飞亚达(000026)Ｂ2004年年度报告摘要（英文版）

Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary SHENZHEN FIYTA HOLDINGS LTD. 2004 ANNUAL REPORT (Summary) §1 Important 1.1 The Board of Directors and all the directors of the Company hereby confirm that there are no important omissions, fictitious statements or serious misleading information carried in this report, and shall take all responsibilities, individually and/or jointly, for the truthfulness, accuracy and completion of the whole contents herein.This summary is cited from the full text of the annual report. An investor who wants to know the detail, should read the full text of the annual report. This annual report is prepared in both Chinese and English. Should there be any difference in understanding of the two versions, the Chinese version shall prevail. 1.2 No director has expressed that he/she is not sure for the truthfulness, accuracy or completeness of this annual report or has any different opinion on the same. 1.3 All directors attended the board meeting. 1.4 Both Pricewaterhouse Coopers Zhongtian Certified Public Accountants and PRICEWATERHOUSECOOPERS CHINA LTD produced a standard unqualified auditors’ report without any explanatory notice for the Company. 1.5 Mr. Wu Guangquan, the Chairman of the Board, Mr. Xu Dongsheng, the General Manager, Mr. Li Dehua, the Deputy General Manager and Chief Accountant, and Mr. Liu Biao, the Financial Manager hereby guarantee the accuracy and completeness of the financial report enclosed in this annual report. 1.6 Except that the Financial Report (§9.2) of the English version is drawn up according to the Auditors' Report as prepared in accordance with International Financial Report Standards, all financial data are based on Chinese Accounting Standards. §2 Company Information 2.1 Basic Information Short form of the FIYTA A , FIYTA B stock Stock code 000026, 200026 Stock Exchange Shenzhen Stock Exchange listed with Registered Address FIYTA Technology Building, Gaoxin S. Road 1, Nanshan District Office Address: 20th Floor, FIYTA Technology Building, Gaoxin S. Road 1, Nanshan Dis trict Post Code 518057 Internet Website http:// www. fiyta.com.cn 1 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary E-mail szfiyta@public.szptt.net.cn 2.2 Communication Information Secretary of the Board Securities Affairs Representative Name Hao Huiwen Chen Zhuo Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road 1, Nanshan District Tel 0755－83217888（operator） 86013669 Fax 0755-83348369 E-mail investor@fiyta.com.cn §3 Financial Highlights 3.1 Accounting Data Summary In RMB Increas e/decre 2002 ase of current 2004 (current 2003 (previous Items year over before after year) year) previous year adjustment adjustment (％) Income from principal businesses 278,246,963 228,133,082 21.97 206,241,298 219,492,686 Total profit 3,523,936 5,708,012 -38.26 -75,424,201 -76,162,958 Net profit 1,907,880 5,088,057 -62.50 -77,434,684 -78,173,441 Net profit after deduction of non- 2,473,894 -6,775,168 136.51 -77,958,917 -78,697,674 recurring loss/gain Net cash flows arising from operating -24,942,143 -11,746,162 -112.34 23,354,487 23,354,487 activities Increase of End of 2002 End of 2004 End of 2003 end of current (end of current (end of year over end before after year) previous year) of previous adjustment adjustment year (％) Total assets 627,537,297 572,847,496 9.55 566,681,393 566,681,393 Shareholders’ equity(Excluding Minority 517,364,242 515,456,362 0.37 510,368,305 510,368,305 Shareholders’) equity) 3.2 Financial Data Summary In RMB Increase/decreas 2002 2004 (current 2003 (previous e of current year Items year) year) over previous before after year (％) adjustment adjustment Net assets per share 0.008 0.020 -62.50% -0.311 -0.314 Net assets-income ratio 0.37% 0.99% 0.62 -15.17% -15.32% Net assets-income ratio based on the net profit after deducting 0.48% -1.31% 1.79 -15.28% -15.42% non-recurring gains/ loss Cash flow arising from business activities per share, -0.100 -0.047 112.34% 0.094 0.094 net 2 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary Increase of end End of 2002 End of 2004 End of 2003 of current year (end of current (end of over end of Before After year) previous year) previous year adjustment adjustment (％) Net assets per share 2.075 2.067 0.37 2.047 2.047 Net assets per share after adjustment 2.03 2.03 0.00 1.96 1.98 non-recurring gain/loss items √ applicable □ inapplicable Non-recurring gain/loss items Amount In RMB Carry-back of the reserve for various devaluations provided in 8,046,795 previous years. Income from disposal of fixed assets 72,722 Earnings from short term investment -8,809,002 non-operating income 477,814 non-operating expenses -354,506 Impact of income tax 163 Total -566,014 3.3 Differences between Domestic and International Accounting Standards √ applicable □ inapplicable In RMB ‘ 000 Domestic Accounting Standard (CAS) International Accounting Standard (IAS) Net profit 1,908 205 Net profit as audited by Pricewaterhouse Coopers Zhongtian Certified Public Accountants 1,908 Note to the Provision of deferred taxes 1,265 discrepancies Earnings from short term investment upon adjustment 438 Net profit as audited by Pricewaterhouse Coopers China Limited according to the international accounting standard 205 §4 Changes in Share Capital and Particulars about Shareholders 4.1 Change in Shares In Shares Increase/ Decrease Before change After the change (+ / -) as of the year 1. Circulating Shares not Listed Promoters’shares 130,248,000 0 130,248,000 Including: domestic legal person 130,248,000 0 130,248,000 shares Total 130,248,000 0 130,248,000 2. Circulating Shares Listed 1) RMB ordinary shares 60,749,999 0 60,749,999 Including: senior executives’shares 48,211 0 48,211 2) Foreign shares listed domestically 58,320,000 0 58,320,000 3 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary Total 119,069,999 0 119,069,999 3. Total shares 249,317,999 0 249,317,999 4.2 Top 10 shareholders and Shares Held by Top 10 Shareholders of Circulating Shares Total shareholders ended the 18,740 report period Shares Held by Top 10 Shareholders Increase/De Number of Shareholding Type Shares pledged or Shareholders crease in the shares held proportion (negotiable/non-ne frozen year at year end (%) gotiable CATIC SHENZHEN Domestic legal 0 130,248,000 52.24 HOLDINGS LTD. person shares 0 CHAN KEUNG 493,383 768983 0.31 Listed B shares unknown Ou Yanping 231,401 451301 0.18 Listed B shares unknown KO,LING HON 49,200 439100 0.18 Listed B shares unknown Lin Hongbo 0 362880 0.15 Listed B shares unknown China Pingan -25,890 359070 0.14 Listed B shares unknown Insurance (Hong Kong) Xue Peiming 233,500 336800 0.14 Listed B shares unknown Lin Zhihua -200,000 330000 0.13 Listed B shares unknown Lihuang Shunjin 104,100 288000 0.12 Listed B shares unknown Yang Yuanzhou 0 285900 0.11 Listed B shares unknown Shares held by the top ten shareholders Shareholders (in full name) Quantity of negotiable shares held Types (A-, B- or H-shares, or others) at the end of the period CHAN KEUNG 768983 Negotiable B-shares Ou Yanping 451301 Negotiable B-shares KO,LING HON 439100 Negotiable B-shares Lin Hongbo 362880 Negotiable B-shares China Pingan Insurance (Hong 359070 Negotiable B-shares Kong) Xue Peiming 336800 Negotiable B-shares Lin Zhihua 330000 Negotiable B-shares Lihuang Shunjin 288000 Negotiable B-shares Yang Yuanzhou 285900 Negotiable B-shares Zeng Ying 255000 Negotiable B-shares Relations hip/concerted action among the The Company has never found any business relations among the above shareholders top ten shareholders or they belong to the persons of concerted action as specified in the Measures on Listed Companies on Disclosing the Shareholding Information. 4.3 About the Controlling Shareholder and the Actual Controller 4.3.1 Change in the Controlling Shareholder and the Actual Controller □ applicable √ inapplicable 4.3.2 About the Controlling Shareholder and the Other Actual Controller(s) About the controlling shareholder: CATIC SHENZHEN HOLDINGS LTD. was founded in June, 1997, with total share capital: RMB 642 million, the legal representative: Wu Guangquan; principal businesses: Design, manufacture and sales of printed circuit board, LCD, mechanical and quartz timepieces. On the date of incorporation, the company issued 400 million domestic shares to CATIC Shenzhen Corporation, taking 62.31% of the total share capital. In 1997, the company successfully issued 242 million H-shares in Hong Kong, taking 37.69% of the total share capital. The company was listed with Hong Kong Stock Exchange in September, 1997. Actual controller of the controlled shareholder 4 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary CATIC Shenzhen Corporation is a state enterprise founded in April, 1982, with the registered capital: RMB 80 million, and legal representative: Wu Guangquan; Principal businesses:Import and export of motor vehicles, equipment and machinery made within the Group. 4.3.3 Diagram of the controlling relationship between the Company and actual controller CATIC Shenzhen Corporation Holding 62.31% CATIC SHENZHEN HOLDINGS LTDS. Holding 52.24% SHENZHEN FIYTA HOLDINGS LTD. §5 Directors, Supervisors and Senior Executives 5.1 Change in shares held b y Directors, supervisors and senior executives Shares Causes of Shares held held at change Name Title Sex Age Office Term at year the year beginning end Wu 42 Chairman of Board male May, 03 - May, 06 0 0 — Guangquan Vice Chairman of Lai Weixuan male 40 May,04-May.06 0 0 — Board (Note ①) Wang Xinkuo Director（Note①） male 56 May, 03 - May, 04 0 0 — Sui Yong Director male 46 May, 03 - May, 06 0 0 — You Lei Director（Note②） male 35 May, 03 - Dec, 04 0 0 — Xu Director & General male 38 May, 03 - May, 06 0 0 — Dongsheng Manager Zhu Gensen Director male 56 May, 03 - May, 06 0 0 — Independent Cai Zheng male 63 May, 03 - May, 06 0 0 — Director Diao Independent male 41 May, 03 - Dec, 04 0 0 — Weicheng Director（Note②） Independent Hua Xiaoning male 41 May, 03 - May, 06 0 0 — Director Chairman of Shao Supervisory male 54 May, 03 - May, 06 0 0 — Kexiong Committee Zhang Supervisor male 51 May, 03 - May, 06 0 0 — Songhua Hu Xinglong Supervisor male 40 May, 03 - May, 06 0 0 — Deputy General Lu Bingqiang male 43 May, 03 - May, 06 48210 48210 frozen Manager Deputy General Li Dehua Manager and Chief male 44 May, 03 - May, 06 0 0 — Accountant 5 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary Deputy General Li Bei male 49 May, 03 - May, 06 0 0 — Manager Deputy General Fang Juan female 45 Jan,04- May, 06 0 0 — Manager Secretary of the Hao Huiwen male 36 May, 03 - May, 06 0 0 — Board of Directors 5.2. Engagement of Directors and Supervisors in the Shareholders √ applicable □ inapplicable Titles engaged in the Name Shareholders Office term shareholders Wu Chairman of the CATIC SHENZHEN HOLDINGS LTD. May, 03 - May, 06 Guangquan Board Lai Weixuan CATIC SHENZHEN HOLDINGS LTD. Director May, 04 - May, 06 Wang Xinkuo CATIC SHENZHEN HOLDINGS LTD. Director May, 03 - May, 04 Sui Yong CATIC SHENZHEN HOLDINGS LTD. Director May, 03 - May, 06 You Lei CATIC SHENZHEN HOLDINGS LTD. Director May, 03 - May, 06 Xu Dongsheng CATIC SHENZHEN HOLDINGS LTD. Director May, 03 - May, 06 Chairman of Shao Kexiong CATIC SHENZHEN HOLDINGS LTD. Supervisory May, 03 - May, 06 Committee 5.3 Annual Emolument to Directors, Supervisors and Senior Executives In RMB ‘000 Total Annual Emolument 2,296.30 The total emolument to the three directors enjoying the 602.90 highest pays (only two) The total emolument to the three senior executives enjoying 888.10 the highest pays Allowance to Independent 30.0/person/year Directors Other Financial Interests to Nil Independent Directors Directors and supervisors who Mr. Wu Guangquan, the Chairman of the Board, Mr. Lai Weixuan, Mr. Sui Yong do not receive any pay or and Mr. You Lei, three directors, and Mr. Shao Kexiong, the Chairman of the allowance from the Company Supervisory Committee receive their remuneration from the Company’s shareholders instead of the Company. Pay intervals Persons RMB 300 thousand 1 RMB 200 –250 thousand 6 RMB 150-200 thousand 2 Below RMB 30 thousand 3 §6 Report of the Board of Directors 6.I Overall Operation Discussion and Analysis In the report period, the Company implemented the work principle of “promoting development of the principal industry, enhancing brand promotion, constructing high-efficiency team and improving overall performances”worked out at the beginning of the year, further concentrated the teamwork force, pooled the wisdom and efforts of everyone, focused on the principal business with the two brands FIYTA and HARMONY, enhanced the management and operation of the Company’ s property business, deepened various management work, and tried every means to improve the operating income and profit-making ability. 6 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary Through deepened survey over the customers and the market, the management made careful research on the competition situation of the watch industry, with the result of the first survey on the watch market in the PRC territory conducted by some domestic famous survey company and the relevant management theory as reference, the management made overall analysis on the business of FIYTA watch and Harmony World Watches Center, clarified the Company’ s strategy basis and competition strategy as well as its competition position and status of resources. Meanwhile, through three turns of discussion, collection and refining among all the staff over the past two years at various levels, the Company determined the FIYTA Philosophy in the report period, and defined the Company’ s mission of “focusing on the timepiece industry, helping customers in realizing high quality life, providing stage for staff and creating returns to the shareholders’ ; proposed the Company’ s wish of “molding international brand and becoming a globalized enterprise”. The establishment of the philosophy and strategy has laid a strategic foundation for the Company to further mold the brand and establish the core competitiveness. 1. FIYTA Watch The Company has taken several favorable measures and further upgraded the brand superiority of FIYTA watches and improved the sales of the market. In respect of new product research and development, the Company, based on the customers’demand and the market survey information, further increased the investment in the research and development and the technology, carried out “the research and development of the three sources”, reinforced the innovation superiority of FIYTA Brand and stressed the brand core value of “innovation”. The Company has launched over 50 varieties of new products and achieved good sales results. The “1st FIYTA Cup Watch Design Contest”jointly held by the Company and the Fine Arts School of Tsinghua University has been honored as “Waking up the Sense of Innovation and Developing Inexhaustible Innovation Source of Watch Industry”in the sector. In respect of marketing, the Company had conducted continuous promotion for all the 365 days, conducted several large-scale promotion activities, such as “Expressing Feeling of Friendship at the Time of Strong Affection”, “Paying Close Attention to the Future”by contributing donations to the Hope Project. As a result, inventories were effectively absorbed and sales volume increased. In respect of organization management, the Company established FIYTA watch sales department based on the market demand for the purpose of better promoting the FIYTA brand development and marketing management. The Company has also upgraded the product quality by optimizing the supply chain management. In the report period, the income from FIYTA watches kept a growth trend since last year and the sales income reached RMB 121,535 thousand, a 12.57% growth over the same period of the previous year. FIYTA Watch has been honorably rewarded as “No. 1 Product of the Same Kind in the National Market”issued by China Industrial Information Statistic Information Delivery Center of the State Bureau of Statistics successively for 10 years. 2. Retails of Top Brand Watches The Company further increased the investment in Shenzhen Harmony World Watches Center (HARMONY). HARMONY is experiencing a high speed expansion stage and has achieved unprecedented development in construction of the network. In the report period, the Company established another 18 chain shops in Beijing, Shenzhen, Nanning, Luoyang, Dongguan, etc. So far, the Company has 36 chain shops all over big and medium cities in China. It is estimated that in 2005, the number of chain shop s shall be 50 and a situation of being regional flagship store as the core and a big scale and specialized famous watch chain sales network throughout the country shall form. HARMONY shall become one of the famous watch suppliers with biggest scale and power force in China. In the report period, the Company, including Shenzhen Ha rmony World Watches Center Co., Ltd., realized a turnover from the retail sale of top brand watches amounting to RMB 129,272 thousand, a 39.24% growth over the same period of the previous year. 3. Property Operation FIYTA Technology Building, located in Shenzhen Hi-tech Park, has been successfully completed in construction and put into use after 26 months of construction. At the end of the report year, such main businesses as the Company’ s head office, its manufacture subsidiaries and HARMONY have successively moved in and the Company’ s overall identity is further manifested. At the end of the report period, the rent invitation of FIYTA Technology Building had been carried out successfully. So far, such famous companies as TENCENT QQ have moved in. The overall utilization rate of the building is over 90%. It shall become an important income and profit growth point in 2005. FIYTA Building, located in CATIC Estate are, is in good operation 7 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary and the operating income has been kept stable. The property lease income of the Company’ s two buildings in the report year amounted to RMB 27,345 thousand, a big growth over the same period of the previous year. It is estimated that in the next year, as FIYTA Technology Building is fully put into operation, income from this business shall further increase. 4. Other important influential factors At the beginning of 2004, based on the good estimation of the policies and macro economic situation and approved by the Board of Directors, the Company increased in a certain degree the short term investment. By the end of the report period, the investment amount was RMB 22,143 thousand. Affected by various factors such as macro adjustment and control, the stock market experienced big falling and the Company’ s short term investment suffered some paper loss. By the end of the report period, the balance of the short term investment was RMB 11,819 thousand; in addition to the reserve for price falling of short term investment at the beginning of the year amounting to RMB 905 thousand, the Company provided RMB 9,419thousand more in the report period, which directly impacted the total profit of the period. Generally speaking, in the report period, the income form the principal businesses was RMB 278,247 thousand, a 21.97% growth over the same period of the previous year. The main reason is that the retail sale income of FIYTA and world top brand watches and the property lease income grew by a big margin. The Company realized a total profit amounting to RMB 3,524 and net profit amounting to RMB 1,908 thousand, dropping respectively by 38.26% and 68.50% over the same period of the previous year. The main reason is that the Company’ s short term investment experienced a big loss in book. In the report period, affected by the increase of investment in expansion of the marketing network of FIYTA watches and Harmony Chain Shops and increase of inventories, the net cash flow arising from the business activities was RMB-24,942 thousand. At the end of the report period, the Company’ s total assets was RMB 627,537 thousand and shareholders’ equity was RMB 517,364 thousand which increased respectively by 9.55% and 0.37% over the same period of the previous year. 6.2 Principal Businesses Classified Based on Sectors and Products In RMB ‘ 000 Increase/decr Increase/decr Increase/decr ease Growth ease of costs ease of gross Based on Income from Gross of income Costs of principal of principal profit rate sectors or principal interest from principal business business over over the products business rate (%) business over the previous previous year the previous year（％） (%) year（％） Industry 121,630,119 64,168,669 47.24 11.98 23.37 4.87 Trading 129,271,502 105,318,152 18.53 29.68 30.46 0.49 Property 27,345,342 5,577,923 79.60 85.16 146.16 5.06 management Incl.: related － － － － － － transactions Sales of FIYTA 121,534,988 64,149,227 47.22 12.57 12.95 0.17 watches Sales of foreign famous 129,271,502 105,318,152 18.53 39.24 37.35 1.12 watches Incl.: related － － － － － － transactions 6.3 Principal Businesses Based on Regions In RMB ‘000 Increase/decrease of revenue from Regions principal business income the principal businesses over the previous year (%) Northeast China 34,280,260 20.89 North China 29,280,936 -23.01 Northwest China 48,101,543 6.19 8 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary East China 35,073,898 77.41 Southwest China 14,209,704 25.66 South China 89,860,149 54.84 Total 250,806,490 24.90 6.4 Suppliers and Customers In RMB ‘000 Total procurement from Proportion in total ４９，８１７，７８７ ８１．６６％ the top five suppliers procurement Total sales to the top five ２０，７７６，４２５ Proportion in total sales ７．５０％ customers 6.5 Associates (applicable to the investment income taking over 10% of the net profit) □ applicable √ inapplicable 6.6 Big Change in the Principal Business or its Structure √ applicable □ inapplicable First, the Company cleared up and transferred all the three restaurant subsidiaries in 2003 and has completely withdrawn from the catering industry in 2004; Secondly, with the expansion of sales income from Harmony World Watches Center, the income from the retail of famous watches increased to RMB 129,272 thousand, which took 46.46% of the total income from the principal business while it was only 43.7% last year; Thirdly, utilization of FIYTA Technology Building shall further increase the Company’ s income and total profit from the principal business. 6.7 Big Change in the Earning Capacity (Gross Profit Rate) of the Principal Business over the Previous Year □ applicable √ inapplicable 6.8 Reasons of Big Change in the Operation Result and Profit Composition over the Previous Year √ applicable □ inapplicable In comparison with the previous year, the change in the Company’ s total profit composition was mainly due to that the Company earned RMB 10 million of profit from entrusted finance management in the previous year while there was no such income in the report year; moreover, there existed book loss of short term investment amounting to RMB 9.4 million. Reasons of Big Change in Overall Financial Position over the Previous Year □applicable √ inapplicable 6.9 Notes to significant changes taken place in the production and operation environment, macro-policies, laws and regulations which have produced, are producing or shall produce material influence upon the Company’s financial position and operation results. □applicable √inapplicable 6.10 Realization of profit estimation □ applicable √ inapplicable 6.11. Fulfillment of Business Plan □ applicable √ inapplicable 9 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary 6.12. Application of the Proceeds Raised throug h Share Offering √ applicable □ inapplicable In RMB ‘000 Total proceeds Total proceeds used in the year 15,931.00 raised through 209,718.00 share offering Total proceeds used 209,718.00 accumulatively Income Proceeds produced Committed Change of Actual invested and projects Planned investment project (Y/N) Investment progress of in the completion report period Set up chain Y (partial shops of proceeds transferred to 1 Harmony 112,000.00 70,000.00 100％ 302.00 World the project of Watches the technology Center in park) China Set up FIYTA N (additional 2 55,000.00 139,718.00 100％ 9,130.00 Hi-tech investment) Park Set up chain all shops of Y (transferred transferred to Harmony to the project of the project of 3 World 41,480.00 0.00 0.00 the technology the Watches park) technology Center in park Southeast Asia Total 208,480.00 — 209,718.00 — 9,432.00 Note to the (1) Ended the report period, 36 chain shops of Harmony World Watches Center had been actual set up in Shenzhen, Harbin, Urumqi, Wuhan, Datong, Changsha, Lanzhou, Kunming, Xi’an, investment Nanjing, Ningbo, Qingdao, Shanghai, Beijing, Nanning, Nanchang, Fuzhou, Luoyang, Changchun, Chongqing, Dongguan, etc. with total investment of RMB 111,055 thousand (including RMB 70,000 thousand from the proceeds raised through share offering), of which the investment in the report period increased by RMB 42,495 thousand. In 2004, the Company realized a turnover amounting to RMB 108,333 thousand and net profit amounting to RMB 302 thousand. (2) Ended the report period, FIYTA Hi-tech Building was completed in construction, passed the acceptance inspection and put into application. In the report period, the Company made additional investment amounting to RMB 49,630 thousand, and the accumulated investment on this project is RMB 174,857 thousand (including RMB 139,718 thousand from the proceeds raised through share offering). In the report period, the earnings realized amounting to RMB 9,130 thousand. 10 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary Notes to Reasons of Change: Reason of (1) Several years ago, the Board of Directors of the Company took the beneficial result Change and being of priority as the principle, put the work focus on the operation of the existing chain Change shops of Harmony World Watches Center, and decided to reduce the investment on Procedures establishment of the chain shop project at home. On the other hand, with consideration of the safety of the capital operation and assurance of the shareholders’interests, the Board of Directors decided to cancel the investment plan of establishing the world famous brand watch center chain shops in Southeast Asia. (2) Meanwhile, FIYTA Technology Park project, which had been financed with the proceeds from the share allotment at the same time as the aforesaid two projects enjoys good development prospects due to its favorable location. The Company decided to make effective allocation of resources and increased investment in that project. Changes: (1) The total investment in establishment of Harmony world famous brand watch center chain shops in China was reduced to RMB 70,000 thousand and the balance of this project amounting to RMB 43,240 thousand was transferred to the project of FIYTA Hi-tech Park; (2) The total amount from the proceeds amounting to RMB41,480 thousand planned to be invested in establishment of world famous brand watch center chain shops in Southeast Asia was transferred to the project of FIYTA Hi-tech Park; (3) The total additional investment of the proceeds in the project of FIYTA Hi-tech Park was RMB 84,718 thousand; the planned accumulative investment of the proceeds was RMB 139,718 thousand. Procedures: The aforesaid changes were reviewed and approved by the 9th meeting of the 3rd Board of Directors and the 5th meeting of the 3rd Supervisory Committee on April 16, 2002 and approved by 2001 Shareholders’General Meeting with all votes for on May 22, 2002. Information Disclosure: The public notice on the aforesaid meetings was published on Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn 6.13. Investment with the Funds not Raised by Share Offering □ applicable √ inapplicable 6.14 Explanation of the Board to the “Non-standard Opinion” Presented by the Certified Public Accountants □ applicable √ inapplicable 6.15 Business Plan of New Year (if any) √ applicable □ inapplicable Looking into the year 2005, the external environment the Company is going to face involves coexistence of opportunities and challenges. On the one hand, the domestic economy shall continue to be favorable and the people’ s income shall grow steadily; the development trend of consumers’focus on watches with famous brand and symbolization is turning more obvious; on the other hand, there has no fundamental change in the excessive competition situation of the domestic timepiece industry. Facing with such a situation, the Company has established the work policy of “focusing on brand molding, making closer teamwork, enhancing system operation, realizing increase of income and creation of good operation result”, shall continue to insist on the brand operation strategy, further condense the teamwork force, attach importance upon the two principal business lines of FIYTA Watches and Harmony Top Brand Watch Chain Shops, develop the property operation in a steady way and try to bring about better operation result to the shareholders. 1. Push ahead the brand strategy of “3-Color Violet”FIYTA watches, take the customers’demand as the starting point, exercise the assembling tactic and differentiation strategy in marketing, and upgrade the brand value. Insist on application of new materials, new process and new technology in a creative way; try every means to improve the earning power in the marketing link through brand competition. 11 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary 2. Construct and optimize Harmony sales network on overall basis by opening new shops, merger and acquisition, put forth effort on constructing flagship shop, enlarge development of resources of Harmony brand and expand the exchange and cooperation with the world famous brand watch groups. 3. Further improve the management and service levels of FIYTA Building and FIYTA Technology Building, ensure steady growth of the property lease income and develop profit sources for the Company. 4. Enhance personnel deployment and training work in respect of marketing, improve the encouragement mechanism, absorb and train senior professionals of brand popularization, marketing, R & D and design, study on customers, make timely adjustment of the organizational structure and improve the efficiency of the management and operation of the Company. Profit-making Prediction in the New Year (if any) □ applicable √ inapplicable 6.16 Profit Distribution or Converting Capital Public Reserve into Share Capital As audited by Pricewaterhouse Coopers Zhongtian Certified Public Accountants according to the Chinese Accounting Standards (CAS) and Pricewaterhouse Coopers according to the International Accounting Standards (IAS), the Company’ s net profit in the year 2004 was RMB 1,907,880 and RMB 205 thousand respectively . In accordance with the relevant provisions of the PRC Company Law and the Articles of Association, based on the net profit as audited and confirmed by Pricewaterhouse Coopers Zhongtian Certified Public Accountants for the year 2004 amounting to RMB 1,907,880, plus the undistributed profit at the year beginning amounting to RMB -56,176,661, the accumulative loss at the settlement was RMB 54,268,783. As the Company constructed FIYTA Technology Building and expanded investment in Harmony world famous brand chain shops in the past years, a big sum of cash was paid; the Company’ s net profit was small, and in addition, had to make up losses of previous years with the profit continuously. Therefore, the Company has decided not to provide statutory surplus public reserve and the statutory public welfare fund, not to conduct profit distribution in cash/bonus shares or convert the public reserve into share capital for the year 2004. The independent directors of the Company approved the above proposal of the Board of Directors. In their opinion, the proposal complies with the Company’ s actual development conditions; the proposal needs to be approved by 2004 Shareholders’General Meeting. The company is making profit in the report term but not yet have any dividend plan. □applicable √inapplicable §7 Important Events 7.1 Assets Acquisition □ applicable √ inapplicable 7.2 Sales of Assets □ applicable √ inapplicable 7.3. Material Guarantees □ applicable √ inapplicable 7.4 Significant Related Transaction 7.4.1 Related Sales And Purchasing 12 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary √ applicable □ inapplicable Relationship Products purchased and labor Related Products sold and labor services with the Related services received from the related Parties provided to the related parties Parties parties A subsidiary of Proportion in Shenzhen Proportion in the the Company’s Amount in the amount of Amount in CATIC amount of the actual controller transaction the sim ilar transaction Property similar transactions transactions Managemen RMB 3.087 t Co., Ltd. － － 100％ million Principle of pricing of the related Contract executed based on the fair market pricing principle transactions Both FIYTA Building and FIYTA Technology Building received property note to necessity/duration of management service from Shenzhen CATIC Property Management Co., related transactions Ltd. which is favorable for improvement of the professional service level. 7.4.2 Credits and Debts Interchange √ applicable □ inapplicable In RMB ‘000 Funds supplied to the related parties Funds supplied to the Company by the Related Parties related parties Amount incurred Balance Amount incurred Balance Shenzhen Feiyu Artistic Timepiece Co., Ltd. ０．００ ５４７．００ ０．００ ０．００ Shenzhen Feitu New-Tech Development ２．００ １９０．００ ０．００ ０．００ Co. CATIC Shenzhen Corporation ０．００ １５０．００ ０．００ ０．００ Total ２．００ ８８７．００ ０．００ ０．００ 7.5 Assets Management on Commission □applicable √inapplicable 7.6. Events of Commitment √ applicable □inapplicable On September 14, 2004, CATIC SHENZHEN HOLDINGS LTD., the Company’ s controlling shareholder, offered guarantee for the Contract of Comprehensive Credit Line executed between the Company and Shenzhen Development Bank Shenzhen Jiangsu Building Sub-branch amounting to RMB 50 million; as well as the Loan Contract executed between the Company and Shenzhen Development Bank Shenzhen Jiangsu Building Sub-branch for the working capital loan amounting to RMB 20 million under the above comprehensive credit line on the same day. The announcement of the aforesaid information was published on Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn. 7.7 Material Suits and Arbitration □ applicable √ inapplicable 7.8. Performance of Independent Directors Presenting the Board Meetings Number of Number of Number of Number of Names personal entrusted Remarks attendances absences attendances attendances Absence from the 5th meeting of the Cai Zheng 8 7 0 1 4th Board of Directors due to business trip Diao Absence from the 8 7 0 1 Weicheng 9th meeting of the 4th Board of 13 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary 4th Board of Directors due to business trip Hua Xiaoning 8 8 0 0 Objection opinion raised by the independent directors on the business of the Company □ applicable √ inapplicable §8 Report of the Supervisory Committee I. Work Summary of the Supervisory Committee 1. In the report year, the Supervisory Committee conducted supervision over the Company’ s operation according to the law, the work of directors, managers and other senior executives, as well as financial inspection, application of the proceeds raised through share offering and related transactions in accordance with the RPC Company Law and the Articles of Association of the Company. 2. In the report year, the Supervisory Committee had held two meetings (1) The 4th meeting of the 4th Supervisory Committee was held on April 6, 2004. The meeting adopted the following resolutions: ① 2003 Work Report of the Supervisory Committee;② Proposal of 2003 Profit Distribution and Converting the Capital Public Reserve into Share Capital; ③Proposal on Provision of Reserve for Devaluation of Assets in 2003;④Proposal on Change of Important Accounting Policies;⑤Proposal on Correction of the Accounting Errors in 2002;⑥2003 Annual Report. (2) The 5th meeting of the 4th Supervisory Committee was held on August 6, 2004. The meeting examined and approved 2003 Semi-annual Report of the Company. 3. Supervisors of the Supervisory Committee attended all the Board meetings held in 2004 as non-voting delegates, heard the relevant proposals and reports and learned the operation and significant decision-making process of the Company. 4. Supervisors of the Supervisory Committee also attended 2003 Shareholders’General Meeting, addressed 2003 Work Report of the Supervisory Committee and expressed independent opinions on the Company’ s production, operation, financial status and implementation of the duties of members of the Board and senior executives. II. Independent Opinion of the Supervisory Committee In 2004, the Supervisory Committee exercised fully the powers authorized according to the relevant laws and regulations of the state and the Articles of Association, conducted sustainable and effective supervisions over such issues as Company’ s operation according to the law, work of the senior executives, application of the proceeds raised through share offering. Our independent opinions are summarized as follows: 1. The Board of Directors worked carefully with responsibility and the Company made decisions in a scientific and rational way. The Company had complete and sound internal control regulations and implemented these regulations in a practical way. Directors, the management and all senior executives worked with due diligence, implemented resolutions of the Shareholders’General Meeting and the Board meetings carefully, and never violated the laws and regulations of the state or the Articles of Association of the Company in doing their duties and had done nothing harmful to the Company’ s interests or the shareholders’right and interests. 2. Both Pricewaterhouse Coopers Zhongtian Certified Public Accountants and Pricewaterhouse Coopers China Limited produced a standard and unqualified auditors’report for the Company, which truly and objectively reflected the Company’ s financial position and operation result of the year 2004. 3. In 2002, the Company adjusted the projects invested with the proceeds raised through share 14 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary offering in 1997 by reducing the investment in Harmony Chain Shop Project by RMB 84,720 thousand and invested the amount to FIYTA Hi-tech Industrial Park Project. The aforesaid investment alteration was reviewed and approved at the 9th meeting of the 3rd Board and the 5th meeting of the 3rd Supervisory Committee, and reviewed and approved by all the rights bearing votes at 2001 Shareholders’General Meeting. The application in 2004 complied with the relevant resolutions. 4. The Company carried out external transactions based on reasonable prices, had never been found involved in insider transaction. The related transactions were carried out in compliance with the legal procedures and the principle of market price without any harm to the minority shareholders’equity or caused loss of the Company’ s assets. § 9 Financial Report 9.1 Auditors’Opinion Standard Unqualified Auditors’Report 9.2 Financial Statement (attached hereafter) 9.3 In comparison with the latest annual report, there is no change in the accounting policy and accounting estimation or correction of accounting error in the report period. 9.4 There is no material accounting error in the report period. 9.5 In comparison with the latest annual report, there is no significant change in the consolidation range in the report period. 15 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary 9.2 Financial Statement SHENZHEN FIYTA HOLDINGS LIMITED (Joint stock limited company incorporated in the People’s Republic of China) CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 Notes 2004 2003 RMB’000 RMB’000 Turnover 4 278,247 228,133 Cost of sales (177,105) (139,435) Gross profit 101,142 88,698 Other operating (expense) / income 7 (7,116) 16,272 Selling expenses (55,225) (57,173) Administrative expenses (35,617) (42,578) Gain on sale of discontinuing operation 30 - 777 Loss on disposal of a subsidiary - (403) Profit from operations 5 3,184 5,593 Finance (costs) / income - net 8 (98) 553 Profit before taxation 3,086 6,146 Taxation charge 9 (2,818) (859) Profit after taxation 268 5,287 Minority interests (63) 845 Net profit for the year 205 6,132 Dividends 25 - - Earnings per share 10 RMB0.001 RMB0.02 16 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2004 Notes 2004 2003 RMB’000 RMB’000 ASSETS NON-CURRENT ASSETS Fixed assets 11 70,291 40,142 Investment properties 12 187,600 16,492 Construction in progress 13 1,290 125,227 Leasehold land payments 14 16,003 16,464 Available-for-sale investments 15 4,885 4,885 Deferred tax assets 16 15,466 16,731 Other non-current assets 1,947 2,507 Total non-current assets 297,482 222,448 CURRENT ASSETS Inventories 17 203,983 152,649 Trade receivables 18 18,730 19,549 Due from a related company 29 1,500 1,500 Prepayments and other receivables 19 36,213 33,984 Trading investments 20 11,819 4,314 Designated deposits 21 - 51,004 Cash and cash equivalents 84,792 117,527 Total current assets 357,037 380,527 TOTAL ASSETS 654,519 602,975 EQUITY AND LIABILITIES CAPITAL AND RESERVES Share capital 22 249,318 249,318 Reserves 23 305,627 305,627 Accumulated losses (36,770) (36,975) Total shareholders’equity 518,175 517,970 MINORITY INTERESTS 7,336 7,273 NON-CURRENT LIABAILITIES Deferred income 3,000 3,000 CURRENT LIABILITIES Trade payables 65,264 34,505 Staff welfare payable 18,713 18,677 Tax payable 449 311 Accruals and other current liabilities 21,582 21,139 Short-term loans 24 20,000 100 Total current liabilities 126,008 74,732 TOTAL EQUITY AND LIABILITIES 654,519 602,975 17 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004 Reserves Share Capital Statutory Accumulated capital reserve reserves Sub-total losses Total RMB’ 000 RMB’ 000 RMB’ 000 RMB’ 000 RMB’ 000 RMB’ 000 At 1 January 2003 249,318 191,108 114,519 305,627 (43,107) 511,838 Net profit for the year - - - - 6,132 6,132 At 31 December 2003 249,318 191,108 114,519 305,627 (36,975) 517,970 Net profit for the year - - - - - 205 205 At 31 December 2004 249,318 191,108 114,519 305,627 (36,770) 518,175 18 Shenzhen Fiyta Holdgings Ltd. 2004 Annual Report, Summary CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 Notes 2004 2003 RMB’000 RMB’000 Cash flows from operating activities Cash used in from operations 26 (40,630) (8,320) Interest paid (323) - Tax paid (1,415) (795) Net cash flows used in operating activities (42,368) (9,115) Cash flows from investing activities Purchases of fixed assets (39,053) (8,048) Additions to construction in progress (24,221) (63,955) Sales proceeds from disposals of fixed assets 1,002 1,327 Proceeds from sale of discontinuing operation 30 - 2,800 Disposal of a subsidiary, net of cash disposed - 22 Dividends received from available-for-sale investments - 138 Investment income from designated deposit 351 10,000 Decrease in designated deposits 51,004 73,996 Subsidiary in voluntary liquidation and not consolidated - (842) Interest received 650 802 Government grants received - 3,000 Net cash flows (used in) / generated from investing activities (10,267) 19,240 Cash flows from financing activities Proceeds from borrowings 20,000 100 Repayments of borrowings (100) (4,000) Net cash flows generated from / (used in) financing activities 19,900 (3,900) (Decrease) / increase in cash and cash equivalents (32,735) 6,225 At start of year 117,527 111,302 At end of year 84,792 117,527 19