方大集团(000055)方大Ｂ2004年年度报告摘要（英文版）

China Fangda Group Co., Ltd. Annual Report 2004 Summary China Fangda Group Co., Ltd. Announcement No. 2005-06 China Fangda Group Co., Ltd. Annual Report 2004 (Summary) §1 Important Declaration 1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. This summary is abstracted from the completed text of Annyytytual Report 2004, for details of the report please go to the complete text. 1.2 This report has been examined and passed by the 18th meeting of the 3rd term of Board. 1.3 Director(s) absented the board meeting Name of the Director Reason of absent Consignee Wan Jianhua Business engagement Shao Hanqing 1.4 The Financial Statements 2004 was audited by Shenzhen Tianjian Xinde CPA and Hong Kong Ho and Ho & Company CPA. They issued the auditor’s report with emphasize on particular issues and standard report without qualified opinion respectively. The Board of Directors and the Supervisory Committee has made particular statement on the report. Investors please be noticed about this. 1.5 Mr. Xiong Jianming, the Chairman, and Mr. Xie Chun, the Financial Principal hereby declares that: The financial statements carried in this annual report are of verity and complete. §2 Company Profile 2.1 Company Profile Stock ID Fangda A, Fangda B Stock Code 000055、200055 Stock Exchange Shenzhen Stock Exchange Registered address: Fangda Building, Kejinan 12th Avenue, High-tech Zone, Shenzhen, PR Registered address China. and office address Head office: Technology Building, Fangda Town, Xili Longjing, Nanshan District, Shenzhen, PRC Post code of registered address：518057 Post Code Post code of offic e address: 518055 Website http://www.fangda.com Email. fd@fangda.com China Fangda Group Co., Ltd. Annual Report 2004 Summary 2.2 Liaison people Secretary of the Board-{}- Representative of Stock Affairs Name Zhou Zhigang Cao Naisi Fangda Town, Xili Longjing, Nanshan Fangda Town, Xili Longjing, Nanshan Address District, Shenzhen, PRC District, Shenzhen, PRC Tel. 86(755) 26788571 ext. 6622 86(755) 26788571 ext. 6622 Fax. 86(755) 26788353 86(755) 26788353 Email. zqb@fangda.com zqb@fangda.com §3 Financial Highlights 3.1 Major accounting data In RMB Yuan 2003 2002 Increase/decrease 2003 2002 2004 Not Not (%) Adjusted Adjusted adjusted adjusted Major business income 623,579,299.99 25.79% 495,718,530.73 425,565,026.33 Gross profit 5,141,589.06 -48.73% 10,028,570.53 117,401,242.93 Net profit 3,266,734.42 -60.98% 8,371,615.97 116,619,414.72 Net profit deducted non-recurring -1,343,616.14 -486.09% 348,006.97 -116,747,375.72 gain/loss Net Cash flow generated by 9,468,649.55 110.11% -93,633,184.31 -37,553,669.00 business operation End of End of Increase/decrease End of 2003 2003 End of 2002 2002 End of 2004 (%) Adjusted Not Adjusted Not adjusted adjusted Gross Assets 1,241,874,249.82 5.41%1,178,115,908.60 1,021,445,651.90 Shareholders’Equity (Exclude 474,456,024.66 -0.92% 478,878,914.73 491,257,998.76 Minority Shareholders’Equity) 3.2 Major financial indices In RMB Yuan 2003 2002 Increase/decrease 2003 2004 Not 2002 Not (%) Adjusted adjusted adjusted Earnings per share 0.01 -66.67% 0.03 -0.40 Net earnings / capital ratio 0.69% -1.06% 1.75% -0.24% Net earnings / capital ratio basing on net profit after deducting of non-recurring -0.28% -0.27% -0.01% -24.64% gain/loss (%) Net Cash flow per share generated by 0.03 109.38% -0.32 -0.13 business operation End of End of End of End of Increase/decrease 2003 End of 2002 2003 2004 (%) Not 2002 Not Adjusted adjusted adjusted Net asset per share 1.60 -1.23% 1.62 1.66 Net asset per share, adjusted 1.44 -5.88% 1.53 1.65 China Fangda Group Co., Ltd. Annual Report 2004 Summary Non-recurring gain and loss items √ applicable □ not applicable In RMB Yuan Non-recurring gain and loss items Amount Bad debt provision written back 2,273,655.94 Government allowance income 64,137.00 Short-term inventory impairment provision written back 970,643.63 Other non-business gains 3,507,632.22 Other non-business expenditures -2,205,718.23 Total 4,610,350.56 3.3 Diversity between the international and domestic accounting standards √ applicable □ not applicable In RMB Yuan Domestic Accounting Standard Overseas accounting standard: Net profit 3,266,734.42 4,906,730.00 RMB’000 Statement Net profit audited by Shenzhen Tianjian Xinde 3,266.73 about the CPAs diversity 1) Property, plant and equipment depreciation -79.00 2) Amortizing of negative goodwill 740.00 3) Amortizing of opening expense 979.00 Net profit audited by Ho and Ho & Company CPAs 4,906.73 Domestic Accounting Standard Overseas accounting standard: Shareholders’ 474,456,024.66 537,479,020 equity RMB ‘000 Stockholders’equity audited by Shenzhen Tianjian Xinde CPAs 474,456.02 （1）Interests capitalization of constructed projects 4,547.00 Statement （2）Depreciation of property, plant and equipment -107.00 about the diversity （3）Assessed appreciation surplus of invested estate – Fangda Mansion 55,993.00 （4）Expanse of negative business credit 2,590.00 Stockholders’equity audited by Ho and Ho & Company CPAs 537,479.02 China Fangda Group Co., Ltd. Annual Report 2004 Summary §4 Changes in Share Capital & Particulars about Shareholders 4.1. Statement of Changes in Shares in Share Before the changeChanged (+,-)After the changed Sub-total I. None negotiable shares 1. Promoter’s shares 109,032,000 0 109,032,000 Incl. State-owned shares 0 0 0 Domestic legal person shares 109,032,000 0 109,032,000 Overseas legal person shares 0 0 0 Others 0 0 0 2. Legal person shares placed 0 0 0 3. Employees’shares 0 0 0 4. Preference shares or others 0 0 0 Total of non-negotiable shares 109,032,000 0 109,032,000 II. Negotiable shares 1. Common shares in RMB 42,000,000 0 42,000,000 2. Foreign shares in domestic market 145,368,000 0 145,368,000 3. Foreign shares in overseas market 0 0 0 4. Others 0 0 0 Total of negotiable shares 187,368,000 0 187,368,000 III. Total of capital shares 296,400,000 0 296,400,000 Shares allotted from foundations, employees’shares traded on site, shares allotted to strategic investors, and shares allotted to common legal persons shall be presented their amount. □applicable √ not applicable 4.2 Top Ten Shareholders and Top Ten Negotiable Share Holders Total shareholders at the end of the 40,890 report period Top Ten Shareholders Changed in the Shares held at the end Proportion Class of share Pledged or Property of Full name of shareholder year of report term % frozen shareholder Banglin 0 60,000,000 20.24%Non-negotiable 60,000,000Others Shilihe 0 47,112,000 15.90%Non-negotiable 47,112,000Others Jikang 0 21,007,000 7.09%Negotiable 0Foreign shares Weng Yingwen 1,083,285 2,158,000 0.73%Negotiable 0Foreign shares Chen Jinbiao 2,029,300 2,029,300 0.69%Negotiable 0Foreign shares Shenzhen Shekou Yu’er 0 1,920,000 0.65%Non-negotiable 1,920,000Others Industrial Co., Ltd. Wang Chanjuan 1,340,600 1,886,100 0.64%Negotiable 0Foreign shares Li Hanbo 909,700 909,700 0.31%Negotiable 0Foreign shares Chen Xizhen 736,400 736,400 0.25%Negotiable 0Foreign shares HOWARD JOHN LOEWEN -186,400 549,354 0.19%Negotiable 0Foreign shares China Fangda Group Co., Ltd. Annual Report 2004 Summary Top Ten Shareholders of Negotiable Shares Full name of shareholder Negotiable shares held at the end of report term Share categories (A, B, H or others) Jikang 21,007,000B shares Weng Yingwen 2,158,000B shares Chen Jinbiao 2,029,300B shares Wang Chanjuan 1,886,100B shares Li Hanbo 909,700B shares Chen Xizhen 736,400B shares HOWARD JOHN LOEWEN 549,354B shares Zhang Hanlin 495,200B shares Li Meifang 487,776B shares THE MTBJ LTD AS TRUSTEE FOR UFJ PARTNERS 455,320B shares MAINLAND CHINA FUND Notes to relationship or “action in Note: Among the top 10 shareholders, Banglin and Onforce are under the same controlling shareholder, therefore they are regarded as related parties. As for the other holders of current concert”among the top ten shares, the Company has not been informed any situation of related parties or concerted shareholders. operators. 4.3 Change in Controlling Shareholder and the Actual Controller 4.3.1 Change in Controlling Shareholder and the Actual Controller □applicable √ not applicable 4.3.2 Particulars about Controlling Shareholder and the Actual Controller Shenzhen Banglin Technologies Development Co., Ltd. is holding 20.243% of the shares of the Company. It is the controlling shareholder of the Company. Banglin was incorporated in June 7th 2001 with capital of RMB30 million. The promoters are nature person. Chairman Xiong Jianming is the legal representative of Banglin and takes 85% of the capital shares. The company is involved in investment of industries, technical development of electronics, technical consulting service, domestic business, and goods supplying. Mr. Xiong Jianming is Chinese nationality. He posses no resident permit of any other country. He has been the chairman and president of the Company for past 5 years. 4.3.3 Controlling relationship chart Xiong Jianming 85% Shenzhen Banglin Technologies Development Co., Ltd. 20.243% China Fangda Group Co., Ltd. China Fangda Group Co., Ltd. Annual Report 2004 Summary §5 Directors, Supervisors and Senior Executives 5.1 Changes in Shares Held by Directors, Supervisors and Senior Executives Shares held at Shares held at the Name Position SexAge Job term the beginning Cause of change end of term of term Xiong Jianming Chairman, president M 472002.4.27 - 2005.4.27 31,500 31,500- Director, Vice Zhu Weiping M 462002.4.27 - 2005.4.27 4,200 4,200- president nd Director, Vice Wang Shengguo M 462002.4.27 - 2005.4.27 11,100 4,200Purchased in 2 president market Xiong Jianwei Director M 362002.4.27 - 2005.4.27 0 0- Wan Jianhua Independent Director M 482002.4.27 - 2005.4.27 0 0- Shao Hanqing Independent Director F 662002.4.27 - 2005.4.27 0 0- Niu Hanben Independent Director M 642002.4.27 - 2005.4.27 0 0- Hoster of the Li Bangyan Supervisory M 402002.4.27 - 2005.4.27 0 0- Committee Song Wenqing Supervisor M 432003.9.11 - 2005.4.27 0 0- Zhen Hua Supervisor F 452003.9.11 - 2005.4.27 0 0- Yang Xiaozhuan Vice President M 502004.2.19 - 2005.4.27 0 0- Secretary of the Zhou Zhigang M 432003.10.22 - 2005.4.27 0 0- Board 5.2 Directors and supervisors taking positions in the shareholding parties √ applicable □ not applicable Name of the Get remuneration or Name Job taken Job term shareholder not Xiong Jianming Banglin Chairman 2001.6.7 -Present No Xiong Jianming Jikang Chairman 2001.3.23 -Present No Zhu Weiping Shilihe Chairman Aug. 24th 2003 - Present No Vice Chairman, Wang Shengguo Shilihe Aug. 24th 2003 - Present No GM Xiong Jianwei Shilihe Director Aug. 24th 2003 - Present No Song Wenqing Shilihe Director Aug. 24th 2003 - Present No 5.3 Annual rewards of Directors, Supervisors and Senior Executives In RMB 10 thousand Yuan Total of annual reward 198.22 Top 3 directors 102.18 Top 3 managements 102.18 10K/person,ye Allowance of Independent Director 6.00 ar Other expenses of Independent Directors: None Directors and supervisors not taking rewards from Independent director Shao Hanqing, Niu Hanben and Wan the Company Jianhua are not taking remuneration from the Company. Reward distribution Number of person 300,000 or over 1 200,000— — 300,000 6 100,000— — 200,000 1 China Fangda Group Co., Ltd. Annual Report 2004 Summary §6 Report of the Board 6.1 Overall business situation in the report term (1) Analyses of Financial Data In the report term, the Company realized sales income of RMB623, 579,300 which increased by 25.79% over the previous year. Fangda Decoration Engineering Co., Ltd. (Fangda Decoration) contributed remarkably by sales income of RMB410, 874,100 which increased by 63.51% over the previous year. The sales of multi-layer and single layer aluminium board, profiled aluminium products have increased significantly by 27.49% and 11.77% respectively. Uner the pressure of price increasing of major materials, the gross profit ratio has increased by 6.38% over the previous report term. In the report term, the major business range and structure has not been changed. The major products were still glass outer wall, aluminium board and profiled aluminium products. Developing of new high-tech products was enforced as well. In the report term, by insisting on the management strategy of “innovation as source and technology as base”, under the leading of of the Board of Directors and the leadership group in the Company, all the work were ruly operated according to the scheduled managing targets early this year. In the reaport term, three large industries, namely, new-type construction materials, electronic -mechanism equipment and semi-conductor and lighting production, developed quite well. The main income and profit was still from new-type construction materials in the report term. The 2nd section of the construction of semi-conductor and lighting production has been finished and the product has been produced and sold in large scale. The localization process of core technology of electronic -mechanism equipment was smooth. In the report term, although the market competition of the Company’s products was more stinging, through together efforts of all the staff, the Company realized income of RMB 623,579,300 from main business, which was 35.83% higher than that of last year. The sales volume of aluminum-plastic plate and aluminum single plate and aluminum profiled materials increased in various degrees, which were respectively 27.49% and 11.77% higher. In the report term, the Company realized income of RMB 14,676,700 from other business, which was 195.82% higher than that of the last report term. The main business is the rent of Fangda Mansion. Currently, the income of the rent of Fangda Mansion is stable, and, to predict, it can gain net profit of RMB 14,000,000 for the Company. In the report term, the prices of main raw materials, such as steels, aluminum, and petrochemical, raised more than 20%. Chemical materials and PE materials even raised 100%. Aiming at the serious situation of makeup of most production materials, the Company took a series of cost reducing actions, such as enforcing control of wastage of workshop production cost, improving cost management and supervisal of building site and making rewards and punishment measures of energy saving, to eliminate the negative effect of material markup to the gross interest rate of product sales. Through efforts, the gross interest rate reached 19.46% in the report term, but it still dropped 3.45% compared to that of the last report term. In the report term, the expanse of every project raised in some degree, because of increase of the income of the Company’s main business. However, the markup of expanse was much less that that of the income of main business. Thereinto, management cost was 17.85% higher than that of the last report term, due to increase of bad account preparation. The operation cost was 14.52% higher, and the financial cost was 104.8% higher due to increase of bank loan in this report term. For the sake of drop of gross interest rate and large increase of financial cost, the net profit rate was only 0.52% in the report term, which dropped 1.16% compared with that of the last report term. In the report term, the Company continued to improve management of accounts receivables and attach importance to dunning accounts receivables. In the whole year, the Company received the payment of RMB 661.39 million and the reclaim rate reached 100.25%. The net flux of working cash reached RMB 9,468,600. In the report term, due to investment and construction of the 2nd section of semi-conductor and Fangda (Jiangxi) New-type Material Technology Zone, the cash and cash equivalents decreased RMB 104.8 million. China Fangda Group Co., Ltd. Annual Report 2004 Summary (2) Analyses of Operation Results During the report term, the Company was operated in good condition. We have received totally RMB956 million of purchase order, which increased by 44.43% over the previous year; Major business turnover of RMB623.5793 million, increased by 25.79% over the corresponding period, which created the highest record in the history of the Company; All of the three major businesses of the Company were showing good growth position. 1). The turnover of new -type construction materials business was growing rapidly During the report term, the national government implemented macro economical control strategy. The conflict between demand and supply of coal, electricity and oil became obvious and the prices of main raw materials, such as steels, aluminum, copper and petrochemical, raised a lot. But with fully utilizing the advantage of “Fang Da” trademark, enforcing of quality management and technical developing, the Company kept enlarging its market share. The construction of a product-oriented business administration system, the implementation of inspiring system of object management and survival of the fitness, manufacturing of energy saving products, strengthening of internal management, improvement of strategic cooperative relations with material suppliers and full range cost controlling scheme were showing their effect. The orders and turnover rose rapidly. Currently the businesses of glass wall, multi-layer aluminum plate & single layer profiled aluminum plate, and aluminum profiled materials, which contributed greatly to the profitability of the Company, have achieved great growth of the highest record in the history of the Company in 2004. They realized respectively the turnover of xxx, xxx and xxx, and were respectively xxx%, xxx% and xxx% higher than that of last year. Overseas sales were also growing rapidly, which realized the turnover of USD xxx in 2004 and was xxx% higher than that of last year. The Company was devoting more efforts to sale in overseas market and its turnover will keep growing stably. 2). Electronic -mechanism equipment was also growing rapidly and the market share was enlarged tremendously. Shield gates of metro system are functioned for energy saving, environment protection and safety. Currently, cities such as Beijing, Shanghai, Tianjing, Guangzhou and Shenzhen are constructing or already completed their metro system, while most of them are planning for the installation of shield gates. This is a rapid growing new market. During the report term, depending on its advantages in personnel, technology, management know-how, and trademark, the Company won the bidding competition for the large-scale shield gate system contract of Guangzhou Metro Line 1 (installation included) by public bidding with famous international companies. This contract is amounted to RMB148.61 million. In the report term, the contract of Nanchang Station of Hong Kong Metro and Testing Station of Shanghai Metro were completed, and the contract of shield gates purchasing and installing of Guangzhou Metro Line 1 and Line 3 was been carried out smoothly according to the plan, and the shield gates for Nanchang Station of Hong Kong Metro and Shanghai Metro Testing Station were supplied by our Company. The Company has expanded its market share of domestic shield gate system market up to 50% in the report term. This has laid a solid foundation for the Company to share the opportunities brought by the rapid growth of the shield gate market. Currently the Company is going all out to extend its business to the other cities of China and the overseas market, continuing to improve product sale and taking active part in domestic or foreign competitive bidding for metro shield gate system so as to ulteriorly expand the market share of shield gate system market. The breakthrough of research and development of core technique of metro shield gate will play a vital part in localization of metro shield gate system, cost reducing and improvement of market competitive position. 3). The construction engineering of semi-conductor of the 2nd section has completed and primarily put into production, and the high-power chip business is going on smoothly. Chinese economy keeps growing rapidly and the shortage of electricity supply becomes more and more serious. Enjoying such features as energy-saving and long service life, semi-conductor lighting materials has a big space to develop. The Company seizes the growing opportunity and enforcing the marketing and internal managing process along with the construction of the 2nd section of semi-conduct IC and lighting products. For this year, the semi-conductor chip has realized a 23.25% growth over last year. The 2nd section of the construction of semi-conductor and lighting production has been finished and put into production in the report term. The upper outer equipment has been tested and it runs well. It has been put into production. The function target got great improvement and was in leading position in China. The completion of the nd China Fangda Group Co., Ltd. Annual Report 2004 Summary 2nd phase of semi-conductor production project is laying a solid foundation for the Company in this area. During the report term, the Company successfully developed the high-power high-luminance semiconductor chip as the key technology of the semiconductor business. It was included as one of the key projects of the national “5-year technology breakthrough scheme”. The functions of the high-power high-luminance semiconductor chip have reached the same advanced level with those in foreign countries. Its industrialization has realized breakthrough. It has the advantage of batch production and has been successfully put into the market. Without doubt, this will win the Company the advantage in occupying the high-end of the market. This regarded as a very important achievement for the semi-conductor lighting industry of the whole country. 4). Fangda (Jiangxi) New-type Material Technology Zone has completed its first stage of construction The construction of Fangda (Jiangxi) New-type Material Technology Zone was moving forward smoothly in the report term. The factory and office building have been completed and the construction of dinning hall and dormitory is at the ending stage. The Gate Business Dept. has first moved in and run smoothly. The Glass Wall Project Dept. also started to produce. The installation and test of expanding building equipments of production lines, such as aluminum-plastic plate and aluminum single plate, copper-aluminum radiator, etc, is at the ending stage. And the related departments are moving in. After construction, the productivity of glass wall, aluminum-plastic plate and aluminum single plate, copper-aluminum radiator, and door products in Fangda (Jiangxi) New-type Material Technology Zone will increase significantly and the cost will be reduced correspondingly. This will contribute greatly to the expanding of the Company 's business scale and profitability. The new-type construction materials business of our company will step into a new development stage. 5). Great achievement in technology innovation In the report term, the Company has invested in developing of 24 new products and technologies and 9 technical reforming projects. In the report term, the high-power high-luminance semiconductor IC was regarded as a strategic achievement to the industry of the whole country. High-tech curtain wall featured in energy saving and environmental protection has been successfully used in the first green Olympic sample building --- sample building of extreme low energy exhaustion. Our curtain wall can save 30% of energy that common curtain wall. The solar photoelectric curtain developed by our company can change sun energy into electricity and it has been put in to use of some buildings. The metro shield gate system enjoys functions of energy saving, environmental protection and security, and it can save 20% of electricity of air-conditioner aeration system. Our metro shield gate system has been used in the metros of Hong Kong, Shanghai and Guangzhou, etc., and is well-appreciated. The high-power LED chips is a strategic breakthrough of the LED lighting industry of the whole country. The intelligent property work realized great achievement in the report term. 210 patent licenses were granted to the Company including 20 of invention patents. It was the most in the history of our company. As of the end of this report term, the Company was possessing 360 patents including 40 invention patents. This is reflecting the innovation capability of the Company and will support the Company for continuous growth. As mentioned before, the high-power high-luminance semiconductor IC was regarded as one of the key projects of the national “5-year technology breakthrough scheme”. Furthermore, the Company has participated in the producing of “National Standard for Steel Doors”, “Engineering Standard of Glass Outer Wall”, as well as the revising works of “National Standard of Construction for Energy Saving”, “National Standard of Aluminium-plastic Plates”. The Company was awarded “Key Model Enterprise of Information Technology Engineering, Guangdong, 2004”; Fangda New-type Material (Jiangxi) Co, Ltd, the full subsidiary of the Company, was entitled the Provincial High-tech Enterprises of Jiangxi and High-tech Products. 6). In the report term, the Company was again awarded “National Large-scaled Industrial Enterprise”by National Bureau of Statistics of China, “Large-scaled enterprise Enjoying Convenient Rapido Service” by Shenzhen Government, and “Leading Competitive Enterprise” by Shenzhen League of Industry and Economy. The new record of single output light power of Blue Light Diod Chip and the high-power high-luminance Blue Light Diod Chip, which are researched and developed by our Company, is regarded as “New record of Chinese Enterprises” (The 9th group) and “Top Ten Innovation Projects” of Shenzhen by China Enterprise Council and China Enterprisers Association. Since the Company has made new records among Chinese enterprises for continuous 5 years, the Company was awarded as “Outstanding Maker of New Record among Chinese Enterprises”. Fangda China Fangda Group Co., Ltd. Annual Report 2004 Summary Deyi, a fully-owned subsidiary of our company, was regarded as “Two-Excellences”foreign-invested enterprise. Fangda Decoration, a fully-owned subsidiary of our company, was regarded as “Advanced Unit of Information Construction in Nation-wide Architecture and Decoration Industry”. The curtain wall program of office building of Jiangsu Provincial Bureau of Commodity Inspection and Quarantine, which was built by Fangda Decoration, was awarded the highest prize of China architecture program in 2004 --- State Excellent Qualified Program (“Luban Prize”). 7). Internal controlling and auditing were enforced Focusing on the weaknesses of internal controlling system, reassessments were performed on the processes of business operation, especially the processes of accounting administration. Number of measurement were adopted to further improve the internal controlling system: Enhance the managing of fund and strict the approving procedures, regulating the processing of bank notes, revise the accounting system according to the new national accounting standard, fine standardizing the managing and processing of accounting. The enforcing of internal management provides security of the Company’s risk control. Along with the above efforts, the Company also enforced the functioning of auditing works to supervise the performance of each management system. Through internal self-inspection, the Company has discovered that Fanda Decoration had made some mistakes in the accounting process of year 2003. The relative data of year 2003 has been corrected in this report. The Company will carry forward the improving of internal management, further enforce the inspection and auditing processes, regulate the accounting and financial administration, to kept the Company growing in a healthy and steady way. 6.2 Principal businesses classified based on industries/products In RMB 10 thousand Yuan Distribution on industries Major Major Gross Increase/decrease of Major business cost Gross profit ration On industry or product business business profit major business increased/decreased over increased/decreased income cost ratio % turnover (%) corresponding term Metal products fro 33,815.84 29,700.06 12.17% 23.27% 23.32% -0.34% construction need Decoration business 41,087.41 32,774.73 20.23% 35.83% 47.36% -23.57% Including: related 0.00 0.00 transactions Distribution on products Outer-wall products 41,087.41 32,774.73 20.23% 35.83% 47.36% -23.57% Complex aluminium boards and single 17,783.53 14,657.41 17.58% 11.59% 11.73% -0.59% profiled plates profiled aluminium 7,616.45 6,761.07 11.23% 21.15% 14.28% 90.68% material Including: related 0.00 0.00 transactions Principle of pricing the There was no related transaction in the report term. related transactions Statement on the necessity and There was no related transaction in the report term. continuousness of related transactions Including: The related transactions of the Company selling products to the controlling shareholders and its subsidiaries were amounted to RMB0.00. China Fangda Group Co., Ltd. Annual Report 2004 Summary 6.3 Major businesses distribution on regions In RMB 10 thousand Yuan Increase/decrease of Regions Major business income major business turnover (%) North 5,759.61 -50.40% South-west 7,248.84 38.92% East 20,981.42 79.34% North-east 1,685.21 26.44% Central 3,511.02 1,009.49% North-west 725.17 -37.56% South 18,760.63 0.63% Export 3,686.03 159.96% Total 62,357.93 21.32% 6.4 Major vendors and clients In RMB 10 thousand Yuan Total of top 5 vendors 11,066.41 Counted in total purchasing 29.99% Total of top 5 clients 14,858.93 Counted in total sales 23.83% 6.5 Operation of shareholding subsidiaries □applicable √ not applicable 6.6 Major Change in the Principal Business or its Structure □applicable √ not applicable 6.7 Major Change in the Profitability (Gross Profit Rate) of the Major Business over the Previous Year □applicable √ not applicable 6.8 Cause of Major Change in the Profit Composition over the Previous Year √ applicable □ not applicable The major business turnover has increased during the report term. Mainly due to the major increasing of sales income. For the increasing of sales income and sales scale, the management expenses and operational expenses increased by the mean time. The increasing of major business costs was due to the increasing of material price is higher than the sales income. Plus the increasing of interests, the net profit has decreased obviously from that of the previous year. The investment on Fangda (Jiangxi) New Materials Park and Shenzhen Fangda Guoke Co., Ltd. was enhanced, which lead to major increasing of cash outflow. Causations of significant change on overall financial status □applicable √ not applicable 6.9 Significant changes in business environment, national policies and regulations impacting the financial situation and business performance in the past, present or future □applicable √ not applicable 6.10 Fulfilling of profitability prediction □applicable √ not applicable China Fangda Group Co., Ltd. Annual Report 2004 Summary 6.11 Fulfilling of business plan □applicable √ not applicable 6.12 Utilization of fund raised from financing actions □applicable √ not applicable Changing of projects □applicable √ not applicable 6.13 Utilizing of non-raised fund √ applicable □ not applicable In RMB 10 thousand Yuan Projects Amount of the project Progress of the project Turnover of the project Fangda (Jiangxi) New The 1st phase has been put 4,192.38 0 Technologies Part into operation Expanding project of 4,409.83Completed 0 semi-conductor chips Interior decoration 428.45Decoration completed 0 Total 9,030.66 - - 6.14 Statement on the None Standard Opinion issued by the CPA √ applicable □ not applicable 2004 auditor’s report with emphasizes on particular issues issued by Shenzhen Tianjian Xinde Certified Public Accountants. The emphasized issues were: Shenzhen Hengxiang Economics Development Holdings Co., Ltd. (hereinafter short as “Hengxiang Economics”) and Fangda Haiyue Fine Chemical Industry Co., Ltd (hereinafter short as “Fangda Haiyue”) were related parties of Fangda Group. In and before 2003, the trade items, such as transfer of part of accounts receivables and other assets involving Fangda Group and its subsidiaries and the two companies, were abnormal and not evenhanded. As for the above-mentioned items, the Board of Directors of Fangda Group discussed and approved to do great accounting mistake correcting, and, at the same time, Hengxiang Economics and Fangda Haiyue have liquidated and gone through formalities of canceling in the industry and commerce bureau respectively on August 30, 2004 and July 8, 2004. The uncertainty of the influence caused by the trade items involving part of creditor's rights and debts in former years between Fangda Group and other related parties still existed. The issued audit opinion will not be influenced by this part. The explanation of the Supervisory Committee of the Company is as follows: Aiming at the above-mentioned items, the Company held the 12th meeting of the 3rd Term Supervisory Committee on October 21, 2004, discussed and approved the proposal about adjustment of great accounting mistake, do accounting adjustment to the above-mentioned items and revealed on appointed information announcing newspaper and website on October 23, 2004. The Supervisory Committee thinks that this item has already been dealt with, and it will not exert an influence on the management of the Company Ho and Ho & Company CPAs, the international audit organ, make the standard non-interpretative explanation and audit report without reserved opinion. This audit report has reflected financial situation of the company and management performance objectively, truly. China Fangda Group Co., Ltd. Annual Report 2004 Summary 6.15 Business plan for the new year √ applicable □ not applicable 1) Increasing the operational efficiency and marketing reaction ability of new type construction material industry, catch the opportunity of the double increased productivity and the hopeful reduced products costs after Fangda (Jiangxi) New Type Material Science and Technology Station constructed and putted into production, in virtue of the competitive advantage of branding, marketing and management to gain more market shares, especially catch the huge commercial opportunity bring for Beijing Olympic Games, Shanghai International Exposition and Guangzhou Asian Games in order to further increase market shares. 2) Foster and intensify the core competition capability of mechanical and electrical integrative equipment industry, the product line is extended to exit and automatic door operations and achieved sales. 3) Based on the productivities of existing semiconductor industry to continually developing new technology, reducing costs, increasing product classification, exploiting product field timely and increasing productivity in order to make a bigger scale of business and forming the new sales and profits earnings, promote all these to be the source of new profit of the Company. 4) Step forward to make a progress on internal risk control, especially finance risk control, and overall increase the risk control ability on business management, information management and internal auditing. 5) Increasing creative ability, accommodate the higher requirements of internal management of the Company after the business was enlarged; make it better and bigger of the major 3 industries. 6) The raw materials’price will follows the trend of fluctuating and the Company will continually make an effort on reducing costs. 7) Make an effort on training based on recruiting the experienced management people for the major 3 industries of the Company and make a good job on Human Resource Management of strategy planning term. Prediction of profitability for the new year □applicable √ not applicable 6.16 Current profit distribution plan or capitalization of public reserves plan □applicable √ not applicable The company is making profit in the report term but not yet have any dividend plan. √ applicable □ not applicable Reason for making profit but not have any dividend plan Plan for the profit not distributed The Company realized the profit of RMB3.2667 million, which will be used to Profit not distributed of the remedy the losses of previous years. Therefore no profit distribution nor Company is a negative figure. capitalizing of common reserves will be implemented. China Fangda Group Co., Ltd. Annual Report 2004 Summary §7 Significant Events 7.1 Acquisition □applicable √ not applicable 7.2 Selling of property □applicable √ not applicable 7.3 Significant guarantee √ applicable □ not applicable In RMB 10 thousand Yuan External Guarantee (Exclude controlled subsidiaries) Guarantee Amount Type of Completed or Related party or Date of contract Term provided to guaranteed guarantee not not Total occurred in the report term 0.00 Total of balance of guarantee at the end of report term 0.00 Guarantee provided to controlled subsidiaries Total of guarantee provide to controlled subsidiaries in the report term 1,000.00 Total of balance of guarantee provide to controlled subsidiaries ended the report term 2,552.95 Total of guarantee (including controlled subsidiaries) Total of guarantees 2,552.95 Proportion of the total guarantee in the net asset of the Company 5.38% Illegal Guarantee Balance of guarantee provided to controlling shareholder and other related parties who take 0.00 less than 50% of the capital share Total of guarantee provided directly or indirectly to parties with liability/asset ratio over 0.00 70% Total of guarantee exceeded 50% of the net capital No Total of illegal guarantee 0.00 7.4 Significant Related Transactions 7.4.1 Related sales and purchasing □applicable √ not applicable 7.4.2 Related credit and debt interchange □applicable √ not applicable 7.5 Financing proxy □applicable √ not applicable 7.6 Fulfilling of consent issues □applicable √ not applicable 7.7 Material Lawsuits/Arbitrations √ applicable □ not applicable China Fangda Group Co., Ltd. Annual Report 2004 Summary In the report period, the Company had no material lawsuits or arbitrations. The Company’s subsidiary, Fangda Decoration Corporation applied for arbitration to Dalian Arbitration Committee in Nov.2002 and required Dalian Hongjin World Trade Co., Ltd. to pay RMB 25.01 million engineering payment. This case is currently under processing. Fangda Decoration Corporation indicted to Guangzhou Intermediate People’s Court in Dec.2002 and required to Guangzhou Donghe Real Estate Co., Ltd. and Zhonghai Development (Guangzhou) Co., Ltd. to pay some RMB 18.00 million of engineering expense. This case is currently under processing. 7.8. Independent directors’performing of duties Independent directors’presenting of board meetings Name of Independent Times of board Presented Presented by Absent Remark Director meetings to present personally proxy Asked for leaving due Wan Jianhua 5 3 1 1 business engagement Shao Hanqing 5 5 0 0- Asked for leaving due Niu Hanben 5 2 3 0 business engagement Objection upon relative events raised by the independent directors □applicable √ not applicable China Fangda Group Co., Ltd. Annual Report 2004 Summary §8 Report of the Supervisory Committee √ applicable □ not applicable 1. The committee has held 5 meetings during the report term. (1) The 8th meeting of the 3rd term of committee was held in the meeting room of the Company on Feb. 19th 2004. The following proposals were examined and passed as resolutions: 1） The Supervisory Committee work report for year 2003. 2） Financial settlement report for year 2003 3） The profit distribution and capitalizing of common reserves proposal; 4） Annual Report of Year 2003 and the summary version. (2) The 9th meeting of the 3rd term of committee was held in the meeting room of the Company on April 13th 2004. The 1st quarterly report of 2004 was examined and passed. (3) The 10th meeting of the 3rd term of committee was held in the meeting room of the Company on May 20th 2004. Supervisors studied and discussed about the Document Shen-Zheng-Ju-Fa-Zi[2004]No.75 titled The rectifying notification for China Fangda Group Co., Ltd. issued by China Securities Regulatory Commission. The report of rectifying plan in responding to the document was also examined and passed in the meeting. (4) The 11th meeting of the 3rd term of committee was held in the meeting room of the Company on August 9th 2004. The Semi-annual Report of 2004 and its summary was examined and passed. (5) The 12th meeting of the 3rd term of committee was held in the meeting room of the Company on October 21st 2004. The following proposals were examined and passed as resolutions: 1） The 3rd Quarterly Report of 2004 and the summary; 2） The proposal on adjusting of major accounting errors 2. The Supervisory Committee issues the independent opinion on the following issues: (1) In 2004, according to relevant regulations, laws and Articles of Association, the Supervisory Committee supervised over the procedure of holding, discussion and decision of the Board of Directors, the implementation of the resolutions of the shareholders’General Meeting and the management system by the Board of Directors and the current management teams and believed that the Board of Directors and the current management teams worked in an honest, diligent and active way, actually and effectively implemented every resolution and authorization of the Shareholders’General Meeting. The procedure of decision-making was in conformity with Company Law and Articles of Association of the Company. The directors and senior executives had no actions of breaking national laws and regulations and Articles of Association or damaging the interest of the Company when they performed their duties. In the report term, the Company fully improved and clarified the internal controlling system and enhanced the internal controlling process. (2) 2004 auditor’s report with emphasizes on particular issues issued by Shenzhen Tianjian Xinde Certified Public Accountants. The emphasized issues were: Shenzhen Hengxiang Economics Development Holdings Co., Ltd. (hereinafter short as “Hengxiang Economics”) and Fangda Haiyue Fine Chemical Industry Co., Ltd (hereinafter short as “Fangda Haiyue”) were related parties of Fangda Group. In and before 2003, the trade items, such as transfer of part of accounts receivables and other assets involving Fangda Group and its subsidiaries and the two companies, were abnormal and not evenhanded. As for the above-mentioned items, the Board of Directors of Fangda Group discussed and approved to do great accounting mistake correcting, and, at the same time, China Fangda Group Co., Ltd. Annual Report 2004 Summary Hengxiang Economics and Fangda Haiyue have liquidated and gone through formalities of canceling in the industry and commerce bureau respectively on August 30, 2004 and July 8, 2004. The uncertainty of the influence caused by the trade items involving part of creditor's rights and debts in former years between Fangda Group and other related parties still existed. The issued audit opinion will not be influenced by this part. The explanation of the Supervisory Committee of the Company is as follows: Aiming at the above-mentioned items, the Company held the 12th meeting of the 3rd Term Supervisory Committee on October 21, 2004, discussed and approved the proposal about adjustment of great accounting mistake, do accounting adjustment to the above-mentioned items and revealed on appointed information announcing newspaper and website on October 23, 2004. The Supervisory Committee thinks that this item has already been dealt with, and it will not exert an influence on the management of the Company Ho and Ho & Company CPAs, the international audit organ, make the standard non-interpretative explanation and audit report without reserved opinion. This audit report has reflected financial situation of the company and management performance objectively, truly. (3) The Company actually raised RMB112.8784 million in 1999. All of the fund raised has been put into investment as set out by the Share Placing Prospectus. (4) In the report term, the Company neither acquired nor sold any asset. (5) The related transactions was on fair basis and harmed no interest of the Company; Shenzhen Tianjian Xinde CPA issued the auditors’report with emphasize on particular issues. The Supervisory Committee completely agrees with the statement of the reoport. China Fangda Group Co., Ltd. Annual Report 2004 Summary §9 Financial Report 9.1 Auditor’s Opinion Opinion: with emphasis on particular issues but no qualified opinion 9.2 Financial Statements 9.2.1 Balance Sheet In RMB Yuan Under domestic accounting standard At the end of term Initial Items Consolidated Parent company Consolidated Parent company Current asset: Monetary fund 193,647,398.25 73,247,686.65 298,446,517.28 181,289,133.06 Short-term investment Notes receivable 1,464,100.00 2,178,397.64 Dividend receivable 35,630,105.00 Interest receivable Account receivable 373,455,294.26 860,985.68 333,171,791.86 1,133,831.41 Other account receivable 24,990,837.22 612,406,468.85 23,439,655.48 431,238,749.46 Advance account 46,022,984.86 16,359,451.74 20,166,783.66 1,642,491.83 Allowance receivable Inventories 114,094,000.61 5,307,425.51 122,282,757.87 73,468.00 Expense to be amortized 407,284.60 243,778.48 500,275.16 306,525.74 Long-term credit invest expire in 1 year Other current asset Total of current asset 754,081,899.80 708,425,796.91 800,186,178.95 651,314,304.50 Long-term investment: Long-term share equity investment 9,901,963.69 231,561,394.55 11,349.90 208,892,271.79 Long-term credit investment Total of long-term investment 9,901,963.69 231,561,394.55 11,349.90 208,892,271.79 Consolidated price difference -6,043,720.62 -6,358,650.10 Fixed asset: Original value of fixed assets 524,784,329.13 272,963,675.51 464,073,289.80 271,852,788.51 Less: Accumulated depreciation 147,816,100.07 47,798,141.94 123,484,108.63 41,067,281.21 Net fixed assets 376,968,229.06 225,165,533.57 340,589,181.17 230,785,507.30 Less: Fixed asset impairment provision 4,235,860.08 4,235,860.08 Net fixed asset 372,732,368.98 225,165,533.57 336,353,321.09 230,785,507.30 Engineering material Construction in progress 69,436,711.41 3,119,335.56 Fixed asset disposal Total of fixed assets 442,169,080.39 225,165,533.57 339,472,656.65 230,785,507.30 Intangible and others: Intangible assets 35,058,699.91 23,673,645.76 36,592,348.47 23,981,043.07 Long-term expenses to be amortized 662,606.03 39,141.33 1,853,374.63 71,057.91 Other long-term assets Total of intangible and other assets 35,721,305.94 23,712,787.09 38,445,723.10 24,052,100.98 Deferred tax: Deferred tax debit Total of assets 1,241,874,249.821,188,865,512.121,178,115,908.601,115,044,184.57 Current liabilities Short-term loans 459,859,389.00 320,000,000.00 434,472,857.50 295,000,000.00 Notes payable 73,815,962.60 76,280,889.00 56,257,646.97 52,138,999.33 Account payable 109,405,354.01 8,997,099.61 106,095,582.82 25,270,568.50 Account received in advance 75,348,953.35 55,047,723.33 23,137,140.51 13,838,297.44 Prepaid wages 114,096.69 Welfare payable 5,455,261.61 7,507,601.89 Dividend payable 6,773,530.00 Tax payable 12,877,611.06 -92,919.04 10,425,210.16 267,426.50 Other accounts to be delivered 1,019,096.64 777,729.31 Other account payable 18,547,025.50 236,580,335.30 37,286,357.37 234,725,782.20 Reserved expenses 1,433,772.11 40,877.37 819,579.74 China Fangda Group Co., Ltd. Annual Report 2004 Summary Expected liabilities 2,000,000.00 2,000,000.00 Long-term liability expire in 1 year 10,000,000.00 Other current liability Total of current liability 759,876,522.57 696,854,005.57 695,553,236.27 621,241,073.97 Long-term liabilities Long-term borrowings Bond payable Long-term payable 250,000.00 Special payable 2,300,000.00 Other long-term liability Total of long-term liability 2,300,000.00 250,000.00 Deferred tax: Deferred tax credit Total of liability 762,176,522.57 697,104,005.57 695,553,236.27 621,241,073.97 Minor shareholders’equity 5,241,702.59 3,683,757.60 Owners’equity (or shareholders’equity) Practical capital collected (or share capital) 296,400,000.00 296,400,000.00 296,400,000.00 296,400,000.00 Less: returned investment Practical capital (or share capital), net 296,400,000.00 296,400,000.00 296,400,000.00 296,400,000.00 Capital reserves 413,402,176.09 413,402,176.09 412,202,179.44 412,202,179.44 Surplus reserves 136,038,799.95 91,893,171.85 139,997,799.45 91,893,171.85 Incl. Statutory public welfare 46,687,776.37 32,022,212.26 46,687,776.37 32,022,212.26 Un-distributed profit -371,387,330.24 -309,936,220.25 -369,721,064.16 -306,692,240.69 Incl. Cash dividend 8,892,000.00 8,892,000.00 Investment loss not recognized yet Different of foreign currency translation 2,378.86 2,378.86 Total of owners’equity (or shareholders’equity) 474,456,024.66 491,761,506.55 478,878,914.73 493,803,110.60 Total of liabilities and owners’equity (or shareholders’ 1,241,874,249.821,188,865,512.121,178,115,908.601,115,044,184.57 equity) China Fangda Group Co., Ltd. Annual Report 2004 Summary 9.2.2 Income statements In RMB Yuan Under domestic accounting standard Current term Same period last year Items Consolidated Parent company Consolidated Parent company I. Major business turnover 623,579,299.99 495,718,530.73 1,814,199.50 Less: Major business cost 502,241,097.59 215,419.70 382,142,457.62 1,814,199.50 Major business tax and surtax 13,685,542.62 10,469,069.99 II. Major business profit (“-“ for loss) 107,652,659.78 -215,419.70 103,107,003.12 Plus: Other business profit (“-“ for loss) 14,676,695.61 15,148,098.37 4,961,386.10 4,844,173.24 Less: Business expenses 32,447,002.59 35,407.72 28,333,403.80 Administrative expense 69,059,545.93 17,202,202.88 58,600,071.32 7,140,400.87 Financial expenses 16,894,127.68 12,928,211.39 8,248,945.95 1,724,329.61 III. Operational profit (“-“ for loss) 3,928,679.19 -15,233,143.32 12,885,968.15 -4,020,557.24 Plus: Investment gains (“-“ for loss) -153,141.12 20,830,933.76 -2,145,847.82 11,565,342.97 Allowance income 64,137.00 1,156,525.00 725,007.00 Non-business income 3,507,632.22 164,015.58 4,215,276.75 90,520.55 Less: Non-business expenses 2,205,718.23 113,785.58 6,083,351.55 375,569.00 IV. Gross profit (“-“ for loss) 5,141,589.06 5,648,020.44 10,028,570.53 7,984,744.28 Less: Income tax 81,320.78 Minor shareholders’equity 1,874,854.64 1,575,633.78 Plus: Investment loss occurred this term but not recognized V. Net profit (“-“ for loss) 3,266,734.42 5,648,020.44 8,371,615.97 7,984,744.28 Plus: Retained profit at the beginning of term -369,721,064.16-306,692,240.69-357,344,680.13-293,928,984.97 Other transferred in 3,958,999.50 VI. Distributable profit -362,495,330.24-301,044,220.25-348,973,064.16-285,944,240.69 Less: Statutory surplus reserves Drawing of statutory public welfare Employee award and welfare fund Reserves Enterprise development fund Profit returned to investment VII. Distributable profit -362,495,330.24-301,044,220.25-348,973,064.16-285,944,240.69 Less: Preference share dividend payable Optional surplus reserves Common share dividend payable 8,892,000.00 8,892,000.00 20,748,000.00 20,748,000.00 Common share dividend transferred to capital (or share capital) VIII. Undistributed profit -371,387,330.24-309,936,220.25-369,721,064.16-306,692,240.69 Income statement (Appendix) 1. Income from selling and disposal of department or invested entities 2. Loss from nature disasters 3. Increasing (or decreasing) of gross profit by changing of accounting policies 4. Increasing (or decreasing) of gross profit by changing of 40,565,971.35 accounting estimation 5. Loss from debt reconstruction 6. Others 4,610,350.56 8,249,736.30 China Fangda Group Co., Ltd. Annual Report 2004 Summary 9.2.3 Cash flow statement In RMB Yuan Under domestic accounting standard Current term Items Consolidated Parent company I. Net cash flow from business operation Cash received from sales of products or services 661,389,964.97 61,698,386.25 Tax returned Other cash inflow related to operation 34,213,590.01 242,043,152.80 Subtotal of cash inflow 695,603,554.98 303,741,539.05 Cash paid for purchasing of merchandise and services 528,408,263.61 41,920,808.71 Cash paid to staffs or paid for staffs 56,083,353.42 7,292,290.23 Taxes paid 22,129,020.79 1,969,699.41 Other cash paid related to operation 79,514,267.61 352,579,471.33 Subtotal of cash outflow 686,134,905.43 403,762,269.68 Net Cash flow generated by business operation 9,468,649.55-100,020,730.63 II. Cash flow generated by investing Cash received from returning of investment Cash received as investment profit Net cash received from disposal of fixed assets, intangible assets and other long-term assets 1,503.28 1,500.00 Other cash received related to investment Subtotal of cash inflow 1,503.28 1,500.00 Cash paid to acquire fixed assets, intangible assets and other long-term assets 90,306,580.31 6,362,136.76 Cash paid for investment 659,296.00 550,000.00 Other cash paid related to investment Subtotal of cash outflow 90,965,876.31 6,912,136.76 Net cash flow generated by investment -90,964,373.03 -6,910,636.76 III. Cash flow generated by financing Proceeds from investments Cash received from loans 641,831,126.50 474,966,020.00 Other cash received related to financing Subtotal of cash inflow 641,831,126.50 474,966,020.00 Cash paid for recovering of debt 629,444,595.00 449,966,020.00 Cash paid for dividend, profit or interest 35,689,927.05 26,110,079.02 Other cash paid related to financing Subtotal of cash outflow 665,134,522.05 476,076,099.02 Net cash flow generated by financing -23,303,395.55 -1,110,079.02 IV. Influence of exchange rate movement V. Net increase of cash and cash equivalents -104,799,119.03-108,041,446.41 China Fangda Group Co., Ltd. Annual Report 2004 Summary Appendix of Cash Flow Statement 1. Net profit adjusted to cash flow of business operation Net profit 3,266,734.42 5,648,020.44 Plus: Asset impairment provision drawn -47,241,631.50 Depreciation of fixed assets 25,558,588.79 6,730,860.73 Amortizing of intangible assets 2,011,197.56 715,484.91 Amortizing of long-term expenses 1,756,264.76 31,916.58 Decrease of expenses to be amortized (Less: increase) 92,990.56 -43,069.49 Increase of reserved expenses (Less: decrease) 614,192.37 98,427.20 Cash lost from treatment of fixed assets, intangible assets and other long-term assets (less: gains) 13,871.63 -1,500.00 Loss of disposing fixed assets Financial expenses 18,986,339.75 14,944,725.24 Investment loss (less: gains) -153,141.12 -20,830,933.76 Credit of deferred tax (less: debit) Decreasing of inventories (less: increasing) 10,033,087.72 -5,233,957.51 Decrease (less: increase) in operating receivables -53,048,092.16-206,532,212.57 Increase (less: decrease) in operating payables 45,703,392.13 104,451,507.60 Others Minor shareholders’equity 1,874,854.64 Net Cash flow generated by business operation 9,468,649.55-100,020,730.63 2. Investment and financing activities not involving with cash Liabilities converted to capital Convertible bond expire in 1 year Fixed assets leased through financing 3. Net increasing of cash and cash equivalents Balance of cash at period end 193,647,398.25 73,247,686.65 Less: Initial balance of cash 298,446,517.28 181,289,133.06 Plus: Balance at the end of term of cash and equivalents Less: Balance at the beginning of term, cash and equivalents Net increasing of cash and cash equivalents -104,799,119.03-108,041,446.41 9.3 Explanation on changes of accounting policies, accounting estimation, and accounting method □applicable √ not applicable 9.4 Content, amount, reason and impact of major accounting errors □applicable √ not applicable 9.5 Explanation on changes of consolidation range □applicable √ not applicable