大东海A(000613)ST东海Ｂ2004年年度报告摘要（英文版）

海南大东海旅游中心股份有限公司 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report Summary (International) For the Year of 2004 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) Hainan Dadonghai Tourism Centre (Holdings) 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 Annual Report 2004, for details of the report please go to the complete text. 1.2 No Director(s) declares disagreement on the truthfulness, accuracy and completeness. 1.3 Director(s) absented the board meeting Name of the Director Reason of absent Consignee Huang Qingwang Business Zhen Jirong Zhu Xinglie Business 1.4 Hainan Chongxin CPA and Grant Thornton CPA issued auditing reports respectively with “Unable to form an opinion”. 1.5 Mr. Li Yuanbin, the Chairman of the Board, and Ms. Wu Yuanyuan, the General Manager, and Mr. Li Wei, the Chief Financial Officer declares: the Financial Statement in the report is secured for its truthfulness and completeness. §2 Company Profile 2.1 Company Profile Stock ID ST Donghai A, ST Donghai B Stock Code 000613、200613 Stock Exchange Shenzhen Stock Exchange Registered address: Dadonghai Sanya Registered address and office address Office address: Dadonghai Sanya For registered address: 572021 Post Code For office address: 572021 Website http://www.cninfo.com.cn Email. hnddht@21cn.com 2.2 Liaison people Secretary of the Board Representative of Stock Affairs Name Wu Chongfeng Li Caijie Address Dadonghai Sanya Dadonghai Sanya Tel. 0898-88219888 Ext. 8264 0898-88219888 Ext. 8264 Fax. 0898-88212298 0898-88212298 Email. hnddht@21cn.com hnddht@21cn.com 2 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) §3 Financial Highlights 3.1 Major accounting data In RMB’000 2004 2003 Increase/decrease (%) 2002 Major business turnover 13,354 13,333 0.16 24,280 Gross profit (12,279) (54,752) 77.57 4,775 Net profit (12,279) (54,752) 77.57 4,775 Net profit deducted non-recurring (12,147) (17,318) 29.86 (1,070) gain/loss Net Cash flow generated by business 1,630 (3,873) 142.09 11,679 operation End of 2004 End of 2003 Increase/decrease (%) End of 2002 Gross Assets 147,388 154,934 (4.87) 201,974 Shareholders’Equity (Exclude (54,903) (42,624) (28.81) 12,128 Minority Shareholders’Equity) 3.2 Major financial indices In RMB 2004 2003 Increase/decrease (%) 2**2 Earnings per share (0.03) (0.15) 80.00 0.01 Earnings per share (Note) (0.03) (0.15) 80.00 0.01 Net earnings / capital ratio - - - (0.15) Net earnings / capital ratio basing on net profit after deducting of non-recurring - - - - gain/loss (%) Net Cash flow per share generated by 0.004 (0.011) 136.36 (0.013) business operation End of End of End of Increase/decrease (%) 2004 2003 2002 Net asset per share (0.15) (0.12) (25.00) 0.03 Net asset per share, adjusted (0.15) (0.12) (25.00) 0.02 Non-recurring gain and loss items √ applicable □ not applicable In RMB’000 Non-recurring gain and loss items Amount None business income / expense (132) (net) Total (132) 3 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) 3.3 Diversity between the international and domestic accounting standards √Applicable □ Non-applicable In RMB’000 (loss)/gain of the year Net value of (liability)/ assets Diversity between the international and Year ended Dec. 31 at Dec. 31 domestic accounting standards 2004 2003 2004 2003 Financial Statement under China (14,213) (54,752) (54,905) (42,624) Accounting Standard Influence of adjustment under IAS Interests of common reserves of legal items and reducing of other payables transferred to the profit of current year 1,934 - - - Re-presented amount (12,279) (54,752) (54,905) (42,624) §4 Changes in Share Capital & Particulars about Shareholders 4.1 Table of capital share movement in thousand shares Before the After the Changed (+,-) change changed Sub-total I. None negotiable shares 1. Promoter’s shares 109,857 109,857 Incl. State-owned shares 36,327 36,327 Domestic legal person shares 73,530 73,530 Overseas legal person shares Others 2. Legal person shares placed 121,143 121,143 3. Employees’shares 4. Preference shares or others Total of non-negotiable shares 231,000 231,000 II. Negotiable shares 1. Common shares in RMB 45,100 45,100 2. Foreign shares in domestic market 88,000 88,000 3. Foreign shares in overseas market 4. Others Total of negotiable shares 133,100 133,100 III. Total of capital shares 364,100 364,100 4 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) 4.2 Top Ten Shareholders and Top Ten Negotiable Share Holders In thousand shares Total shareholders at the 21,124 end of the report period Top Ten Shareholders Shares held at Changed in Proportion Pledged Property of Full name of shareholder the end of Class of share the year % or frozen shareholder report term Haikou Grocery Co., Ltd. 60,000 16.48% Non-negotiable 60,000 China Great Wall Assets 36,327 9.98% Non-negotiable State-owned Management Co., Ltd. Hainan Shanya Yinnong Industrial Development 9,900 2.72% Non-negotiable Co., Ltd. Huaxia Securities Co., Ltd. 6,600 1.81% Non-negotiable 6,600 Shanghai Jinxian 4,973 1.37% Non-negotiable Investment Co., Ltd. China International Trade Trust & Investment Co., 3,960 1.09% Non-negotiable State-owned Ltd. Hainan Chuangye Venture 3,894 1.07% Non-negotiable State-owned Capital Co., Ltd. Sanya Zhongxing 3,630 1.00% Non-negotiable Development Co., Ltd. Yangpu Jinyu Industrial 3,366 0.92% Non-negotiable Co., Ltd. China Agriculture Bank 3,300 0.91% Non-negotiable State-owned Haikou Jinmao Branch Sanya United Credit 3,300 0.91% Non-negotiable Top Ten Shareholders of Negotiable Shares Negotiable shares held at the end of Full name of shareholder Share categories (A, B, H or others) report term LIU ZILI 2,904 B shares FENG LINGMIN 2,016 B shares Lin Mingyu 1,275 B shares Xiang Xingliang 1,069 B shares Jiang Huorong 937 B shares Li Jingji 7610 B shares Zhang Chi 760 B shares Du Xuehui 668 B shares TANG,LIXIN 609 B shares Jiang Jianjun 59 B shares The first shareholder and the 7th shareholder – Hainan Chuangye Venture Notes to relationship or “action in Capital Co., Ltd. are related parties, they are under the controlling of concert”among the top ten Hainan Chuangye Venture Capital Co., Ltd. None of the other shareholders shareholders. are regarded as acting in concerts in accordance with the rules of information disclosure on change of shareholding._ 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 5 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) (1) The controlling shareholder l Name of the shareholder: Haikou Grocery Co., Ltd. l Legal representative: Fan Pingyue l Date of incorporation: August 28, 1998 l Registered capital: RMB113,693,900 l Major business: processing of animal and meat products, vending of frozen Grocerys and side products of agriculture, refrigeration stoking, real-estate developing The shares held by the controlling shareholder has not been changed, all of the shares held are in pledge at December 31 2004. (2) Particulars about the practical controlling party l Nature person: Zhong Wenkui l Nationality: China l Obtain resident right in other nation or region: No l Occupation in latest 5 years: real-estate investment, enterprise investment, business operation and managment Profile of the practical controller: Mr. Zhong Wenkui, 47 of age, major background: use to be the vice chairman of Haikou Xingao Refrigeration Co., Ltd., currently he is the chairman of Hainan Juye Education Investment Co., Ltd. 4.3.3 Controlling relationship chart Ｚｈｏｎｇ Ｗｅｎｋｕｉ 35% Ｈａｉｎａｎ Ｃｈｕａｎｇｙｅ Ｖｅｎｔｕｒｅ Ｃａｐｉｔａｌ Ｃｏ．， ＬＴｄ． 69.4％ Ｈａｉｋｏｕ Ｇｒｏｃｅｒｙ Ｃｏ．， Ｌｔｄ． 16.48％ Ｈａｉｎａｎ Ｄａｄｏｎｇｈａｉ Ｔｏｕｒｉｓｍ Ｃｅｎｔｅｒ （Ｈｏｌｄｉｎｇｓ） Ｃｏ．， Ｌｔｄ． 6 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) §5 Directors, Supervisors and Senior Executives 5.1 Changes in Shares Held by Directors, Supervisors and Senior Executives Shares held at the Shares held at Cause of Name Position Sex Age Job term beginning of year the end of year change Li Yuanbin Director, Chairman M 53 Jun.25 2002 –Jun. 16 2005 0 0 - Fu Cai Director M 31 Jun.25 2002 –Jun. 16 2005 0 0 - Zheng Jirong Director M 45 Jun.25 2002 –Jun. 16 2005 2,673 2,673 - Huang Director M 34 Jun.25 2002 –Jun. 16 2005 0 0 _ Qingwang Liu Juntao Director M 36 Jun.25 2002 –Jun. 16 2005 0 0 - Director, Vice GM, Li Wei M 42 Jun.25 2002 –Jun. 16 2005 0 0 - CFO Zhu Xinglie Director M 45 Jun.25 2002 –Jun. 16 2005 0 0 - Independent Zhao Man F 53 Jun.25 2002 –Jun. 16 2005 0 0 - Director Leng Independent M 50 Jun.25 2002 –Jun. 16 2005 0 0 - Mingquan Director Independent Lin Kechang M 61 Jun.20 2004 –Jun. 16 2005 0 0 - Director Huang Wencai Supervisor M 36 Jun.25 2002 –Jun. 16 2005 0 0 - Li Caijie Supervisor M 42 Jun.25 2002 –Jun. 16 2005 0 0 - Wang Guobin Supervisor M 34 Jun.25 2002 –Jun. 16 2005 0 0 - Luo Wen’eng Supervisor M 59 Jun.25 2002 –Jun. 16 2005 0 0 - Yan Jianhua Supervisor M 42 Dec. 3 2004 –Jun. 16 2005 0 0 - Wu Yuanyuan General Manager F 29 April 13 2004 –Jun. 16 2005 0 0 - Vice General Chen Liurong M 41 Jun.25 2002 –Jun. 16 2005 0 0 - Manager Secretary of the Wu Chongfeng M 32 April 13 2004 –Jun. 16 2005 0 0 - Board 5.2 Directors and supervisors taking positions in the shareholding parties √ applicable □ not applicable Get remuneration Name Name of the shareholder Job taken Job term or not Feb.1 2001 –Dec. Zheng Jirong China Great Wall Assets Management Co., Ltd. Vice director of section No 31 2004 Huang Assistant of department Feb.1 2001 –Dec. China Great Wall Assets Management Co., Ltd. No Qingwang director 31 2004 Hainan Shanya Yinnong Industrial Development May 1 2003 –Dec. Fu Cai Manager Yes Co., Ltd. 31 2004 Aug.1 1992 –Dec. Zhu Xinglie Sanya Zhongxing Development Co., Ltd. Manager No 31 2004 Huang June 16 2004 – Haikou Grocery Co., Ltd. Director No Wencai Dec. 31 2004 China Industry & Commercial Bank Hainan Trust July 1 2004 –Dec. Wang Guobin Vice chief No Investment Co., Sanya Office 31 2004 7 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) 5.3 Annual rewards of Directors, Supervisors and Senior Executives In RMB0’000 Total of annual reward 34.80 Top 3 directors 17.60 Top 3 managements 17.20 Allowance of Independent 12K / person. year Director Other expenses of None Independent Directors: Directors and supervisors not Zhen Jiwang, Huang Qingwang, Liu Juntao, Zhu Xinglie taking rewards from the Huang Wencai, Wang Guobin, Luo Wen’eng Company Reward distribution Number of person 40K –60K 6 20K –40K 1 bellow 20K 1 §6 Report of the Board 6.1 Overall business situation in the report term The major business income of year 2004 was about the same with last year. If regardless the contracted restaurant of the hotel, the major business income has increased slightly over that of the last year. But the overall business result was still negative. The followings are the major aspects that influenced the result: (1) For the past few years, the Company has increased the investment in reconstruction of South China Hotel, which including redecoration of the out wall, some of the villas and hotel rooms, changing of TV sets and air-conditioners. The business environment was improved, and brought increasing in guest flow over year 2003. Though for the recent years, the number of star-ranked hotels and hostels was increasing sharply, which was making the market competitive more and more severe. The rent rate was falling for successively several years. The hotel income only increased in small scale though the guest flow increased significantly. (2) Shift the business strategy to cutting down cost by the mean time of increasing output. Since 2004, the hotel has leased the profit-losing department out, which may reduce the internal costs. This has brought good economical effect to the Company. (3) In the 1st half of 2004, the government of Sanya city performed macro adjustment on the prices of tourism market. That caused major loss in tour groups during May and June over the whole city. The strike of tour guides occurred in October has influenced the local market on certain level. (4) No practical progress was made on business reconstruction and debt reconstruction in 2004. The business income was not changed significantly. The debt burden was still heavy. The Company will keep forward on improving the hotel facilities and enhance training on increasing service standard. The staffs of the Company will do everything possible to achieve better results in year 2005. 8 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) 6.2 Principal businesses classified based on industries/products In RMB’000 Distribution on industries Major business cost Gross profit Increase/decrease of On industry or Major business Major business Gross profit ratio increased/decreased ration major business product turnover cost % over corresponding increased/decreas turnover (%) term ed Hotel 13,354 461 96.55 0.16 (68.45) 8.62 Including: related 20 100.00 transactions Distribution on products Hotel 13,354 461 96.55 0.16 (68.45) 8.62 Including: related 20 100.00 transactions Principle of pricing the relatedOn market price transactions Statement on the necessity and None 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. 6.3 Major businesses distribution on regions In RMB’000 Regions Major business turnover Increase/decrease of major business turnover (%) Sanya 13,354 0.16 6.4 Major vendors and clients In RMB’000 Counted in total Total of top 5 vendors 1,310 52.61% purchasing Counted in total Total of top 5 clients 1,080 8.10% sales 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 Causations of significant change on overall financial status □applicable √ not applicable 9 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) 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 □applic able √ not applicable 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 6.14 Statement on the “None-standard”opinion issued by the CPA √ applicable □ not applicable 1. Issues involved in the auditors’report and the basic opinions of the auditors As more fully explained in note 2 to the financial statements, although the Company reported net current liabilities of RMB181,886,000 and net liabilities of RMB54,903,000 as of 31 December 2004, the financial statements have been prepared on a going concern basis, the validity of which is dependent on the successful completion of formal debt restructuring agreement between the Company and its bankers and other lenders in order to enable the Company to continue as a going concern. Had the going concern basis not been used, adjustments would have to be made to reclassify non-current assets as current assets and non-current liabilities as current liabilities, to reduce the value of assets to their recoverable amounts and, to provide for any future liabilities which might arise. Such adjustments may have a consequential significant effect on the Company's net liabilities as of 31 December 2004 and its loss for the year then ended. We consider that appropriate disclosure have been made but the inherent uncertainty surrounding the circumstances under which the Company might successfully continue to adopt going concern basis is so extreme that we have disclaimed our opinion. Because of the significance of the matters referred to in the preceding paragraph, we are unable to form an opinion as to whether the financial statements give a true and fair view of the state of the Company's affairs as of 31 December 2004 or of its loss for the year then ended in accordance with International Financial Reporting Standards. In our opinion the financial statements give a true and fair view of the cash flows of the Company for the year ended 31 December 2004 in accordance with International Financial Reporting Standards. 2. Statement of the Board, Supervisory Committee and senior management on the matters referred to by the auditors’report The Board of directors, supervisors and the management think that the amount of company’s overdued debt and accumulative operational loss is considerably enormous and the law cases are so many, main assets have already been closed down. Which caused by the former big shareholder Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. , who occupied the fund raised for shares, produced the decrease of major business 10 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) revenue, shrank the running project yearly and weaken the ability to repay the debts; In addition, the company accumulative operational loss is so enormous, which caused by the decrease of major business revenue yearly as well as the retrospective adjustment on all kinds of tracking allowance based on the increase of suppositional profit according to the law from 1993 to 1997; 3. Measurement to offset the impact of above issues (1) The new management team will concentrate on expanding the market and make great efforts to explore the tourist business markets of tourist corporation, the enterprises and institutions in domestic north, southwest , midwest on the basis of consolidating the existing market, meanwhile develop the Russian tourist market to heighten the room rate and increase the relevant income, turn over the unfavorable situation occurred in the hotel industry of facing lower price competition in Sanya at present so as to expand sale and make the major serving business in hotel more larger and powerful. (2) Sanya Branch Company will do its best to employ capital on developing of new projects. (3) Keep improving financial management, enforcing clearing of receivables and controlling of costs and expenses. (4) Start up operation or disposal of bad assets. (5) Get every possible assistant on the negotiation with Sanya branc h of Agricultural Bank of China, Haikou Nanhang Branch of Agriculture Bank, China Xinda Capital Management Company and China eastern property management company on the plan of debt recombination. (6) Make great efforts to gain the capital of shareholder, other guarantee measurement and support from government department. 6.15 Business plan for the new year √ applicable □ not applicable 1. Do everything possible to obtain support from the shareholders and government to push forward the debt restructuring process. Enforce communication and negotiation with the government department and relative creditors, carry out relative capital restructure and debt offsetting plans. Completely get away from the loss from accumulation of negative assets. Do every effort to complete the debt restructuring work to lay a good foundation to turn the negative position around. 2. Concentrate on development and target on increasing business performance and reducing of liabilities. Keep following with the relative laws, regulations and the Article of Association of the Company, do every effort to improve the financial situation and turn around the negative operation. 3. Fully develop the advantages and optimize resources available. Start up supplementary businesses and new businesses to raise new profit points. 4. Increasing of major business turnover (1) The new management team will concentrate on expanding the market and make great efforts to explore the tourist business markets of tourist corporation, the enterprises and institutions in domestic north, southwest , midwest on the basis of consolidating the existing market, meanwhile develop the Russian tourist market to heighten the room rate and increase the relevant income, turn over the unfavorable situation occurred in the hotel industry of facing lower price competition in Sanya at present so as to expand sale and make the major serving business in hotel more larger and powerful. (2) Stress on the specialized operation and standardized services. Enhance the optimizing and maintaining of accessory facilities and surroundings. Improve the competitive of hard wares of the hotel. Promote people-centered management, recruit experienced stuffs. Fully develop the overall standard of the employees to upgrade the management and image of the hotel. 11 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) 5. Continue to strengthen the financial administration. Intensive controlling on the budget, fully adopt cost management process. Push forward to clear up debts and control the cost &expenses. 6. Take charge of the standardization, institutionalized, standardized management severely and do a good job of disclosure of information and " three meetings " work. 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 §7 Significant Events 7.1 Acquisition □applicable √ not applicable 7.2 Selling of property □applicable √ not applicable 7.3 Significant guarantee □applicable √ not applicable 7.4 Significant Related Transactions 7.4.1 Related sales and purchasing √ applicable □ not applicable In RMB’000 Sales of products or labour service to the Purchasing of products or labour services from related parties the related parties Related parties Amount of Amount of Ratio in similar trades Ratio in similar trades transaction transaction China Great Wall Assets 20 0.15% 0.00 0.00% Management Co., Ltd. Total 20 0.15% 0.00 0.00% 7.4.2 Related credit and debt interchange □applicable √ not applicable 7.5 Financing proxy 12 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Annual Report 2004 Summary (International) □applicable √ not applicable 7.6 Fulfilling of consent issues □applicable √ not applicable 7.7 Material Lawsuits/Arbitrations □applicable √ not applicable 7.8. Independent directors’performing of duties Independent directors’presenting of board meetings Name of Times of board meetings Presented Presented by Independent Absent Remark to present personally proxy Director Leng Mingquan 4 4 0 0 Lin Kechang 4 2 0 2 Zhao Man 4 3 1 0 Objection upon relative events raised by the independent directors □applicable √ not applicable 7.9 This report is prepared both in English and Chinese. When there is any conflict in understanding, the Chinese version shall prevail. §8 Report of the Supervisory Committee √ applicable □ not applicable Hainan Cong Xin Certified Public Accountants and Grant Thornton Certified Public Accountants audited the Company’s 2004 Financial Statements, and produced auditor’s report with “Unable to form an opinion”The Board of Directors has made special explanation on the events referred to in the report. The Board also issued detailed statement on the influence of the events and measures to resolve the influence. In the opinion of the Supervisory Committee, the auditor’s report has truly and objectively reflected the Company’s financial position and operation result. The explanation of the Board of Directors on the events involved in the auditors’reserved opinion was in compliance with the Company’s practical situation and the measures planned to be taken are practical and effective. The Supervisory Committee shall urge and assist the Board of Directors and the management to carry out the measures as soon as possible so as to improve the Company’s financial position and operation situation and ensure the Company to conduct normal and sustainable operation. §9 Financial Report 13 Auditors' report To the members of Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. (incorporated in the People's Republic of China with limited liability) We were engaged to audit accompanying balance sheet of Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. (the "Company") as of 31 December 2004, and the related statements of income and cash flows for the year then ended. The financial statements as set out on pages 2 to 20 are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing issued by the International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As more fully explained in note 2 to the financial statements, although the Company reported net current liabilities of RMB181,886,000 and net liabilities of RMB54,903,000 as of 31 December 2004, the financial statements have been prepared on a going concern basis, the validity of which is dependent on the successful completion of formal debt restructuring agreement between the Company and its bankers and other lenders in order to enable the Company to continue as a going concern. Had the going concern basis not been used, adjustments would have to be made to reclassify non-current assets as current assets and non-current liabilities as current liabilities, to reduce the value of assets to their recoverable amounts and, to provide for any future liabilities which might arise. Such adjustments may have a consequential significant effect on the Company's net liabilities as of 31 December 2004 and its loss for the year then ended. We consider that appropriate disclosure have been made but the inherent uncertainty surrounding the circumstances under which the Company might successfully continue to adopt going concern basis is so extreme that we have disclaimed our opinion. Because of the significance of the matters referred to in the preceding paragraph, we are unable to form an opinion as to whether the financial statements give a true and fair view of the state of the Company's affairs as of 31 December 2004 or of its loss for the year then ended in accordance with International Financial Reporting Standards. In our opinion the financial statements give a true and fair view of the cash flows of the Company for the year ended 31 December 2004 in accordance with International Financial Reporting Standards. Grant Thornton Certified Public Accountants Hong Kong １１ Ａｐｒｉｌ ２００５ 1 Statement of income for the year ended 31 December 2004 Notes 2004 2003 RMB'000 RMB'000 Turnover 4 13,354 13,333 Cost of sales (1,196) (2,196) Gross profit 12,158 11,137 Other revenue 5 2,268 438 Selling expenses (10,361) (11,030) General and administrative expenses (7,453) (12,474) Impairment charges on land use right - (12,305) Impairment charges on land exchange right - (21,586) Loss from operations 6 (3,388) (45,820) Net finance costs 7 (8,891) (8,932) Loss before taxation (12,279) (54,752) Taxation 8 - - Loss for the year (12,279) (54,752) Loss per share (RMB Fen) 9 (3.37) (15.04) 2 Balance sheet as of 31 December 2004 Notes 2004 2003 RMB'000 RMB'000 ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 10 91,738 97,940 Land use right 11 35,907 36,776 127,645 134,716 Current assets Land exchange right 12 9,251 9,251 Inventories 13 370 612 Trade and other receivables 14 3,136 3,814 Tax recoverable 4,630 5,468 Cash at banks and in hand 2,356 1,073 19,743 20,218 Current liabilities Bank loans 15 105,128 105,128 Trade and other payables 96,281 91,290 Finance lease – current portion 16 220 220 201,629 196,638 Net current liabilities (181,886) (176,420) Non-current liabilities Bank loans 15 - 35 Finance lease – non-current portion 16 662 885 662 920 Net liabilities (54,903) (42,624) CAPITAL AND RESERVES Share capital 17 364,100 364,100 Reserves 18 (419,005) (406,724) Capital deficits (54,903) (42,624) __________________________ __________________________ Director Director 3 Statement of changes in equity for the year ended 31 December 2004 Share Capital Accumulated capital reserve losses Total RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 January 2003 364,100 47,454 (399,426) 12,128 Loss for the year - - (54,752) (54,752) Balance at 31 December 2003 and at 1 January 2004 364,100 47,454 (454,178) (42,624) Loss for the year - - (12,279) (12,279) Balance at 31 December 2004 364,100 47,454 (466,457) (54,903) 4 Cash flow statement for the year ended 31 December 2004 2004 2003 RMB'000 RMB'000 Cash flows from/(used in) operating activities Loss before taxation (12,279) (54,752) Adjustments for : Depreciation 4,606 5,103 Impairment charges on trade and other receivables 192 185 Amortisation of land use right 869 1,141 Impairment charges on land use right - 12,305 Impairment charged on land exchange right - 21,586 Interest income (2) (2) Interest expense 8,893 8,934 Loss on disposal of property, plant and equipment 396 4,181 Operating profit/(loss) before changes in working capital 2,675 (1,319) Decrease/(Increase) in trade and other receivables 486 (2,068) Decrease in inventories 242 1,245 Decrease in tax recoverable 838 543 Decrease in trade and other payables (2,611) (2,274) Cash generated from/(used in) operations 1,630 (3,873) Cash flows from investing activities Purchases of property, plant and equipment (708) (734) Proceeds from disposal of property, plant and equipment 751 71 Interest received 2 2 Net cash generated from/(used in) investing activities 45 (661) Cash flows from financing activities Repayment of bank loans (35) (53) Repayment of finance lease (223) (25) Interest paid (134) - Net cash used in financial activities (392) (78) Net increase/(decrease) in cash and cash equivalents 1,283 (4,612) Cash and cash equivalents at beginning of year 1,073 5,685 Cash and cash equivalents at end of year 2,356 1,073 5 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. The Board of Directors April 11 th , 2004 6