宁通信B(200468)宁通信Ｂ2004年年度报告摘要（英文版）

Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report Nanjing Putian Telecommunications Co., Ltd. Summary of 2004 Annual Report (Based on IFRS) Important Note The Board of Directors and Directors of the Company hereby confirm that there are no factitious record, misleading statements or material omission in the information carried in this report, and collectively and individually accepts full responsibility for the truthfulness, accuracy and completeness of the whole contents. The Company’ s Legal Representative Li Weide, General Manager Sun Liang, and Associate Chief Accountant Shi Lian hereby confirm that the financial report in this report is truthful and complete. This summary is abstracted from the full text of the annual report, which is published at www.cninfo.com.cn. Investors may read the full text for the detailed contents. This report is prepared both in Chinese and in English. In case of any inconsistency between the two versions, the Chinese version should prevail. -1- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report I. Company Profile 1. Company’ s Legal Chinese Name: 南京普天通信股份有限公司 Company’ s Legal English Name: Nanjing Putian Telecommunications Co., Ltd. 2. Legal Representative: Mr. Li Weide 3. Secretary of the Board of Directors: Mr. Xiao Zhaokai Address: No. 1 Putian Road, Qinhuai District Nanjing Telephone: 86-25-52418518-2278,86-25-52409954 Fax: 86-25-52409954 Email Address: xzk@postel.com.cn Securities Affairs Representative: Mr. Shi Lian Address: No. 1 Putian Road, Qinhuai District Nanjing Telephone: 86-25-52418518-2258 Facsimile: 86-25-52409954 Email Address: sl@postel.com.cn 4. Registered Address: No. 58 Qinhuai Road, Jiangning Economics and Technology Development Zone, Nanjing, Jiangsu Province PRC Business Address: No. 1 Putian Road, Qinhuai District Nanjing Postal Code: 210012 Web Site: www.postel.com.cn Email Address: securities@postel.com.cn 5. Appointed Newspaper for Company Information Disclosure: Securities Times & Hong Kong Ta Kung Pao Appointed Web Site for Annual Report Publication: www.cninfo.com.cn Annual Report Prepared At: Financial & Securities Department 6. Listing and Trading Place of Company stock: Shenzhen Stock Exchange Stock Abbreviation: Ning Tong Xin B Stock Code: 200468 7. Latest Registration Date: 28 May, 1999 Registered At: State Administration For Industry and Commerce Legal person operating license Qi Gu Su Zong Zi No. 000225 registration code: Taxation Registration Code: 320121134878054 Appointed Auditor: Price WaterHouseCoopers Zhong Tian CPAs Co., Ltd. Auditor’ s Business Address: 11th Floor Price WaterHouseCoopers Center, 202, Hubin Road, Shanghai II.Financial & Operating Highlights 1. Financial data for 2004(RMB’ 000) Profit Before Taxation -34,885 Net Profit -27,461 Profit After Deducting Non-recurrent profit/loss -28,618 Gross profit 157,712 Profit for Other Businesses 7,807 Operating Profit -7,819 -2- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report Subsidy Receipt 0 Net Cash Generated from Operating Activities 16,109 Increase of Cash and Cash Equivalent 24,874 Note 1:Deducted non-recurrent profit/losses are: Losses from disposal of long-term investments -55 Net income from disposal of fixed assets, project in progress, intangible assets and other long-term assets 50 Concluded in other operating income 4,596 Concluded in other operating expenses -3,434 Income tax 0 Total 1,157 Note2: Explanation of discrepancy as audited under CAS and IFRS (RMB’ 000) Net assets at Net loss for 2004 31 December 2004 Per PRC accounts (47,845) 337,568 Adjustments for IFRS accounts: Negative goodwill generated from acquisition of subsidiaries 8,103 2,380 Remeasurement of financial assets and financial liabilities in accordance with IAS 39 12,281 - Per IFRS accounts (27,461) 339,948 2. Main financial data for the recent 3 years: Financial Indicators 2004 2003 2002 Turnover(RMB’ 000 yuan) 851,292 818,647 625,872 Net Profit(RMB’ 000 yuan) -27,461 12,068 -55,213 Total Assets(RMB’ 000 yuan) 948,276 1,026,102 963,925 Shareholder’ s Equity(excluding minor 339,948 366,365 352,120 shareholder’ s equity) (RMB’ 000 yuan) Earnings Per Share(yuan) -0.128 0.056 -0.257 Net Assets Per Share(yuan) 1.581 1.704 1.638 Net Cash Per Share Generated from 0.075 0.250 0.401 Operating Activities(yuan) Return On Net Assets(%) -8.08% 3.29% -15.68% Note 1: The share capital of the Company kept unchanged from the end of the reporting period to the day when this report is published. Note2: Attached Profit Form Profit for Return On Net Equity（%） Earnings Per Share reporting period Fully diluted Weighted average Fully diluted Weighted average Gross profit 46.39% 44.72% 0.7335 0.7335 Operating profit -2.30% -2.22% -0.0364 -0.0364 Net profit -8.08% -7.79% -0.1277 -0.1277 Net profit after -8.42% -8.12% -0.1331 -0.1331 deducting Non-recurrent profit/losses -3- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report 3. Changes on Shareholders’Equity during the reporting period (RMB’ 000) Capital Statutory and Statutory Exchange Share accumula discretionary welfare Translation Other Retained Shareholder’ s Item capital tion fund accumulation fund reserve reserves earnings equity in total fund At 215,000 167,664 15,216 9,640 -14 115 -41,256 366,365 year-beginning Increase 1,153 935 414 -27,461 -24,959 Decrease 109 1,349 1,458 At year-end 215,000 168,817 16,151 10,054 -123 115 -70,066 339,948 Increase of capital accumulation fund was due to share of waived debts of an associate company, i.e., share of capital surplus recognized by an associate due to debts by its investors, and other reasons. Increase of statutory and discretionary accumulation fund as well as statutory welfare fund resulted from profit appropriation of subsidiaries. Decrease of retained earnings resulted from the Company’ s net losses for the year. III. Share Capital Variation & Shareholders Introduction 1. Share Capital Variation (1)Change of the shares of the Company Changes in the period Year-beginni Placed Bonus Shares transferred Sub Year-end ng other shares shares from capital shares -total Un-listed shares 1.Promoter 115,000,000 115,000,000 shares Including: State-owned 115,000,000 115,000,000 shares Domestic legal person shares Foreign legal person shares Other 2.Placement legal person shares 3.Employee’ s shares 4.Preference shares and other Un-listed shares 115,000,000 115,000,000 in total Listed shares -4- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report 1. RMB ordinary shares 2.Domestically-li 100,000,000 100,000,000 sted foreign shares 3.Overseas listed foreign shares 4.Other Listed shares in 100,000,000 100,000,000 total Total shares 215,000,000 215,000,000 (2)Stock issuing and listing in the last three years The Company did not issue shares in the last three years ended by 2004. 2. Shareholders introduction (1) As at 31st December 2004, the Company had 18518 shareholders, including 1 state-owned legal person shareholder and 18517 B- shareholders. (2) Top ten shareholders and top at year-end Shareholder Shares held +/-Shares Mortgaged or Order Shareholder proportion in the year type at year-end frozen shares China Putian Unlisted 115,000,000 53.49% 0 1 0 Corporation state-owned Share 2 Wang Xuanxuan Circulating B-share 1,242,368 0.58% 175,500 Unknown THE MTBJ LTD AS 638,588 0.30% TRUSTEE FOR UFJ 3 PARTNERS Circulating B-share Unknown Unknown MAINLAND CHINA FUND 4 Cai Weiguang Circulating B-share 460,000 0.21% Unknown Unknown 5 Lin Xiaoyan Circulating B-share 410,542 0.19% 211,342 Unknown 6 Aileen Yue Circulating B-share 410,400 0.19% Unknown Unknown 7 Li Yi Circulating B-share 351,837 0.16% 0 Unknown 8 Xu Bingnan Circulating B-share 327,000 0.15% 47,000 Unknown 9 Ye Zhuanyou Circulating B-share 322,900 0.15% 0 Unknown 10 Wong Lai Circulating B-share 308,600 0.14% 0 Unknown 11 Zhang Zhim ei Circulating B-share 285,600 0.13% 135,600 Unknown Note: The shareholders from No. 2 to No. 11 were the top ten shareholders of the Company’ s circulating shares. Among the top ten shareholders, China Putian Corporation isn’ t a related party to the others. It’ s not known by the Company whether there are related parties among the other shareholders The Company does not know whether there are related parties among the top ten shareholders of circulating shares. (3) Introduction of the holding company: Company name: China Putian Corporation -5- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report Company type: state-owned sole enterprise Legal representative: Xing Wei Date of Corporation: 1980 Scale of business: develop and manufacture various communications equipment such as large-scale digital program-controlled switchboard, GSM and CDMA mobile telecommunication equipment and mobile phone, IP serial products, micro-wave telecommunication equipment, optical telecommunication equipment, optical and electric telecommunication cable, communication power supply, distribution equipment, IC phone, multi-media computer terminal, fax machine, postal mechanic and so on; engage in contract for international and domestic telecommunication project, engage in technical and economic business such as cooperation, technology introduction, import and export of relevant products. It was originally named ”China Posts and Telecommunications Industry Corporation” under the Ministry of Posts and Telecommunications and the Ministry of Information Industry. At the end of 1998 it became a large-scale enterprise directly subordinate to the central government. During the reporting period the holding company kept unchanged. The ultimate shareholder of China Putian Corporations is State-owned Assets Supervision and Administration Commission of the State Council(“SASAC”). The relationship between the Company and its ultimate shareholder is as follows: SASAC 100% China Putian Corporation 53.49% Nanjing Putian Telecommunications Co., Ltd. IV. Directors, Supervisors & Senior Management 1.Profile Whether shares receive term of shares held at name sex age Position held at payment in office year-beginning year-end the Company Huang Jun 2003 Male 43 Chairman of BOD 0 0 No Zhiqin -Jan 2005 Vice Chairman of Jun 2003 Li Weide Male 57 BOD, General 0 0 Yes -Jun 2006 Manager -6- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report Jun 2003 Cao Bin Male 48 Director 0 0 No -Jun 2006 Jiang Director, Assistant Jun 2003 Male 49 0 0 Yes Haishan General Manager -Jun 2006 Wang Jun 2003 Female 54 Director 0 0 No Lili -Jun 2006 Wu Jun 2003 Male 34 Director 0 0 No Xiaohua -Jun 2006 Shi Independent Jun 2003 Male 49 0 0 Yes Jianjun Director -Jun 2006 Yang Independent Jun 2003 Male 42 0 0 Yes Zhen Director -Jun 2006 Yu Independent Jun 2003 Honglia Male 50 0 0 Yes Director -Jun 2006 ng Chairman of the Wang Jun 2003 Male 54 Supervisory 0 0 No Jiaqiang -Jun 2006 Committee Jiang Jun 2003 Male 36 Supervisor 0 0 No Kun -Jun 2006 Shi Jun 2003 Male 54 Supervisor 0 0 Yes Xinhua -Jun 2006 Sun Assistant General Jun 2003 Male 47 0 0 Yes Qiang Manager -Jun 2006 Jiang Assistant General Jun 2003 Male 42 0 0 Yes Hanbin Manager -Jun 2006 Liu Assistant General Jun 2003 Male 50 0 0 Yes Chuanxi Manager -Jun 2006 Yuan Assistant General Jun 2003 Male 41 0 0 Yes Yong Manager -Jun 2006 Zou Assistant General Jun 2003 Dezhon Male 44 0 0 Yes Manager -Jun 2006 g Xiao Jun 2003 Male 39 Secretary of BOD 0 0 Yes Zhaokai -Jun 2006 Note: this chapter discloses the condition of the directors, supervisors and senior management by the end of 2004. From the beginning of 2004 to the day when this report is disclosed, there have been some changes: in January 2005, as approved by the BOD, Mr. Huang Zhiqin resigned from the post of director, and Mr. Li Weide was elected chairman of the BOD; Mr. Li Weide no longer acted as general manager, and Mr. Sun Liang was appointed as general manager(see the announcement of the 16th Meeting of the Third BOD published on the Securities Times and Ta Kung Pao on 11 January 2005). 2. Directors and supervisors working for the Company’s shareholders Name Company Position Office Term Huang Zhiqin China Putian Vice President Since Dec 2001 Cao Bin China Putian Deputy Dean of Putian Institute of Technology Since Mar 2004 Wu Xiaohua China Putian Assistant General Manager of Strategy & Since Jul 2003 Development Department Wang Lili China Putian Associate Senior Researcher of Technology & Since Dec 2001 Quality Department Wang Jiaqiang China Putian General Manager of Financial Department Since Nov 2001 Jiang Kun China Putian Assistant General Manager of Capital Since Jun 2003 Administration Department -7- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report 3. Annual remuneration （1） In 2004, the directors(except independent directors) and supervisors were not paid by the Company. Those directors or supervisors who held the administrative positions in the Company received remuneration according to their administrative posts. The senior management’ s remuneration, which is proposed by the Remuneration & Assessment Committee of the BOD and is finally decided by the BOD, was made up of three parts including fundamental remuneration, post remuneration and performance remuneration. The BOD evaluated the senior management’ s performance in light of operating results and accordingly determine their remuneration. Independent directors received allowance from the Company as approved by the shareholder’ s general meeting. （2） In 2004, a total of RMB1,253,260 was paid to the nine persons including the directors, supervisors and senior management who received remuneration from the Company, including RMB310,488 to the two executive directors and RMB517,983 to the three senior managements with highest remuneration. （3） There were nine persons receiving remuneration from the Company among the directors, supervisors and senior management, including one person with an annual remuneration below RMB100,000, six persons between RMB100,000 to RMB150,000 and two persons over RMB150,000. （4） The independent directors each received an allowance of RMB30,000 (before-tax) in 2004. （5） The directors and supervisors who do not receive remuneration from the Company are: Mr. Hang Zhiqin, Mr. Cao Bin, Mr. Wu Xiaohua, Ms. Wang Lili, Mr. Wang Jiaqiang, Mr. Jiang Kun. They all receive remuneration from the Company’ s controlling shareholder, China Putian Corporation. V. Corporate Governance Structure 1. Present state of the Company’s governance The Company continued to perfect its legal person governance structure to standardize its operation in accordance with the requirements of the PRC Company Law, Securities Law and China Securities Regulatory Commission (CSRC) during the reporting period. During the reporting period, the BOD approved the Rules on Related Transactions and Rules on Investor Relation Management, and revised the Articles of Association to regulate its actions in providing guaranties for other parties. In general, the Company’ s governance structure was inconformity with the demands of the Rules on Listed Company’ s Governance. 2. Independent directors’working performance The three independent directors of Company could perform their duties in accordance with the Articles of Association. They attended the board meetings held in the reporting period and carefully examined all the proposals. They paid great attention to the Company’ s operating and financial condition and participated actively in the Company’s policy-making. They presented independent opinions on relevant affairs. What they have -8- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report done was very helpful for the BOD to make right decisions and for the Company to enhance its management level and to standardize its operation. They both played their role as independent directors and safeguarded the shareholders’interests. (1) Particulars of independent directors’attendance in the board meetings during the reporting period: Number of Attendance Attendance Name board Absence Note in person by proxy meetings Be away on official Shi Jianjun 10 9 1 business Yan Zhen 10 9 1 Be in hospital Yu Be away on official 10 9 1 Hongliang business (2) objections raised by independent directors against certain issues of the Company During the reporting period, the independent directors did not raise objections against any issues of the Company. VI. Report of the Board of Directors 1. the Company’s operating position in the reporting period (1) analysis of the overall operating condition of the Company during the reporting period During the reporting period, the Company was confronted with the government’ s economic macro-control policy, rise of raw material prices and the telecom operators’ reduction in their investment in fixed assets. Despite of that, the Company achieved fair operating results by concerted efforts of the whole staff under the leadership of the BOD. The revenue was reported RMB 851,292 thousand for the year, 3.99 percent up from last year. However, under the influences of market competition and rise of prices of raw material, the cost of products became higher while gross margin was lower than that of last year, and with some subsidiaries reporting losses for the year, and the Company increasing assets impairment provision, the Company reported loss of RMB27,461 for the fiscal year of 2004. （2） Main business of the Company 1) Introduction of main business The Company is mainly engaged in manufacture, sales and after sales services of data communications products, wiring communications products, wireless communications products, distribution frame products as well as multi-media computers and relevant products. 2) Composition of turn over( RMB’ 000) The Company realized turn over of RMB851,292 thousand and gross profit of RMB157,712 thousand for the fiscal year of 2004, the composition is as follows: By industry: -9- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report Industry Sales Cost Telecommunications 699,720 570,173 Electric appliances 127,009 103,920 By products: Product Sales Cost Distribution frame 255,163 181,421 Network products 335,775 285,770 Electric products 127,009 103,920 Wireless products 108,782 102,983 By region: Region Sales Cost North China 282,347 237,652 East China 270,492 214,461 Other regions 298,454 239,233 (3) Operating results of main associated companies in 2004 (Yuan) Associated companies which contributing more than 10 percent of the Company’ s net profit. Equity owned Investment Registered Company by the Main business Net profit Income to the capital Company Company Nanjing Postel Wong Zhi Manufacture and 90,000,000 Telecommunications 34% sales of CDMA -24,365,024 -8,284,108 ($10,900,000) Co., Ltd mobile phone Note: Nanjing Postel Wong Zhi Telecommunications Co., Ltd was consolidated into the group by equity method in 2004. (4) Main suppliers and customers In 2004, the Company’ s purchase from the top five suppliers amounted to RMB 272,324 thousand, accounting for about 42.31 percent of the total purchase, and sales to the top five customers amounted to RMB 100,144 thousand, accounting for about 11.76 percent of the total revenue. (5) Difficulty in operation In 2004, faced with the severe market condition, the Company vigorously adopted different measures to raise operating results. It strengthened the integration of resources. It speeded up the pace of developing various products and reform in corporate mechanism and corporate system. Moreover, the Company invited public bidding in the purchase of raw materials and components to control the costs; it enhanced product volume to maintain the original market share when selling prices was reduced; it further strengthened the overall budget management, trying to reduce expenses to offset the losses incurred from the gross margin reduction. 2. Investment in reporting period -10- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report (1) Use of proceeds from share issuing The Company did not raise any proceeds by issuing shares in the reporting period or use proceeds raised in previous periods. (2) Other investment in report period ① As approved by the 14th meeting of the Third BOD on 10 November 2004, Nanjing Putian Smart-building Company Ltd., one of the Company’ s controlled subsidiaries, reinvested RMB 1.03 million in Nanjing Nanfang Telecommunications Company, the Company’ s fully-owned subsidiary, increasing its registered capital from 33.17 million Yuan to RMB 34.2 million. After the reinvestment, the Company will hold 97% equity of Nanfang Telecommunications Company while Nanjing Smart-building Company will hold 3%, with an investment of RMB 33.17 million and RMB1.03 million respectively, and Nanjing Nanfang Telecommunications Company was renamed as Nanjing Nanfang Telecommunications Company Ltd. ② on 22 September 2004, the 12th Meeting of the Third BOD approved the resolution of setting up a joint venture with the U.S. P-COM Corporation. The joint venture, which will be specialized in micro wave products, will have a registered capital of $ 3.50 million, with $ 2.45 million invested by the Company and $ 1.05 million by P-COM Corporation, holding 70% and 30% equity respectively. The joint venture had not been set up by the end of the reporting period. 3. Analysis on financial position and operating results (RMB’000) Increas Item 2004 2003 e/decre +/-(%) Main reason of increase/decrease ase Total assets 948,276 1,026,102 -77,826 -7.58% Net loss for the year, and decrease of loans Shareholder’ 339,948 366,365 -26,417 -7.21% Net loss for the year s equity Increase of 24,874 29,187 -4,313 -14.78% Increase of cash outflows due to cash and reduction in bank loans cash equivalents Gross profit 157,712 181,984 -24,272 -13.34% Rise of prices of raw materials, and reduction of gross margin Subsidy 0 1,091 -1,091 -100.00 No such income for the year receipt % Net profit -27,461 12,068 -39,529 -327.55 Decrease of revenue, investment income, % and non-operating income, and increase of administrative expenses 4. Work plan for next year (1) deepen the reform in corporate system and mechanism, strengthen capital management, and optimize assets structure and industry structure (2) strengthen market exploration and construction of marketing network, and work hard to raise market share (3) readjust industry structure, strengthen product-based operation, work earnestly in all the links from the development, manufacture, sales to after-sale services of self-developed products, vigorously meet the competitions, attach importance on the strategy and development of competitive industries basic industry, application industry and (4)Work hard to foster new profitable products, accelerate the speed of developing new -11- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report technology and new products to enhance the core competitiveness of the Company. (5)Further strengthen fundamental management. (6)Strengthen the construction of corporate culture and promote the comprehensive quality of the staff. 5. Profit distribution preplan for the year The Company realized net profit of RMB–27,461 thousand for 2004. Plus the accumulated losses by last year, it had accumulated losses of RMB70,066 thousand by the end of 2004. According to this fact, the Board of Directors advised that no dividends be declared for 2004, and that no capital accumulation fund be transferred into share capital. VII. Report of Supervisory Committee (1) The Company’ s performance in abiding by the laws in operation The Supervisory Committee inspected and supervised the Company’ s decision-making procedures, internal management rules and actions of the directors and senior management in performing duties. The Supervisory Committee believe that the Company was in conformity with the relevant laws, regulations and the Company’ s internal management rules in its operations, and underwent legal procedures in decision-making. No acts of the directors and senior management were observed violating the laws, regulations and the Company’ s Articles of the Association or contrary to the interest of the Company. (2) The Company’ s financial position: The Supervisory Committee carefully inspected the financial rules and financial situation of the Company. Upon the Company’ s inappropriate actions in providing guaranty to other parties, the Supervisory Committee remind the BOD and the management to strictly abide by the Articles of Association and the Company’ s Rule on Guaranty and regulate its actions of providing guaranty to the subsidiaries. the Supervisory Committee remind the BOD and the management to pay great attention to the quality of the assets, and adopt vigorous measures in the disposal of the inventories or collecting of trade receivables on which provision for impairment has been calculated, to reduce virtual losses on the Company. Meanwhile, the Company should try to avoid or reduce the increase of bad assets. The Supervisory Committee believe that the 2004 Accounting Statement gives a true view of the Company’ s financial position and operating results in the reporting period, and the Auditor’ s Report as well as the related judgement presented by Price WaterHouseCoopers Zhong Tian CPAs Co., Ltd. is objective and fair. (3) The Company’ s transaction in purchasing and selling assets The Company’ s transactions in purchasing and selling assets in the reporting period were in line with the principle of sustainable long-term development and were executed at -12- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report fair prices. No insider deals, actions harmful to certain shareholders’interest, or loss of the Company’ s assets were found. (3) The Company’ s related transactions: The Company’ s related transactions in the year were executed at market price by regulated procedures according to relevant rules and by normal commercial terms under the rule of fair trade. No actions of harming the interest of the Company were observed by the Supervisory Committee after inspection. VIII. Significant Events 1. The Company was not engaged in any lawsuit or arbitration of material importance during the reporting period. 2. Matters related to purchasing assets, selling assets or merging during the reporting period 1）As approved by the 14th meeting of the Third BOD on 10 November 2004, the Company bought a 33% stake in Nanjing Postel Wong Zhi Telecommunications Co., Ltd. from Toshiba Corporation and Toshiba China Co., for RMB 10.48 million. After the transfer, the Company’ s equity in Nanjing Postel Wongs Co., Ltd. was increased from 34% to 67%. 2）As approved by the 7th meeting of the Third BOD on 31 March 2004, the Company bought a 1.7% stake in Nanjing Putian Changle Telecommunications Equipment Company Limited. After the transfer, the Company’ s equity in Nanjing Putian Changle Telecommunications Equipment Company Limited was increased from 49% to 50.7%. As a result of the above transactions, Nanjing Postel Wong Zhi Telecommunications Co., Ltd. and Nanjing Putian Changle Telecommunications Equipment Company Limited became the controlled subsidiaries of the Company. The above transactions will not affect the continuity of the Company’ s operation and the stability of the management. Both the property right of the assets involved and the liabilities or right of credit have been transferred. 3）As approved by the 13th meeting of the Third BOD on 21 October 2004, the Company will purchase a 1.18% stake of Hangzhou Hongyan Electric Appliances Company Ltd. from China Putian Corporation. After the transaction the Company will hold a 1.18% stake in Hangzhou Hongyan Electric Appliances Company Ltd. At present the relevant procedures related to the transactions are being gone through at the commercial administration department. 4）As approved by the 7rd meeting of the Third BOD on 31 March 2004, the Company -13- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report closed Nanjing Putian Computer Industry Company Limited, one of the subsidiaries during the reporting period. All the work concerning the liquidation of the subsidiary has been finished. 3. Material related transactions: Material related transactions: As approved by the First Extempore Shareholders General Meeting of 2003, the Company purchased PHS phones of RMB 54,556,192 from Shenzhen Putianlingyun Electronic Ltd., which is a related party of the Company as also controlled by China Putian Corporation. The transaction was executed at market price and is estimated to be continued in 2005. 4. Material contracts (1) During the reporting period the Company did not trust, contract or lease assets to other companies or from other companies. (2) Guarantee offering: during the reporting period the Company offered guarantee for the following subsidiaries with accumulative amount of RMB 62 million and the ending balance accounts for 14.52% of the net assets. (3) The Company made no entrust investment during the reporting period. 5. Commitment of the Company or shareholders holding over 5 percent of the share capital During the reporting period, the Company or shareholders holding more than 5 percent of the share capital did not make any commitment. 6. Appointment of Public Accountant The Company continued to appoint Price WaterHouseCoopers Zhong Tian CPAs Co., Ltd. as the domestic and foreign auditor. Payment to the auditors: (unit: yuan) 2004 2003 Auditor Audit expense Other expense Audit expense Other expense Domestic auditor 350,000 0 300,000 0 Overseas auditor 750,000 0 700,000 0 Note: (1) Expense for business trip was borne by the auditors themselves. (2)The auditors provided no other services charging fees except audit services for the Company. 7. The Company, the Board of Directors or the directors were not punished by the securities regulatory departments during the reporting period. IX. Financial Report 1. Auditor’ s report -14- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report The Company’ s 2004 Financial Statements were audited and issued a report with unqualified opinion by Price WaterHouseCoopers Zhong Tian CPAs Co., Ltd. 2. Financial statements(attached) X. Documents for Inspection 1. Original text of accounting statements signed and sealed by legal person representative, financial controller and accountant officer. 2. Original text of Auditor’s Report signed and sealed by Certified Public Accountant with public accountant’ s seals on. 3. Original texts of all the files and announcements published on the newspapers appointed by China Securities Regulatory Commission during the reporting period. Nanjing Putian Telecommunications Co., Ltd. 19 April 2005 -15- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report NANJING PUTIAN TELECOMMUNICATIONS CO., LTD. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 (All amounts are stated in Renminbi thousand Yuan unless otherwise stated) Notes 2004 2003 Sales 3 851,292 818,647 Cost of sales 3 (693,580) (636,663) Gross profit 157,712 181,984 Other operating income 11,241 8,611 Distribution costs (71,546) (79,417) Administrative expenses (101,792) (79,033) Other operating expenses (3,434) (1,515) Operating profit (loss) 4 (7,819) 30,630 Finance costs, net 6 (18,174) (20,235) Loss on disposal of subsidiaries 8 (55) (812) Profit from sales of long-term investments - 4,795 Share of loss before tax of associated companies 14 (8,837) (456) Profit (loss) before tax (34,885) 13,922 Tax 9 (2,194) (2,141) Profit (loss) before minority interests (37,079) 11,781 Minority interests 10 9,618 287 Net profit (loss) for the year (27,461) 12,068 Earnings (loss) per share 11 Rmb(0.13) Rmb 0.06 - 16- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report NANJING PUTIAN TELECOMMUNICATIONS CO., LTD. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2004 (All amounts are stated in Renminbi thousand Yuan unless otherwise stated) 31 Notes December 31 December 2004 2003 ASSETS Non-current assets Property, plant and equipment 12 130,702 111,149 Construction in progress 3,198 2,753 Land use rights 13 34,410 35,271 Investments in associated companies and available-for-sale investments 14 7,583 35,345 Intangible assets 15 9,844 14,063 185,737 198,581 Current assets Inventories 16 162,462 206,094 Receivables and prepayments 17 399,743 397,122 Trading investments 363 - Cash and bank balances 18 199,971 224,305 762,539 827,521 Total assets 948,276 1,026,102 - 17- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report NANJING PUTIAN TELECOMMUNICATIONS CO., LTD. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2004 (continued) (All amounts are stated in Renminbi thousand Yuan unless otherwise stated) Notes 31 31 2004 2003 EQUITY AND LIABILITIES Capital and reserves Share capital 19 215,000 215,000 Reserves 20 124,948 151,365 339,948 366,365 Minority interests 10 29,601 15,820 Non-current liabilities Long-term bank loan 21 35,000 35,000 Employee housing benefits payable 15,069 17,918 Other non-current liabilities 2,529 1,670 52,598 54,588 Current liabilities Trade and other payables 22 259,006 287,499 Current tax liabilities 1,123 1,029 Dividend payable - 801 Short-term bank loans 23 266,000 300,000 526,129 589,329 Total liabilities 578,727 643,917 Total equity and liabilities 948,276 1,026,102 On 15 April 2005, the Company’ s Board of Directors authorised these financial statements for issue. Director Director - 18- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report NANJING PUTIAN TELECOMMUNICATIONS CO., LTD. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004 (All amounts are stated in Renminbi thousand Yuan unless otherwise stated) Year ended 31 December 2003 Statutory and discretionary Statutory Exchange Capital surplus public translation Other Accumulated Total Share Total equity Surplus reserve fund welfare fund reserve reserves losses reserves capital and reserves Balance at 1 January 2003 165,531 16,331 10,253 (58) 115 (55,052) 137,120 215,000 352,120 Exchange translation difference - - - 44 - - 44 - 44 Net profit for the year - - - - - 12,068 12,068 - 12,068 Profit appropriation of subsidiaries - 616 308 - - (924) - - - Disposal of subsidiaries - (1,731) (921) - - 2,652 - - - Share of waived debts of an associate (1) 1,843 - - - - - 1,843 - 1,843 Others 290 - - - - - 290 - 290          Balance at 31 December 2003 167,664 15,216 9,640 (14) 115 (41,256) 151,365 215,000 366,365          1) It represents share of capital surplus recognized by an associate due to waiver of debts by its investor. -19- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report NANJING PUTIAN TELECOMMUNICATIONS CO., LTD. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004 (continued) (All amounts are stated in Renminbi thousand Yuan unless otherwise stated) Year ended 31 December 2004 Statutory and discretionary Statutory Exchange Capital surplus public translation Other Accumulated Total Share Total equity surplus reserve fund welfare fund reserve reserves losses reserves capital and reserves Balance at 1 January 2004 167,664 15,216 9,640 (14) 115 (41,256) 151,365 215,000 366,365 Exchange translation difference - - - (109) - - (109) - (109) Net profit for the year - - - - - (27,461) (27,461) - (27,461) Profit appropriation of subsidiaries - 935 414 - - (1,349) - - - Share of waived debts of an associate(1) 423 - - - - - 423 - 423 Others 730 - - - - - 730 - 730          Balance at 31 December 2004 168,817 16,151 10,054 (123) 115 (70,066) 124,948 215,000 339,948          (1) It represents share of capital surplus recognized by an associate due to waiver of debts by its investor. -20- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report NANJING PUTIAN TELECOMMUNICATIONS CO., LTD. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 (All amounts are stated in Renminbi thousand Yuan unless otherwise stated) 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES Net profit (loss) (27,461) 12,068 Adjustments for: Tax 2,194 2,141 Minority interests (9,618) (287) Depreciation 15,088 18,202 Impairment (Reversal of impairment) of property, plant and equipment 256 (529) Impairment (Reversal of impairment) of receivables 4,403 (2,858) Provision of slow moving inventories 27,194 14,130 Amortization of land use rights and intangible assets 6,425 6,888 Interest expense 20,554 21,840 Interest income (3,392) (2,416) Loss of associated companies 8,837 456 Negative goodwill (8,103) - Profit on sale of investments - (4,795) Profit on disposal of property, plant and equipment and intangible assets (43) (6,867) Loss on disposal of subsidiaries 55 812 36,389 58,785 Decrease (increase) in inventories 27,277 (42,426) Decrease (increase) in receivables and prepayments (3,917) 20,761 Increase (decrease) in trade and other payables (20,508) 37,719 Cash generated from operations 39,241 74,839 Net interest paid (17,162) (19,424) Tax paid (5,970) (1,602) Net cash generated from operating activities 16,109 53,813 -21- Summary of Nanjing Putian Telecommunications Co., Ltd. 2004 Annual Report NANJING PUTIAN TELECOMMUNICATIONS CO., LTD. CONSOLIDATED CASH FLOW STATEMENT (continued) FOR THE YEAR ENDED 31 DECEMBER 2004 (All amounts are stated in Renminbi thousand Yuan unless otherwise stated) 2004 2003 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment 695 11,389 Purchase of property, plant and equipment, intangible assets and payments on construction projects (11,610) (20,213) Investments in associated companies - (13,663) Purchase of trading investments (363) - Purchase of subsidiaries, net of cash receipts 8,795 - Disposal of subsidiaries, net of cash disposed (41) (63) Cash from sale of subsidiaries of the Company - 11,754 Investment in a subsidiary company (75) (900) Dividends from investments in associated companies 790 461 Decrease (increase) in bank deposits with maturity over 3 months 49,208 (16,264) Net cash generated from (used in) investing activities 47,399 (27,499) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of non-current liabilities (6,511) (7,843) Proceeds from bank loans 381,000 269,500 Repayment of bank loans (415,000) (259,000) Capital contributed by minority shareholders 3,165 1,138 Dividend paid to minority shareholders (1,288) (922) Net cash generated from (used in) financing activities (38,634) 2,873 Increase in cash and cash equivalents 24,874 29,187 Cash and cash equivalents at beginning of year 175,097 145,909 Cash and cash equivalents at end of year 199,971 175,096 -22-