东沣B退(200160)帝贤Ｂ2004年年度报告摘要（英文版）

CHENGDE DIXIAN TEXTILE CO., LTD. SUMMARY OF ANNUAL REPORT 2004 §1. Important Notice 1.1 The Board of Directors of Chengde Dixian Textile Co., Ltd. (hereinafter referred to as the Company) and its directors individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions or errors which would render any statement misleading. The summary of annual report 2004 is abstracted from the full text of annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 No directors stated that they couldn’t ensure the correctness, accuracy and completeness of the contents of the Annual Report or have objection for this report. 1.3 All directors of the Company attended the Board meeting. 1.4 Shenzhen Pengcheng Certified Public Accountants and Hong Kong CCIF Limited Certified Public Accountants respectively audited the domestic and international financial report of the Company and issued the unqualified Auditors’Report for the Company. 1.5 Chairman of the Board of the Company Mr. Wang Shuxian, Chief Financial Officer Mr. Zhang Jing and Person in Charge of Accounting Mr. Sun Li hereby confirm that the Financial Report of the Annual Report is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock DIXIAN B Stock code 200160 Listed stock exchange Shenzhen Stock Exchange Registered address and office address Registered address: Xiabancheng Town, Chengde County, Hebei Office address: Xiabancheng Town, Chengde County, Hebei Post code Post code of registered address: 067400 Post code of office address: 067400 Internet web site of the Company http://www.dxtex.com E-mail of the Company dxgs-9@heinfo.net 2.2 Contact person and method Secretary of the Board Securities Affairs Representative Name Chen Zhiguo Du Qingfeng Contact address Xiabancheng Town, Chengde County, Xiabancheng Town, Chengde County, Hebei Hebei Telephone (86)314-3115049, 3115048 (86)314-3115049, 3115048 Fax (86)314-3182013 (86)314-3182013 E-mail dxgs-9@heinfo.net dxgs-9@heinfo.net 1 §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB Increase/decrease 2004 2003 2002 over last year（％） Income from main operations 525,685,638.38 523,600,120.73 0.40% 463,087,869.00 Total profit 112,829,922.20 184,182,798.70 -38.74% 139,287,134.00 Net profit 105,127,475.36 143,046,586.23 -26.51% 115,303,505.00 Net profit after deducting 104,980,695.82 140,043,395.00 -25.04% 115,257,975.00 non-recurring gains and losses Net cash flow arising from 77,842,558.55 124,500,520.00 -37.48% 162,376,239.00 operating activities Increase/decrease At the end of At the end of At the end of from the end of 2004 2003 2002 previous year（％） Total assets 2,992,390,844.89 2,310,992,830.72 29.49% 1,839,661,136.00 Shareholder’s equity 1,298,142,307.03 696,775,076.35 86.31% 553,728,489.00 (excluding minority interests) 3.2 Major financial indexes (Unit: RMB) Increase/decrease 2004 2003 2002 over last year（％） Earnings per share 0.18 0.33 -45.45% 0.32 Earnings per share (note) 0.18 - - - Return on equity 8.10% 20.53% -12.43% 20.82% Return on equity as calculated based on net profit after deducting 8.09% 20.10% -12.01% 20.81% non-recurring gains and losses Net cash flow per share arising 0.13 0.28 -53.57% 0.44 from operating activities Increase/decrease At the end At the end At the end from the end of of 2004 of 2003 of 2002 previous year（％） Net assets per share 2.21 1.59 38.99% 1.52 Net assets per share after 2.20 1.58 39.24% 1.51 adjustment Note: Earnings per share was calculated based on new share capital if share capital was changed from the end of the report period to disclosure date of the report. Items of non-recurring gains and losses √Applicable □Inapplicable Unit: RMB Items of non-recurring gains and losses Amount Income from compensation 221,458.25 2 Other income 337,932.36 Expenditure of penalty -59,645.00 Other expenditure -352,966.07 Total 146,779.54 3.3 Difference in net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Unit: RMB CAS IAS Net profit 105,127,475.36 105,127,475.36 Explanation on the difference There was no difference in net profit. §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of changes in share Unit: Share Increase/decrease in this time (+, - ) Before the After the Additional Subtotal change change issuance Ｉ． Unlisted Shares 1. Sponsors’shares 204,000,000 0 0 204,000,000 Including: State-owned shares 0 0 0 0 Domestic legal person’ s shares 19,289,424 0 0 19,289,424 Foreign legal person’ s shares 0 0 0 0 Others 184,710,576 0 0 184,710,576 2. Raised legal person’ s shares 0 0 0 0 3. Inner employee’ s share 0 0 0 0 4. Preference shares or others 0 0 0 0 Total unlisted shares 204,000,000 0 0 204,000,000 Ⅱ. Listed Shares 1. RMB ordinary shares 0 0 0 0 2. Domestically listed foreign shares 234,600,000 150,000,000 150,000,000 384,600,000 3. Overseas listed foreign shares 0 0 0 0 4. Others 0 0 0 0 Total Listed shares 234,600,000 150,000,000 150,000,000 384,600,000 Ⅲ. Total shares 438,600,000 150,000,000 150,000,000 588,600,000 The amount of shares offered by funds, inner employees’shares traded in the counter, shares offered by strategic investor and shares offered ordinary juridical person should be disclosed respectively □Applicable √Inapplicable 3 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Total shareholders at the end of report year 15,319 Particulars about shares held by the top ten shareholders Number Nature of Increase / Holding Proportion Type of shares of share shareholders decrease in shares at the Full name of Shareholders in total (Circulating/non- pledged (State-owned the report year-end shares (%) circulating) or frozen shareholder or year (share) (share) (share) foreign shareholder) WANG SHU XIAN 173,604,000 29.49% Non-circulating 0 Other CHINA SOUTHERN SECURITIES CO., 90,700,000 90,700,000 15.40% Circulating 0 Foreign shareholder LTD. CHINA SOUTHERN SECURITIES 0 51,027,117 51,027,117 8.66% Circulating Foreign shareholder (HONG KONG) CO., LTD. CHENGDE NORTH INDUSTRIAL 15,431,376 2.62% Non-circulating 0 Other CORPORATION WANG ZHENG SONG 11,106,576 1.88% Non-circulating 0 Other RIPPERTON ASSETS LIMITED 7,084,388 1.20% Circulating 0 Foreign shareholder CSSC INTL LTD 6,530,000 1.10% Circulating 0 Foreign shareholder WANG WEN SHENG 6,048,339 1.02% Circulating 0 Foreign shareholder CHINA MIDDLING & SMALL ENTERPRISE DEVELOPMENT FUND 5,880,000 0.99% Circulating 0 Foreign shareholder CO., LTD. PERFECT SPACE INVESTMENTS 4,542,989 0.77% Circulating 0 Foreign shareholder Particulars about shares held by the top ten shareholders of circulation share Full name of Shareholders Holding circulation share at the Type (A-share, B-share, H-share or year-end (share) others) CHINA SOUTHERN SECURITIES CO., LTD. 90,700,000 B-share CHINA SOUTHERN SECURITIES (HONG KONG) CO., 51,027,117 B-share LTD. RIPPERTON ASSETS LIMITED 7,084,388 B-share CSSC INTL LTD 6,530,000 B-share WANG WEN SHENG 6,048,339 B-share CHINA MIDDLING & SMALL ENTERPRISE 5,880,000 B-share DEVELOPMENT FUND CO., LTD. PERFECT SPACE INVESTMENTS 4,542,989 B-share MAIN FORCES ASSETS LIMITED 4,046,700 B-share CHINA SOUTHERN CORPORATE FINANCE 3,790,000 B-share LIMITED CSS (HK) L A/C ULTRAMATIC HOLDINGS LIMITED 3,690,330 B-share 4 Explanation on associated relationship among the Among the above shareholders, the Company is unknown whether there top ten shareholders or consistent action exists associated relationship or belongs to the consistent actor regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Company among the other shareholders except that there existed association relationship between WANG SHU XIAN and WANG ZHENG SONG, which are the relationship of father and son; and China Southern Securities (Hong Kong) Co., Ltd and CSSC INTL LTD are subsidiaries of China Southern Securities Co., Ltd.. 4.3 Particulars about the controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in the controlling shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for the controlling shareholder and actual controller The controlling shareholder of the Company is Wang Shuxian; and also is the first largest shareholder of the Company as well as actual controller of the Company. His information is as follows: Mr. Wang Shuxian, 51, Chinese nationality, who has not enjoy the residence power in the other country or area. He is one of the sponsors of the Company and holds 173,604,000 shares of the Company at present. Mr. Wang Shuxian is founder of the Company. In 1986, Xiaban County Knitting Factory was founded in Xiabancheng town of Chengde, Hebei. Over ten years, the Company has developed into the largest base of manufacture and exporter of textile in North China from small to large, developing into the largest base of production and export in knitting products in North China. In 1994, he has established Hebei Dixian Textile Group Co., and it has been changed into joint-stock company on Nov. 3, 1999. Approved by CSRC, DIXIAN B successfully listed with Shenzhen Stock Exchange for trade on Sep. 29, 2000. The Company has become the first B-share listed company controlled by person. Now, Mr. Wang Shuxian is Chairman of the Board of the Company. 4.3.3 Property right and controlling relationship between the actual controller of the Company and the Company is as follows: WANG SHU XIAN 29.49% CHENGDE DIXIAN TEXTILE CO., LTD. 5. Particulars about the Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives 5 Holding Holding Reason of Name Title Gender Age Office term shares at the shares at the change year-begin year-end Chairman of the Oct. 29, 2002- Wang Shuxian Male 51 173,604,000 173,604,000 No change Board Oct. 29, 2005 Director, Oct. 29, 2002- Shi Bainian Male 33 0 0 General Manager Oct. 29, 2005 Oct. 29, 2002- Song Yushan Director Male 64 0 0 Oct. 29, 2005 Director, Deputy Oct. 29, 2002- Wang Huilai Male 50 0 0 General Manager Oct. 29, 2005 Oct. 29, 2002- Du Qingfeng Director Male 43 0 0 Oct. 29, 2005 Director, Deputy Oct. 29, 2002- Lan Wenzhi Female 46 0 0 General Manager Oct. 29, 2005 Independent Oct. 29, 2002- Wang Enyuan Male 63 0 0 director Oct. 29, 2005 Independent Oct. 29, 2002- Li Wei M ale 34 0 0 director Oct. 29, 2005 Independent Oct. 29, 2002- Wang Yaguang Male 52 0 0 director Oct. 29, 2005 Wang Deputy General Oct. 29, 2002- Male 28 11,106,576 11,106,576 No change Zhengsong Manager Oct. 29, 2005 Chairman of the Aug. 11, 2004- Xu Xue Supervisory Male 56 0 0 Oct. 29, 2005 Committee Oct. 29, 2002- Li Xianfu Supervisor Male 59 0 0 Oct. 29, 2005 Male Oct. 29, 2002- Sun Zhenyu Supervisor 42 0 0 Oct. 29, 2005 Oct. 29, 2002- Yao Fenglan Supervisor Female 39 0 0 Oct. 29, 2005 Male Oct. 29, 2002- Xu Huafeng Supervisor 32 0 0 Oct. 29, 2005 Male Oct. 29, 2002- Zhang Jing CFO 34 0 0 Oct. 29, 2005 Secretary of Board Oct. 29, 2002- Chen Zhiguo Male 32 0 0 of Directors Oct. 29, 2005 5.2 Particulars about directors and supervisors holding the position in Shareholding Company √Applicable □Non-applicable Name of Shareholding Title in Shareholding Drawing the payment Name Office term Company Company from the Shareholding 6 Company (Yes / No) Chengde North Industrial From Jan. 1, 1999 to Song Yushan Legal Representative No Corporation Apr. 13, 2005 Chengde Dragon and Phoenix From Jan. 1, 2002 to Song Yushan Legal Representative No Dressing Co. Apr. 13, 2005 Chengde Xiaban Town From Jan. 1, 1999 to Song Yushan Legal Representative No Hongxing Plastic Factory Apr. 13, 2005 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 514,000 Total annual payment of the top three directors RMB 191,000 drawing the highest payment Total annual payment of the top three senior RMB 138,000 executives drawing the highest payment Allowance of independent director RMB 20,000 per person/ year Other treatment of Independent Directors The Company reimbursed the reasonable charges according to the actual situation which independent directors attended the meeting of the Board, shareholders’ general meeting or exercise their functions and powers in accordance with the relevant laws and regulations and Articles of Association. Name of directors and supervisors received no None payment or allowance from the Company Payment Number of persons Over RMB 50,000 2 RMB 40,000 ～ RMB 50,000 5 RMB 10,000 ～ RMB 30,000 10 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In the report period, in spite of being encountered with some difficulties, the Company’ s production and operation was generally normal for the whole year. In 2004, income from core business was RMB 525,685,638.38, and the Company realized profit from core business amounting to RMB 171,942,051.42 and net profit amounting to RMB 105,127,475.36. In the report period, interest expenses increased RMB 14 mil over last year, capitalized interests decreased RMB 3 mil over last year and export tax-rebation decreased RMB 8 mil. In the report period, adverse elements including coal shortage, overfreight on road harnessed, and tight power etc., produced certain disadvantageous effect on the production of the Company. In the first half of the year, as cotton price rose up sharply and export tax rebation decreased 4%, to guarantee the profit, the Company raised selling price of knitting dressing products. After huff, customers didn’t agree on partial orders, which resulted in decrease in sales income of knitting dressing 7 compared with that of the same period of last year and declining of gross profit ratio of knitting dressing products at some certain degree, In recent years, the Company input large quantities of capital into project construction of spinning and papermaking. Although the Company accomplished additional issuance of B-share in the second half of 2004, most of raised proceeds were paid for bank loan according to the agreement. Therefore, the tense situation of capital was not released in essence. Due to adjustment of bank policies, from the second half of 2004, partial banks didn’t increase loan and credit line for the Company and the Company faced capital turnover crisis, which resulted in vast stop production at the end of 2004. On Jan. 18, 2005, the Company issued stop production public notice, which arose high attention from governments of Chengde City and Chengde County and all bank creditors. They went to inspect conduct research and negotiate to resolve the relevant problems. Under the common efforts of the Company and all parties, on Jan. 25, 2005, the company published resuming production public notice and plans. The Company began to resume production by and by. At present, the production of the company have basically went back to normal, and the capital shortage have been mitigated at certain degree, partial banks committed to borrow new loan for returning back bad loans, or increase bank loans. The management of the Company believed, with the resumption of the production, investment project was put into operation stage by stage, and the capital pressure of the Company would be released with the increase of business revenue. The Company had two basic industries of textile and papermaking: textile product mainly included knitting wears and yarn and integrated silk achievements. From the view of development prospect, in the aspect of knitting wears: because no input in new project enlarged production volume, knitting wears scale basically kept the same; in the aspect of yarn and integrated silk: because the equipments of the Company were installed up and put into production, productivity and sales income still need improving; in the aspect of papermaking: with the papermaking equipments of the Company attaining to production capability, papermaking would become the main component of profit of the company. In the report period, as approved by China Securities Regulatory & Supervision Commission ZJFXZi [2004] No. 101 document, the Company completed directional additional issuance of 150,000,000 domestically listed foreign shares (B-share). The accomplishment of additional issuance would improve liabilities structure of the Company and produce significant influence on the long-term development of the Company. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 Main operations classified according to industries Classified according to Income from Cost of main Gross Increase/decrease Increase/decrease Increase/decrease industries or products main operations profit in income from in cost of main in gross profit operations (RMB) ratio (%) main operations operations over the ratio over the last (RMB) over the last year last year (%) year (%) 8 (%) Clothing manufacturing 21,062.00 12,558.00 40.38% -14.49% 12.74% -14.40% Cotton textile 20,373.00 15,290.00 24.95% 7.26% 23.17% -9.70% Papermaking 11,133.00 7,527.00 32.39% 27.49% 20.05% 0.41% Including: related 5,458.00 3,210.00 41.19% transactions Main operations classified according to products Knit wears 21,062.00 12,558.00 40.38% -14.49% 12.74% -14.40% Spinning and synthetic 20,373.00 15,290.00 24.95% 7.26% 23.17% -9.70% silks Paper 11,133.00 7,527.00 32.39% 27.49% 20.05% 0.41% Including: related 5,458.00 3,210.00 41.19% transactions Pricing principle of related transaction Price of transaction between the Company and related companies was determined according to the market transaction clause and articles of the relevant agreement. Explanation on necessity and consistency Y’S Company, its main related party, is an important trade partner of the Company before of related transaction becoming the Company’ s related party. Including: total amount of related transactions that the listed company sold products or provided labor service to the controlling shareholder and its subsidiaries was RMB 0.00 in the report period. 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Areas Income from main Increase/decrease in income from main operations (RMB) operations over the last year (%) Asia 23,882.00 -13.06% North China 12,026.00 -21.22% South China 14,822.00 72.25% East China 625.00 -12.30% Northeast 1,213.00 295.00% 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase of 18,535.00 Proportion in the total 65.00% the top five suppliers amount of purchase Total amount of sales of the 19,395.00 Proportion in the total 37.00% top five sales customers amount of sales 6.5 Operation of share-holding companies □Applicable √Inapplicable 6.6 Explanation on reasons of material changes in main operations and its structure □Applicable √Inapplicable 9 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) compared with the previous year √Applicable □Inapplicable Due to rising of the price of raw materials and fuel. 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year □Applicable √Inapplicable Analysis to reasons of material changes in the whole financial position than that in the last year □Applicable √Inapplicable 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment, macro-policies and regulations on the Company’ s financial position and operating results □Applicable √Inapplicable 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds √Applicable □Inapplicable Total amount of raised proceeds used in the 46,624.00 report year Total amount of raised proceeds 49,624.00 Total amount of raised proceeds used 49,624.00 accumulatively Committed projects Planned Accrued Compliance with Compliance with Change projects Actual amount amount of amount of planned progress estimated earnings or not of input input earnings or not or not Increasing investment project of technological reforms of 51,000.00 No 49,624.00 992.94 No No high-graded paper used for cultural amounting to 100,000 tons Total 51,000.00 - 49,624.00 992.94 - - Explanation on not The said project did not reach estimated earnings due to the longer of additional issuance course reaching planned and later of allocation of raised proceeds. progress and 10 earnings Explanation on reasons and procedures of change Particulars about the changed projects □Applicable √Inapplicable 6.13 Application of the proceeds non-raised through shares offering √Applicable □Inapplicable Unit: RMB’0000 Name of projects Amount of projects Progress of projects Earnings of projects Xingye Papermaking Company 17,645.00 - 446.49 Construction of Textile project 2,035.00 - - Project of Chengde Japan - - 5,662.00 Papermaking Co., Ltd. Total 25,342.00 - - 6.14 Explanation of the Board of Directors on the “Qualified Opinion” made by the Certified Public Accountants □Applicable √Inapplicable 6.15 Business plan as of the next year of the Board of Directors √Applicable □Inapplicable 1. In 2005, the Company shall continue to reinforce interior management and cost control, dig interior potential and enhance the efficiency through improving the management in order to better return to the investors. 2. The Company shall try its best to increase the product export to America and Europe while keeping and enlarging the product sales in Japan. The Company also shall actively expand the domestic market, establish sales network for products at home, increase sale in domestic market and ensure the productive and sales connection of the Company’ s products. 3. The Company shall continue to speed up the construction of joint papermaking project, try its best to make papermaking equipments be under normal production and operation and enhance its output and quality in order to create more economic benefits for the Company. Profit estimation of the new report year □Applicable √Inapplicable 6.16 The preplan on the profit distrib ution and capitalization of capital public reserve of the Board of Directors □Applicable √Inapplicable The Company did not appropriate share distribution preplan though the Company 11 achieved the profit in the report period √Applicable □Inapplicable The reasons why the Company did not appropriate share Usage and plan of undistributed distribution preplan though the Company achieved the profit profit in the report period Since the Company invested a large amount of capital in The Company has taken the profit construction of projects of textile and papermaking and the to use in the transfer and bank adjusted the policies, which not only could not conduct development of the Company’s auxiliary support on current capital demanded in the operations, and the Company projects, but the original scale of credit line has decreased would conduct profit distribution by a large margin, resulting in the tension of the Company’s after the situation of the capital. Company’s capital straightens up. §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable 7.3 Significant guarantees √Applicable □Inapplicable Unit: RMB’0000 Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries) Guarantee Name of the Date of happening Complete Amount of Guarantee for related Company (date of signing Guarantee term Implementation guarantee type party (yes or guaranteed agreement) or not not) Guangdong Counter Rieys Group Dec. 29, 2004 2,000.00 Half year No No guarantee Co., Ltd. Total amount of guarantee in the report period 6,000.00 Total balance of guarantee at the end of the report period 2,000.00 Guarantee of the Company for the controlling subsidiaries Total amount of guarantee for controlling subsidiaries in the report period 20,000.00 Total balance of guarantee for controlling subsidiaries at the end of the report 20,000.00 period Particulars about the external guarantee of the Company (Including the guarantee for the controlling subsidiaries) Total amount of guarantee 22,000.00 The proportion of the total amount of guarantee in the net assets of the 16.95% Company Particulars about the guarantees out of line 12 Total amount of guarantee for other related parties, which the Company or 0.00 controlling shareholders held less than 50% The debts guarantee amount provided for the guarantee of which the 0.00 assets-liability ratio exceeded 70% Proportion of total amount of guarantee in net assets of the Company exceeded No 50% (Yes of No) Total amount of guarantee breaking regulations 0.00 7.4 Significant related transactions 7.4.1 Current related purchase and sale √Applicable □Inapplicable Unit: RMB’0000 Selling products and providing Purchasing products and accepting service to related parties service to related parties Related parties Transaction Proportion in the Transaction Proportion in the amount same kind of amount same kind of transaction amount transaction amount Beirifang 200.00 0.61% 0.00 0.00% Y’s Corporation 5,258.00 10.00% 0.00 0.00% Total amount 5,458.00 10.61% 0.00 0.00% 7.4.2 Current related credits and liabilities √Applicable □Inapplicable Unit: RMB’0000 Supply funds to related parties Related parties supplied funds to the Related parties Company Occurred amount Balance Occurred amount Balance Beirifang 271.00 39.50 0.00 0.00 Japan Papermaking Co., Ltd. 2,551.00 1,074.00 0.00 0.00 Total 2,822.00 1,113.50 0.00 0.00 Including: in the report period, the capital amount the listed company provided to controlling shareholder and its subsidiaries was RMB 0.00 and the balance was RMB 0.00. 7.5 Entrusted assets management □Applicable √Inapplicable 7.6 Implementation of commitments √Applicable □Inapplicable In the report period, as authorized by shareholders’general meeting, the Board of the Company actively organized and implemented papermaking project construction and directional additional issuance of B-shares. To grasp the challenges and chances, before the raised proceeds were not carried out, authorized by shareholders’general meeting, the Company used bank loan and its own capital in advance to conduct project construction. As approved by China Securities Regulatory and Supervision 13 Committee ZJFXZi [2004] No. 101 Document, the Company directionally issued 150 mil domestically listed foreign shares (B-share) to overseas institutional investors at the issuance price HKD 3.32 per share with the total raised proceeds amounting to HKD 498 mil. The issuance arranged 3-month lock-up period. The shares of the Company issued this time were on the market for circulation on Oct. 22, 2004. 7.7 Significant lawsuits and arbitrations □Applicable √Inapplicable 7.8 Particulars about the performance of obligations of Independent Directors Particulars about the independent directors attending the Board Name of This year times Presence in Entrusted Absence Notes Independent of attending the person presence (Times) Directors Board meeting (times) Wang Enyuan 5 5 0 0 Wang Yaguang 5 5 0 0 Li Wei 5 5 0 0 Particulars about the independent directors proposed different opinions about the relevant matters of the Company □Applicable √Inapplicable §8. Report of the Supervisory Committee √Applicable □Inapplicable The Supervisory Committee believed, the Company operated by law; 2004 financial report truly reflected financial situation and operating results of the Company; raised proceeds were used adequately; related transaction were fair and reasonable; the company had no purchase and sale transaction of assets. §9. Financial Report 9.1 Auditor’s opinions Auditor ’ s opinions : Standard unqualified auditor ’ s opinions 9.2 Financial statement 14 CHENGDE DIXIAN TEXTILE CO., LTD. CONSOLIDATED INCOME STATEMENT YEAR ENDED 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 TURNOVER 4 525,686 523,600 COST OF SALES (353,744) (298,484) GROSS PROFIT 171,942 225,116 OTHER OPERATING INCOME 5,067 28,697 DISTRIBUTION COST (9,759) (9,461) ADMINISTRATIVE EXPENSES (19,217) (19,499) OTHER OPERATING EXPENSES (413) (24,958) PROFIT FROM OPERATIONS 5 147,620 199,895 FINANCE COSTS, NET 7 (33,508) (15,855) SHARE OF RESULTS OF AN ASSOCIATE BEFORE TAX (1,283) 213 PROFIT BEFORE TAXATION 112,829 184,253 INCOME TAX EXPENSE 8 (6,027) (24,359) PROFIT BEFORE MINORITY INTEREST 106,802 159,894 MINORITY INTERES T 19 (1,675) (16,847) NET PROFIT FOR THE YEAR 105,127 143,047 DIVIDENDS 9 - - EARNINGS PER SHARE - Basic 10 RMB0.22 RMB0.34 - Diluted 10 N/A N/A 15 CHENGDE DIXIAN TEXTILE CO., LTD. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 ASSETS Non-current assets Property, plant and equipment 11 1,989,586 1,480,737 Prepayments for property, plant and equipment 45,993 136,329 Interests in an associate 12 56,579 225,015 Deferred tax assets 21 314 314 Other non-current assets 97,817 2,421 2,190,289 1,844,816 Current assets Inventories 13 215,911 126,361 Trade receivables 14 162,615 109,642 Other receivables and prepayments 15 191,953 91,112 Cash and bank balances 16 231,623 135,880 802,102 462,995 Total assets 2,992,391 2,307,811 EQUITY AND LIABILITIES Capital and reserves Share capital 17 588,600 438,600 Reserves 18 709,542 254,993 1,298,142 693,593 MINORITY INTEREST 19 350,661 277,340 Non-current liabilities Borrowings 20(a) 480,000 278,000 Deferred tax liabilities 21 2,195 2,634 Other non-current liabilities 22 125,355 26,905 607,550 307,539 Current liabilities Trade payables 23 282,375 304,231 Other payables and accrued charges 24 137,430 175,430 Current income tax liabilities 21,703 400 Borrowings 20(b) 294,530 549,278 736,038 1,029,339 Total equity and liabilities 2,992,391 2,307,811 Approved and authorised for issue by the board of directors on 11 April 2005. 16 CHENGDE DIXIAN TEXTILE CO., LTD. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER 2004 Share Share Revaluation Statutory Retained capital premium reserve reserves earnings Total (Note 17) (Note 18) (Note 18) (Note 18) (Note 18) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at 1/1/2004 438,600 17,756 24,819 62,955 149,463 693,593 Net profit for the year - - - - 105,127 105,127 Appropriation from net profit (Note 19) - - - 16,099 (16,099) - Share issue 150,000 - - - - 150,000 Share premium less issuance costs - 349,422 - - - 349,422 Balance at 31/12/2004 588,600 367,178 24,819 79,054 238,491 1,298,142 Balance at 1/1/2003 365,500 20,938 24,819 41,498 100,973 553,728 Net profit for the year - - - - 143,047 143,047 Appropriation from net profit (Note 19) - - - 21,457 (21,457) - Appropriation - bonus issue (Note 18) 73,100 - - - (73,100) - Share issuance costs (Note) - (3,182) - - - (3,182) Balance at 31/12/2003 438,600 17,756 24,819 62,955 149,463 693,593 Note: Share issuance costs represent expenses incurred for the issue of shares of the company listed in securities market in 2004. 17 CHENGDE DIXIAN TEXTILE CO., LTD. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 25 29,196 238,811 Interest paid (34,130) (17,506) Taxes paid (1,979) (25,221) NET CASH GENERATED FROM OPERATING ACTIVITIES (6,913) 196,084 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (342,137) (343,776) Time deposits placed, net - 60,000 Interest received 3 2,578 NET CASH USED IN INVESTI NG ACTIVITIES (342,134) (281,198) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings raised 517,302 189,102 Repayment of borrowings (570,050) - Issue of share capital 497,538 - NET CASH GENERATED FROM FINANCING ACTIVITIES 444,790 189,102 INCREASE IN CASH AND CASH EQUIVALENTS 95,743 103,988 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 135,880 31,892 CASH AND CASH EQUIVALENTS AT END OF YEAR 16 231,623 135,880 9.3 Explanation on changes of accounting policy, accounting estimation and settlement compared with the latest annual report □Applicable √Inapplicable 9.4 Contents, correct amount, reason and its influence of significant accounting errors □Applicable √Inapplicable 9.5 Explanation on change of consolidated scope compared with the latest annual report √Applicable □Inapplicable In the report period, controlling subsidiary of the Company, Chengde Dixian Fashion 18 Co., Ltd. Signed Agreement on Share Equity Change of Chengde Banhe Chemical Simulation Textile Co., Ltd. with Hebei Xiaban Town Knitting Co., Ltd. And Japan Shanxia Trade Co., Ltd.. After change, the Investment of Dixian Fashion Co., Ltd. took 40% of the registered capital of Banhe Company, and that of Japan Shanxia Trade Co., Ltd. 35%, and that of Xiaban Town Company 25%. Therefore, the Company listed Chengde Banhe Chemical Simulation Textile Co., Ltd. into consolidation scope. Board of Directors of Chengde Dixian Textile Co., Ltd. Apr. 13, 2005 19