,947,103.22 840,931,946.31 1.90% 1,035,388,019.73 minority interests) 3.2 Major financial indexes Unit: RMB Increase/decrease over 2004 2003 2002 last year（％） Earnings per share 0.04 -0.47 108.51% 6.15 Earnings per share (note) 0.04 - - - Return on equity 1.96% -23.15% 25.11% 0.78% Return on equity as calculated based on net profit after deducting non-recurring gains 1.37% -21.52% 22.89% 0.79% and losses Net cash flow per share arising from 0.36 0.23 56.52% 0.16 operating activities Increase or decrease At the end At the end At the end from the end of of 2004 of 2003 of 2002 previous year（％） Net assets per share 2.07 2.03 1.97% 2.50 Net assets per share after adjustment 1.22 1.30 -6.15% 1.92 Note: Earnings per share was calculated based on new share capital if share capital was changed from the end of the report period to disclosure date of the report. Items of non-recurring gains and losses √Applicable □Inapplicable Unit: RMB Items of non-recurring gains and losses Amount Income form purchasing of capital 188,643.62 2 Net income from penalty 40,535.21 Income from subsidy 2,862,000.00 Switching back provision for losses from falling price of inventories of 2,102,030.98 the report period Net losses from disposal of fixed assets -68,621.44 Donation expenditure -50,796.87 Penalty expenditure -704.00 Income from transfer of share equity -30,000.00 Total 5,043,087.50 3.3 Difference of net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Unit: RMB CAS IAS Net profit 16,767,740.47 28,432,000.00 Net profit as of year 2004 As restated after PRC statutory financial statements 16,767 IFRS adjustments: Provision for maintenance expenses 2,899 Explanation on the difference Remeasurement of financial assets in according with IAS 39 7,656 Depreciation of fixed assets (3,084) Other (4,194) As report under IFRS 28,432 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital Unit: share Before the Increase / decrease in this After the change time (+, -) change Other Subtotal I. Unlisted Shares 1. Sponsors’shares 126,982,650 -82,852,683 -82,852,683 44,129,967 Including: State-owned 123,396,375 -82,852,683 -82,852,683 40,543,692 share Domestic legal person’s 3,586,275 0 0 3,586,275 shares Foreign legal person’s 0 0 0 0 shares Others 0 0 0 0 2. Raised legal person’s 22,029,973 0 0 22,029,973 shares 3. Inner employees’shares 0 0 0 0 3 4. Preference shares or 0 82,852,683 82,852,683 82,852,683 others Total unlisted shares 149,012,623 0 0 149,012,623 II. Listed Shares 1. RMB ordinary shares 151,530,326 0 0 151,530,326 2.Domestically listed 113,100,000 0 0 113,100,000 foreign shares 3. Overseas listed foreign 0 0 0 0 shares 4. Others 0 0 0 0 Total listed shares 264,630,326 0 0 264,630,326 III. Total shares 413,642,949 0 0 413,642,949 The amount of shares offered by funds, inner employees’shares traded in the counter, shares offered by strategic investor and shares offered ordinary juridical person should be disclosed respectively □Applicable √Inapplicable 4.2 Statement of shares held by the top ten shareholders Total number of shareholders at the end of report year 89,832 Particulars about shares held by the top ten shareholders Number Nature of Increase / Holding Type of shares of share shareholders decrease in shares 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) GUANGDONG GREENCOOL Non-circulating ENTERPRISE DEVELOPMENT CO., 82,852,683 82,852,683 20.03% 0 Other LTD. HEFEI MEILING (GROUP) HOLDINGS Non-circulating 0 State-owned -82,852,683 40,543,692 9.80% CO., LTD. shareholder FANG JING WEN 534,000 2,203,300 0.53% Circulating Foreign shareholder YONGSHENG INDUSTRIAL CO., LTD. 29,000 2,109,000 0.51% Circulating Foreign shareholder HEFEI INDUSTRIAL BANK 0 1,707,750 0.41% Non-circulating Other HEFEI REFRIGERATOR FITTINGS Non-circulating 1,707,750 0.41% Other FACTORY HEFEI AGENCY OF ANHUI Non-circulating 1,536,975 0.37% Other AGRICULTURAL BANK INTERNATIONAL BUSINESS DEPT. OF Non-circulating ANHUI INDUSTRIAL AND 1,536,975 0.37% Other COMMERCIAL BANK ANHUI PROVINCE TECHNOLOGY Non-circulating 1,536,975 0.37% Other IMPORT & EXPORT CORPORAT ION CHINA CINDA ASSETS Non-circulating 1,536,975 0.37% Other MANAGEMENT COMPANY 4 Particulars about shares held by the top ten shareholders of circulation share Number of circulation shares held at Type (A-share, B-share, H-share Name of shareholder (full name) the year-end and others) FANG JING WEN 2,203,300 B-share YONGSHENG INDUSTRIAL CO., LTD. 2,109,000 B-share HUANG GUO QIANG 1,488,000 B-share LI XOXONG 1,450,000 B-share CAO SHENGCHON 1,376,000 B-share LONG QIN FANG 1,341,962 B-share HEFEI MEICHENG ABSORBING PLASTIC CO., LTD. 1,305,300 A-share CHEN YI QING 976,559 B-share XIAO YANMEI 811,805 B-share SUPER WIDE INTERNATIONAL LIMINTED 808,000 B-share Among the top ten shareholders, there existed no associated relationship among Guangdong Greencool Enterprise Development Co., Ltd., Hefei Meiling (Group) Holdings Co., Ltd. and other legal person’s shareholders or belong to the concerted actors as Explanation on associated relationship specified in the Measures for Controlling Information Disclosure of Alternation in the among the top ten shareholders or Shares Held by Shareholders in Listed Companies; as the Company has no idea on whether concerted action there exists any business relationship among other shareholders of circulating shares or they belong to the concerted actors as specified in the Measures for Controlling Information Disclosure of Alternation in the Shares Held by Shareholders in Listed Companies. 4.3 Particulars about the controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in the controlling shareholders and actual controller of the Company √Applicable □Inapplicable Name of new controlling shareholder Guangdong Greencool Enterprise Development Co., Ltd. Name of new actual controller Gu Chujun Date of change Date of change of new controlling shareholder: Feb. 27, 2004 Date of change of new controller: Feb. 27, 2004 Publication date and newspaper of the Securities Times and Ta Kung Pao dated Mar. 2, 2004 change of controlling shareholder Publication date and newspaper of the Securities Times and Ta Kung Pao dated Feb. 27, 2004 change of new actual controller 4.3.2 Introduction of especial situation for the controlling shareholder and other actual controller Guangdong Greencool Enterprise Development Co., Ltd. was funded on Oct. 22, 2001; the registered address was 8/F, Rongshan Mansion, Shunde District, Foshan, Guangdong Province with the registered capital amounting to RMB 1,200,000,000; business scope was development, production and sales: refrigerating plant, freon-free refrigerant; research and development of the refrigerating technology; development, 5 production and sales of computer and broadband net equipment. Guangdong Greencool Enterprise Development Co., Ltd. was jointly invested and established by Mr. Gu Chujun and Greencool Cryogen (China) Co., Ltd, of which, Mr. Gu Chujun held 60% of share equity and Greencool Refrigerant held 40% of share equity. Greencool Cryogen (China) Co., Ltd. is foreign enterprise, which was invested and established by British Virgin Islands GCT Investment Co., Ltd. according to approval of Tianjin Municipal People’ s Government in Tianjin dated Mar. 3, 1995 (Mr. Gu Chujun owned the absolute controlling share right of British Virgin Islands GCT Investment Co., Ltd.). Registered capital of Greencool Cryogen (China) Co., Ltd. is USD 150 million, and business scopes include: Gu’ s cryogen, various replacers of CFC, new-style cryogen, hot-dynamical medium, hot-circle medium and development, production and sales of raw materials of the said products; auxiliary equipment, application equipment, development, production and sales of the above products. Mr. Gu Chujun, graduated from Tianjin University with Engineering Master Degree. The inventor and patent owner of Guangdong Greencool Cryogen and founder of Greencool Group. Chairman of the Board of Guangdong Greencool Enterprise Development Co., Ltd., Greencool Cryogen (China) Co., Ltd. and Yangzhou Yaxing Motor Coach, cha irman of the Board of Guangdong Kelon Electric Appliance and Greencool Technology Holdings Co., Ltd.. Mr. Gu Chujun accumulated a wealth of experience over 20 years in refrigeration engineering and cryogen industry. Before establishment of Greencool, he ever taught at Tianjin University, actively participated in and researched thermodynamics and refrigeration engineering, and now is in charge of chairman of the Board of the Company. 4.3.3 Property right and controlling relationship between the actual controller of the Company and the Company is as follows: 6 MR.GU CHUJUN 60% GCT INVESTMENT CO., LTD. 100% 60% GREENCOOL CRYOGEN (CHINA) CO. 40% GUANGDONG GREENCOOL ENTERPRISE DEVELOPMENT CO. LTD. 20.64% 20.03% GUANGDONG KELON CO., LTD. HEFEI MEILING CO., LTD. §5. Particulars About Directors, Supervisors, Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Shares held Shares held Change of Name Title Sex Age Office term at at holding period-end period-begin share Chairman of the Gu Chujun Male 46 Jul. 5, 2003 till now 0 0 0 Board Vice Chairman of Wang Jiazhang Male 54 M ay 18, 2002 till now 13,477 13,477 0 the Board Li Shijun President Male 50 Jul. 5, 2003 till now 0 0 0 Cheng Executive Male 39 Jul. 5, 2003 till now 0 0 0 Xiangzhou director He jinqi Vice-president Male 42 Jul. 5, 2003 till now 0 0 0 Xue Hui Vice-president M ale 42 Jul. 5, 2003 till now 0 0 0 Liu Ke Director Male 42 Jul. 5, 2003 till now 0 0 0 Jiang Jizhi Director Male 58 Aug. 8 2003 till now 0 0 0 Huo Yongxin Director Male 35 Jul. 5 2003 till now 0 0 0 Independent Wei Wei Male 50 May 18, 2002 till now 0 0 0 director 7 Independent Zhuo Wenyan Male 67 May 18, 2002 till now 0 0 0 director Independent Wu Hanhong Male 48 Aug. 8 2003 till now 0 0 0 director Chairman of the Li Weimin Supervisory Male 38 Jun. 19, 2003 till now 0 0 0 Committee Jing Xing Supervisor Male 51 Jul. 5, 2003 till now 0 0 0 Yong Fengshan Supervisor Male 37 Jul. 5, 2003 till now 0 0 0 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment Name of Shareholding Title in Shareholding Name Office term from the Shareholding Company Company Company (Yes / No) Guangdong Greencool Gu Chujun Enterprise Development Co., Chairman of the Board Oct. 22, 2001 to now No Ltd. Hefei Meiling (Group) Wang Jiazhang Chairman of the Board May 18, 2002 to now Yes Holdings Co., Ltd. Hefei Meiling (Group) Director, Deputy Jiang Jizhi May 18, 2002 to now Yes Holdings Co., Ltd. General Manager Hefei Meiling (Group) Director, Deputy Jul. 8, 2003 to Yong Fengshan Yes Holdings Co., Ltd. General Manager now 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual remuneration RMB 3,905,500 Total annual remuneration of the top three RMB 1,322,100 directors drawing the highest payment Total annual payment of the top three senior RMB 1,503,300 executives drawing the highest payment Allowance of independent director RMB 60,000 per person/ year Other treatment of independent directors Naught Name of directors and supervisors receiving no Gu Chujun payment or allowance from the Company Range of remuneration Number of persons RMB 750,000 to RMB 800,000 1 RMB 600,000 to RMB 650,000 1 RMB 300,000 to RMB 400,000 6 RMB 50,000 to RMB 100,000 6 8 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period Year 2004 was the first development year of the Company after reformation, as well as the most important year. Over the past year, the external macro environment occurred a great change: the price of the main raw materials such as chemical industry, steels and plastic has increased by a big range; price- falling of products in the refrigeration industry caused the price of refrigeration in the midseason reached the lowest in the recent years; the industry competition was very furious and the brand continually integrated, which cause the concentricity of brand has enhanced further. Under the said situation such new macro enviroment, the Company carried through the instructions of the Board with a firm hand, and adjusted business strategy and operating mechanism timely, reinforced internal reformation and management, tightly seized the opportunity from the market adjustment and active ly used the various policies so as to realize quickening of the development step under adjustment and the great development in the fierce market competition. 1. To enhance development of new products with technology as precursor The Company conducted a mass of input in respects of technology renovation and produtcs development such as energy-saving, silent, network, frequency conversion, environment protection and anti-bacteria, and designed and developed series middle- and high- grade products such as zoology with series of Terminator A++ as representative, A++, 8B energy-saving and 7AK electron-control, and put in the market and obtained the achievement. 2. To seize the opportunity of international market development and promote development of enterprise with export The Company organized and took part in the large-scale international appliance exhibition and China Export Commodities Fair in spring and autumn respectively for five times, actively promoted “Meiling”products and “Meiling”image, and achieved the better effect. In the last year, markets in Middle East and Africa also became a new economic growth points except that Europe market continually increased by a big margin, and two markets increased over 100%. 3. To advance the sales proporation of the middle- and high- grade products with energy-saving products as breach The Company advanced the sales proporation of middle- and high- grade “Meiling” products with product of Terminator A++ as development point of brand promotion and with re-entry high- grade level as tenet. Through such measures as strengthening communication and cooperation with the professional large-scale chain stores, intensifying specialty training of salespersons and reinforcing terminal sales capability, the Company increased the sales proportion of middle- and high-grade products so as to advance the brand value of “Meiling”. 4. To conduct construction of export base and enlarge production scale of the Company In order to use the current resources in full, the production line project of output of 600,000 sets invested and set up by the Company has been put into production 9 according to the Company’ s interim development tactic and the requirement of increase of export market, which layed solide foundation for the development of the Company in the new year. 5. To continualy implement biding and purchasing of materials and reduce cost of products The Company and Kelon Company jointly implemented the full-scale biding and purchasing for materials of year 2004, and greatly saved purchasing capital. Althrought the international enviroment was changed later, but the rising of price of the partial raw materials fetched the largish pressure to biding and purchasing. 6. To strengthen plan and budget management and standardize management mechanism of business running The Company established new monthly running mode of business plan, formed the plan and management system through three- lay plan and work mode such as coordination meeting of production and marketing, communication meeting of production plan and operation plan meeting of the Company, and laid stress on reinforcing supervision and checking of the operating plan. The Company set up the full-sided budget management system for the first time, and conducted the budget and analysis for all expenses of next month at the beginning of the month, performed registration in advance and canceling after verification for all expenses, knew the situation of expenses occurred in the current month, and at the same time, carried out the strict examination and approval system for every expense, controlled expenditure and primarily formed the budget management system. 7. To promote work of reduction of cost and development activities of revenue-enhancing and expenditure control and improve economic benefit of the Company Through the Company’ s effort, communication with Kelon Company and technology renovation and improvement of design, the Company reduced the cost of products. The consuming quota of single set auxiliary materials has greatly reduced through strengthening the control to consuming of auxiliary materials; increased liquidation and receiving of accounts receivable, for accounts receivable of products sold in domestic market was fully conducted liquidation, evaded risk of operation; the profit from waste reclaim has increased by a large margin compared with the same period of through the several methods such as advancing price and bidding; the 6th government bonds has obtained the discount government loans. Due to the efficient measures taken, the Company gained the great achievement in operation and development, which bulit up stick basis to get more improvement of the Company next year. In 2004, the sales volume of refrigerators (freezers) increased by 20.6% compared with the last year, of which the export increased by 63.2% year-on-year. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 10 Main operations classified according to industries Classified according to Income from Cost of main Gross Increase/decrease Increase/decreas Increase/decrease industries or products main operations operations profit in income from e in cost of main in gross profit ratio ratio (%) main operations operations over over the last year over the last year the last year (%) (%) (%) Manufacture of daily 143,840.14 114,974.88 20.07% 13.35% 8.32% -3.72% appliances Including: related 0.00 0.00 0.00% 0.00% 0.00% 0.00% transactions Main operations classified according to products Refrigerators (freezer) 143,840.14 114,974.88 20.07% 13.35% 8.32% -3.72% Including: related 0.00 0.00 0.00% 0.00% 0.00% 0.00% transactions Pricing rules of related In the report period, the Company did not sell products and provide labor service to the controlling shareholder and transactions its subsidiaries. Necessity and durative In the report period, the Company did not sell products and provide labor service to the controlling shareholder and of related transactions its subsidiaries. Including: total amount of related transactions that the listed company sold products or provided labor service to the controlling shareholder and its subsidiaries was RMB 0.00 in the report period. 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Areas Income from main Increase/decrease in income from main operations operations over the last year (%) Domestic 109,329.96 9.85% Overseas 34,534.43 49.50% 6.4 Particulars about the customers of purchase and sale Unit: RMB’0000 Total amount of purchase of Proportion in the total 26,829.00 23.33% the top five suppliers amount of purchase Total amount of sales of the Proportion in the total 11,472.13 7.97% top five sales customers amount of sales 6.5 Operation of share-holding companies □Applicable √Inapplicable 6.6 Explanation on reasons of material changes in main operations and its structure □Applicable √Inapplicable 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) than that in the last year □Applicable √Inapplicable 11 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year √Applicable □Inapplicable In the report period, the Company adjusted products structure and enhanced development of new products, the sales income from products increased by a big margin; and at the same time, the strengthened the control of operating expenses, which was reduced by 26.25% compared with the last year; furthermore, the balance of accounts receivable decreased by a big margin, withdrawal of the reserve for bad debts correspondingly decreased, which cause Management expense decrease by 54.55% compared with the last year. The Company’ s operating achievement and profit increased by RMB 16.76 million compared with the last year. 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 □Applicable √Inapplicable 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds □Applicable √Inapplicable Particulars about the changed projects □Applicable √Inapplicable 6.13 Application of the proceeds not raised through shares offering √Applicable □Inapplicable RMB’0000 Names of projects Amount of projects Progress of projects Earnings of projects Investment of fixed assets 3,012.00 Completed - Construction in progress 1,447.00 85% - Total 4,459.00 - - 6.14 Explanation of the Board of Directors on the “Qualified Opinion”made by the Certified Public Accountants □Applicable √Inapplicable 12 6.15 Business plan as of the next year of the Board of Directors √Applicable □Inapplicable In 2005, with the operating and guiding idea of “closing to the market, pulling products, promoting management, profit oriented”as the core, the Company would further change and adjust mind, operating concept and management measures, strive for constructing objective system, planning system, budget system, responsibility system, cost accounting system, assessment system and operating safeguard system. The Company actively guided the staff to fulfill obligations, improve professional level, management level and operating capabilities, creatively develop various work, and realize operating objected proposed by the Board. 1. Return of domestic-sales brand, increase of export volume and efficiency. Adjust product structure of domestic sales, strengthen product image at middle and high level: adopt strategy of products at middle and high price level, take market shares to pull and promote market position of products, and guarantee certain objective profit. When increasing export volume, pursue to maximization of profit. 2. Adjust sales strategy and reorganize domestic sales market. Reorganize sales internet roundly, adopt product sales strategy of “break out high-price products, enlarge middle-price products and keep low-price products”. Further improve sales proportion of middle and high price products. 3. Speed up export rate of internationalization and propel enterprise development effectively. The Company used export basis to enlarge productivity, grasped good chance that international market increased big space, facilitated powerful international distributor and special manufacture, and improved export volume in international market. 4. Speed up technology research step and promote product development capabilities. Improve research and development qualities of the team based on stabilizing excellent talents, dominating point of refrigeration technology with environmentalism, energy-saving, silent, appearance as main breakthroughs for research and development; oriented by the market, with quick reaction means, attain to the objectives of adapting to the need of market changes, decreasing design costs and improving production efficiency; shorten design and input circle life of developing new product and improving products, and enhance competitive edge of Meiling products depending on speed. 5. Extrude cost management, strengthen mind of increasing income, and develop cost-falling activities. Establish pricing and accounting models of products, further control expenditures and decreasing consumption; reinforced assessment and analysis of various control, emphasized analysis and management of various ration, develop every item of saving activities correspondingly; and consummated management system of expense registered and cancelled after verification. Establish profit-oriented planning budget management pattern to help planning and budget to get more closer to the market and the fact. 6. Optimizing human resources and improve implementation capabilities. Continually optimizing human resources structure and enhancing whole qualities of human resources; designed staff professional planning and strengthened professional training. 13 Dissolve key achievement index of mangers and draw up post assessment measures. Develop consistent management activities with improving professional level as the objective, enhance professional capability of staff, and reinforced capability of fulfilling functions and cooperation. Profit estimation of the new report year □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors □Applicable √Inapplicable The Company did not appropriate share distribution preplan though the Company achieved the profit in the report period √Applicable □Inapplicable The reasons why the Company did not appropriate share distribution Usage and plan of preplan though the Company achieved the profit in the report period undistributed profit Since there incurred a loss in the operation in 2001 and 2003, at present Offsetting losses the accumulative retained profit was RMB –413,354,873.01. Thus, the Company decided neither to distribute profits nor convert reserve into share capital in 2004. The profit distribution plan would be carried out after losses offsetting. §7. Significant Events 7.1 Purchase of assets √ Applicable □ Inapplicable Unit: RMB’0000 Assets Debts and Contribution to net ownership Liabilities profit of the Company Transaction The assets Date of Purchase Related Explain involved in involved in of the assets purchased parties purchased purchase price transaction principle of the assets the assets from the year-beginning or no pricing transferred transferred to the date of purchase or not or not Hefei Confirmed No Yes Meiling based on Land-using Dec. 28, Group 41,889.26 0.00 Yes evaluation right 2004 Holdings price Co., Ltd. 7.2 Sales of assets √ Applicable □ Inapplicable Unit: RMB’0000 Transaction The assets Date of Contribution Profit Assets Debts and Sale price parties sold sale to net profit of or ownership Liabilities 14 the Company loss Related Explain principle of involved involved of the assets from transaction pricing in the in the sold from the sale or no assets assets year-beginning transferred transferred to the date of or not or not sale Hefei Meiling Accounts Dec. 28, Group 41,889.26 0.00 0.00 Yes Based on book value Yes Yes receivable 2004 Holdings Co., Ltd. 7.1, 7.2 Influence on consistence of business and stability of managers caused by the issues interfered in purchase and sale Under present circumstance, current factory layout of the Company was not reasonable to meet the need of high-efficiency operation of modern enterprises. The Company decided to implement whole removal, establish brand-new “Meiling Inudstrial Park” and improve operating benefits in essence. After the transaction, production scale of the Company would be further enlarged, which solidified basis for improving production efficiency of enterprise, complied with long-term development planning, and meanwhile quality of partial assets of the Company would be further optimized to realize health and sustainable development of enterprise and protect interest of the Company and middle and small shareholders. 7.3 Important guarantee √ Applicable □ Inapplicable Unit: RMB’0000 Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries) Guarantee Name of the Date of happening Complete Amount of Guarantee for related Company (date of signing Guarantee term Implementation guarantee type party (yes or guaranteed agreement) or not not) Total amount of guarantee in the report period 0.00 Total balance of guarantee at the end of the report period 0.00 Guarantee of the Company for the controlling subsidiaries Total amount of guarantee for controlling subsidiaries in the report period 2,000.00 Total balance of guarantee for controlling subsidiaries at the end of the report 450.00 period Particulars about the external guarantee of the Company (Including the guarantee for the controlling subsidiaries) Total amount of guarantee 2,450.00 The proportion of the total amount of guarantee in the net assets of the 0.00% Company Particulars about the guarantees out of line Total amount of guarantee for other related parties, which the Company or 0.00 controlling shareholders held less than 50% 15 The debts guarantee amount provided for the guarantee of which the 0.00 assets-liability ratio exceeded 70% Proportion of total amount of guarantee in net assets of the Company exceeded No 50% (Yes of No) Total amount of guarantee breaking regulations 0.00 7.4 Significant related transactions 7.4.1 Current related purchase and sale √Applicable □Inapplicable Unit: RMB’0000 Selling products and providing Purchasing products and accepting service to related parties service to related parties Related parties Transaction Proportion in the Transaction Proportion in the amount same kind of amount same kind of transaction amount transaction amount Hefei Meiling Packaging Co., 0.00 0.00% 4,349.98 4.01% Ltd. Anhui Anhong Plastics Co., Ltd. 0.00 0.00% 540.88 0.50% Anhui Anhong Plastics Co., Ltd. 1,776.41 1.23% 0.00 0.00% Total 1,776.41 1.23% 4,890.86 4.50% 7.4.2 Current related credits and liabilities √Applicable □Inapplicable Unit: RMB’0000 Supply funds to related parties Related parties supplied funds to Related parties the Company Occurred amount Balance Occurred amount Balance Hefei Meiling Group Holding Co., 14.67 10,145.54 0.00 0.00 Ltd. Hefei Meiling Washing Machine 0.00 30,917.70 0.00 0.00 Co., Ltd. Total 14.67 41,063.24 0.00 0.00 Including: in the report period, the capital amount the listed company provided to controlling shareholder and its subsidiaries was RMB 146,700 and the balance was RMB 410,632,400. 7.5 Entrusted assets management □Applicable √Inapplicable 7.6 Implementation of commitments √Applicable □Inapplicable By Dec. 31, 2004, the debt owed by Hefei Meiling Group Holdings Co., Ltd. was RMB101,105,300. The debt occurred mainly because the Group Company had acquired the assets of the Air-Conditioner Plant of the Company and equity of the Washing Machine Company and undertaken relevant fund occupation fee. The debt 16 owed by Hefei Meiling Washing- machine Co., Ltd. was RMB309,184,900. The debt occurred mainly due to the current funds investment, payment for raw materals for it made by the Company, as well as the ads fee of the Stock Company shared by it and relevant fund occupation fee it undertook before the Company transferred the equity of Washing Machine Company to Group Company. The 4th Board of Directors of the Company had been actively negociating with Meiling Group and Meiling Washing Machine Company to solve the aforesaid problems of capital occupancy. All related parties had agreed to implement the closing pla n to the debts owed by principal shareholders and their related parties signed in 2001. It is estimated that all debts would be cleaned up in 2005. 7.7 Significant lawsuit and arbitration □ Applicable √ Inapplicable 7.8 Particulars about the performance of obligations of Independent Directors Particulars about the independent directors attending the Board Name of This year times Presence Entrusted Absence Notes Independent of attending the in person presence (Times) Directors Board meeting (times) Wei Wei 6 6 0 0 Zhuo Wenyan 6 6 0 0 Wu Hanhong Aboard due to 6 3 1 2 business trip Particulars about the independent directors proposed different opinions about the relevant matters of the Company □Applicable √Inapplicable §8. Report of the Supervisory Committee In the report period, the Supervisory Committee prudently performed the rights and obligations of supervisors according to the PRC Company Law, the Articles of Association of the Company and relevant laws and regulations and in compliance with the Rules of Procedures for the Supervisory Committee, fully exercised the supervision over the Board of Directors and its members and the senior executives, and played a good role in the standardized operation and sustainable development of the Company. 1. Operation according to the laws In the report period, the Board of Directors conducted operation in a standardized way and seriously implemented various resolutions and authorizations of the Sha reholders’ General Meeting strictly according to the PRC Company Law, Securities Law, Administration Rule for Listed Company, Articles of Association of the Company, and other laws and regulations. The decision- making procedures were scientific and legal. The Supervisory Committee supervised over and checked the procedure of holding, resolutions of the Shareholders’General Meeting and the Board of Directors, implementation of the resolutions of the Shareholders’General Meeting by the Board of Directors, performance of duties of the directors, managers and other senior executives and implementation of the internal management system of the Company 17 and there found no behaviors of breaking laws, regulations and Articles of Association of the Company. The decision- making and operation of related transactions of the significant investment of the Company was disposed in the classified authorization scope through legal decision- making procedure and had not done any harm to the interests of the Company or the shareholders of the Company, especially the minority shareholders. 2. Inspection of the financial status of the Company In the report period, the Supervisory Committee conducted earnest and careful inspection over the Company’ s financial position. In the opinion of the Supervisory Committee, the Company had maintained good financial position, operated the funds with high efficiency, conducted standardized financial management and kept healthy internal system. Shenzhen Pengcheng Certified Public Accountants and Morison Heng Certified Public Accountants had respectively issued standard unqualified Auditors’ Report for the Company’ s Financial Report of 2004, which had truly, accurately and completely reflected the Company’s financial position and operation result. 3. Purchases and sales of assets and related transactions As checked, the Supervisory Committee believed that the related transactions of the significant assets replacement between the Company and Hefei Meiling (Group) Holdings Co., Ltd. in the report period was conducted according to the principle of fairness and obtained the independent opinion issued by relevant agencies. The related transactions had no inside dealings and had not done harm to the interest of any part of the shareholders or caused any loss to the assets of the Company. §9. Financial Report 9.1 Auditor’ s opinion Auditor ’ s opinions : Standard unqualified auditor ’ s opinions 9.2 Financial statement CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2004 Notes 2004 2003 RMB’000 RMB’000 Turnover 3 1,438,884 1,393,196 Cost of sales (1,148,782) (1,157,593) Gross profit 290,102 235,603 Other revenue 3 11,085 7,208 Distribution costs (152,833) (144,294) Administrative expenses (78,897) (129,600) Other operating expenses (1,719) (112,473) Profit/(Loss) from operations 4 67,738 (143,556) Finance costs 6 (38,924) (39,651) Share of results of associates (214) 2,408 18 Profit/(Loss) before taxation 28,600 (180,799) Income tax 8 - (402) Profit/(Loss) after taxation 28,600 (181,201) Minority interests 26 (168) 3,128 Net profit/(loss) for the year 28,432 (178,073) Earnings per share Basic 9 0.07 (0.43) CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2004 Notes 2004 2003 RMB’000 RMB’000 ASSETS Non-currents assets Land use rights 10 473,452 124,216 Property, plant and equipment 11 479,586 494,232 Construction in progress 12 11,088 7,685 Intangible assets 13 117,480 134,460 Interests in associated companies 14 26,218 28,004 Available-for-sale investments 15 30,690 30,690 Amount due from a shareholder 16 70,374 85,221 Amount due from a related company 17 159,437 160,508 1,368,325 1,065,016 Current assets Inventories 18 237,529 188,607 Trade receivables 19 34,645 314,072 Bills receivable 75,599 138,061 Other receivables and prepayments 20 106,679 59,079 Amounts due from related companies 21 445 6,974 Pledged or guaranteed deposits 22 89,476 58,500 Bank balances and cash 22 226,175 196,790 770,548 962,083 Current liabilities Trade payables 369,307 296,185 Bills payable 272,106 204,000 Other payables and accruals 110,376 99,618 Receipts in advance 88,737 104,320 19 Amounts due to related companies 23 1,274 29,126 Amounts due to associated companies 23 18,813 - Provision for warranty 24 12,076 14,975 Borrowings 25 630,190 626,059 1,502,879 1,374,283 Net current liabilities (732,331) (412,200) Total assets less current liabilities 635,994 652,816 Non-current liabilities Borrowings 25 (23,300) (67,910) Minority interests 26 (16,406) (16,298) NET ASSETS 596,288 568,608 CAPITAL AND RESERVES Registered capital 27 413,643 413,643 Reserves 28 856,658 857,410 Accumulated losses (674,013) (702,445) 596,288 568,608 20 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2004 Reserves Statutory Statutory Discretionary Share Capital common public common Accumulated capital reserve reserve funds welfare funds reserve funds losses Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at December 31, 2002 413,643 572,321 65,426 65,643 153,820 (524,372) 746,481 Transfer from waiver of short term loan - 200 - - - - 200 Net loss for the year - - - - - (178,073) (178,073) Balance at December 31, 2003 413,643 572,521 65,426 65,643 153,820 (702,445) 568,608 Share of capital reserve of an associate - (892) - - - - (892) Share of capital reserve of a subsidiary - 140 - - - - 140 Net profit for the year - - - - - 28,432 28,432 Balance at December 31, 2004 413,643 571,769 65,426 65,643 153,820 (674,013) 596,288 21 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2004 2004 2003 RMB’000 RMB’000 Cash flows from operating activities Profit/(loss) before taxation 28,600 (180,799 ) Adjustment for: Amortisation of intangible assets 16,980 17,064 Amortisation of land use rights 3,334 3,334 Construction in progress written off 1,523 - Depreciation 43,423 45,951 Gain on disposal of property, plant and equipment (189) (13 ) Loss on disposal of property, plant and equipment 206 10,359 Loss on disposal of available-for-sale investments 30 - Minority interest (60) - Interest paid 38,924 39,651 Interest income (2,000) (851 ) Provision for impairment loss of amount due from associated company - 1,660 Provision for impairment loss of amount due from a shareholder 705 2,339 Provision for impairment loss of receivables 690 38,186 Provision for impairment loss of inventories - 36,743 Provision for warranty expenses - 975 Share of results of associates 214 (2,408 ) Write-back of provision for warranty expenses (2,899) - Write-back of provision for receivables (4,623) - Operating profit before working capital changes 124,858 12,191 (Increase)/Decrease in inventories (48,922) 43,350 Increase in trade receivables (68,995) (21,316 ) Decrease/(Increase) in bills receivable 62,462 (45,749 ) (Increase)/Decrease in other receivables and prepayments (47,815) 15,160 Decrease in amounts due from related companies 6,529 20,495 Increase/(Decrease) in trade payables 73,122 (83,096 ) Increase in bills payable 68,106 124,000 Increase in other payables and accruals 10,758 23,690 (Decrease)/Increase in receipts in advance (15,583) 31,467 (Decrease)/Increase in amounts due to related companies (27,852) 15,439 Increase in amounts due to associated companies 18,813 - Decrease in provision for loss on guarantee - (55,500 ) Cash generated from operations 155,481 80,131 Interest paid (38,924) (39,651 ) 22 Net cash from operating activities 116,557 40,480 Cash flows from investing activities Interest received 2,000 851 Proceeds on disposal of property, plant and equipment 1,329 4,704 Proceeds on disposal of available-for-sale investments 70 - Purchase of property, plant and equipment (20,572) (5,490 ) Purchase of intangible assets - (1,331 ) Purchase of available-for-sale investments (100) - Payments for construction in progress (14,477) (7,638 ) Interests in associated companies 1,572 286 Decrease in amount due from shareholder 14,142 52,665 Decrease/(Increase) in amount due from a related company 1,071 (32,216 ) Net cash (used in)/from investing activities (14,965) 11,831 Cash flows from financing activities Dividend paid - (2,478 ) Increase in deposits used as collaterals (30,976) (34,500 ) Proceeds from issue of capital reserve 140 - Payment on capital reserve (892) - Proceeds from borrowings 600,690 90,844 Repayments of borrowings (641,169) (61,550 ) Net cash used in financing activities (72,207) (7,684 ) Net increase in cash and cash equivalents 29,385 44,627 Cash and cash equivalents at the beginning of the year 196,790 152,163 Cash and cash equivalents at the end of the year 226,175 196,790 Analysis of cash and cash equivalents at the end of the year Bank balances and cash 226,175 196,790 9.3 Explanation on changes of accounting policy, accounting estimation and settlement compared with the latest annual report □Applicable √Inapplicable 9.4 Contents, correct amount, reason and its influence of significant accounting errors □Applicable √Inapplicable 23 9.5 Explanation on change of consolidated scope compared with the latest annual report □Applicable √Inapplicable Board of Directors of Hefei Meiling Co., Ltd. Apr. 21, 2005 24