江铃汽车(000550)江铃Ｂ2004年年度报告摘要（英文版）

Jiangling Motors Corporation, Ltd. Extracts From 2004 Annual Report §1 Important Note 1.1 The Board of Directors is collectively and individually liable for the truthfulness, accuracy and completeness of the information disclosed in the report and undertakes that the information disclosed herein is truthful, accurate and complete and contains no false statement, misrepresentation or major omission in this report. These extracts are extracted from the original of Annual Report. Investors should read the original for details. 1.2 Director Gordon Spaulding did not attend this Board meeting. He authorized Vice Chairman Mei Wei Cheng to represent him to exercise the voting power. 1.3 PwC Zhong Tian CPAs issued unqualified auditor ’ s reports for JMC’s year 2004 financial report. 1.4 Chairman Wang Xigao, President York Chen, CFO Manto Wong and Head of Finance Department, Wu Kai, ensure that the Financial Report in the Annual Report is truthful and complete. 1.5 All financial data in this report are prepared under International Financial Reporting Standards (‘IFRS’) unless otherwise specify. §2 Brief Introduction 2.1 Brief introduction Share’ s name Jiangling Motors Jiangling B Share’ s code 000550 200550 Place of listing Shenzhen Stock Exchange Company registered address No. 509, Northern Yingbin Avenue, Nanchang City, & headquarters address Jiangxi Province, P.R.C Post code 330001 Company’ s website http://www.jmc.com.cn E- mail relations@jmc.com.cn 1 2.2 Contact persons and contact details Board Secretary Person for financial Securities Affair information disclosure Representative Name Wan Hong Manto Wong Quan Shi Telephone 86-791-5235675 86-791-5232888-6503 86-791-5232888-6178 Fax 86-791-5232839 E- mail relations@jmc.com.cn Contact address No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi Province, P.R.C §3 Operating Highlight 3.1 Main accounting data Unit: RMB’000 Year-on-year changes 2004 2003 2002 (%) Turnover 5,770,676 5,094,897 13.26% 4,270,869 Profit before tax 477,965 480,032 -0.43% 331,166 Net profit 415,134 382,255 8.60% 313,108 Net cash flows from 749,919 794,852 -5.65% 930,198 operating activities Changes from reporting December December December period-end to 31, 2004 31, 2003 31, 2002 year-beginning (%) Total assets 4,179,331 3,821,005 9.38% 3,636,593 Shareholder’s equity 2,449,019 2,163,366 13.20% 1,867,431 (after minority interests) 3.2 Main financial indexes Year-on-year changes 2004 2003 2002 (%) Earnings per share (RMB) 0.48 0.44 9.09% 0.36 Return on net asset ratio 16.95% 17.67% Down 0.72 point 16.77% Net cash flows per share from 0.87 0.92 -5.44% 1.08 operating activities (RMB) Changes from December December December reporting period-end to 31, 2004 31, 2003 31, 2002 year-beginning (%) Net assets per share (RMB) 2.84 2.51 13.15% 2.16 2 3.3 Difference between net profits per Chinese Accounting Standards (‘CAS’) and per International Financial Reporting Standards (‘IFRS’) ■Applicable □Not Applicable Unit: RMB’000 International Financial Reporting Chinese Accounting Standards Standards Net profits 386,858 415,134 Net profits 2004 As prepared per CAS 386,858 Adjustment per IFRS : Deferred Ta x asset 28,021 Notes on Pension defined benefit -605 difference Minority interest 6,501 Staff bonus and welfare fund of Jiangling -6,194 Isuzu appropriated from profit after tax Others 553 As restated in confo rmity with IFRS 415,134 §4 Share Capital Changes & Shareholders 4.1 Table on the changes of shareholding structure Before the Change (+, -) After the change change Allocated Bonus Reserve-conv New Others Subtotal Shares Shares erted shares issuance I. Unlisted shares 1. Issuer ’ s shares 354,176,000 354,176,000 Including: State-owned shares 354,176,000 354,176,000 Domestic legal-person shares Foreign legal-person shares Others 2. Other legal-person shares 47,438,000 47,438,000 3. Preferred shares or others Subtotal 401,614,000 401,614,000 II. Listed shares 1. A shares 117,600,000 117,600,000 Including: Management shares 69,540 -63,480 -63,480 6,060 2. B shares 344,000,000 344,000,000 Overseas-listed Foreign-invested shares 3 Foreign-invested shares Others Subtotal 461,600,000 461,600,000 3. Total 863,214,000 863,214,000 During the reporting period, changes in management shares are because that Mr. Sun Min, ex-chairman of the Company, and Mr. Liu Shanbo, ex-director of the Comppany, no longer took the post of director since September 2003, shares of the Company held by them totalling 64,680 shares were unfrozen in March 2004, and Ms. Xiong Chunying, executive vice-president of the Company, bought the Company’ s shares of 1,200 in the reporting period. 4.2 Top ten shareholders and circulating-share shareholders Total shareholders at the end of 54,713 shareholders, including 41,606 A-share shareholders and 13,107 reporting period B-share shareholders Top ten shareholders Name Change Shares at the Ratio in Share type Shares due Shareholder the total in end of 2004 to mortgage type capital 2004(+, -) stock or frozen （%） State-owned Jiangling Motors Company State-owned 0 354,176,000 41.03 legal-person 0 (Group) (‘JMCG’) shareholder shares Ford Motor Company Circulation B Foreign-invest 0 258,642,800 29.96 0 (‘Ford’) shares ed shareholder Shanghai Automotive Co., Domestic 0 25,970,000 3.01 legal-person 0 Ltd. shares Domestic China Baoan Group Co., 0 12,000,000 1.39 12,000,000 Ltd. legal-person shares DEUTSCHE BANK AG Circulation B 4,408,177 4,669,977 0.54 0 LONDON shares Guangdong Machinery & Domestic 0 1,200,000 0.14 legal-person 0 Electronic Company shares Domestic Shenzhen Airport Terminal 0 1,200,000 0.14 legal-person 0 Building Co., Ltd. shares Tianxi Development Co., Circulation B 186,500 1,038,800 0.12 0 Ltd. shares United Securities Limited Circulation A 867,621 867,621 0.10 0 Liability Company shares Hanbo Securities Circulation A 862,332 862,332 0.10 0 Investment Fund shares The top ten circulation-share shareholders Name Shares at the end of 2004 Share Type Ford Motor Company 258,642,800 B share 4 DEUTSCHE BANK AG LONDON 4,669,977 B share Tianxi Development Co., Ltd. 1,038,800 B share United Securities Limited Liability Company 867,621 A share Hanbo Securities Investment Fund 862,332 A share Boshi Yufu Securities Investment Fund 791,126 A share Liu Xiaodong 604,400 B share Jinding Securities Investment Fund 599,957 A share HSBC BROKING SECURITIES (ASIA) LIMITED-CLIENTS A/C 590,997 B share Jingye Securities Investment Fund 515,612 A share There was no association relationships among the top ten circulation-share Notes on association among above-mentioned shareholders, and nor among the top ten circulation-share shareholders shareholders and the top ten shareholders per the public information known by the Company. 4.3 Controlling Shareholders and actual controller 4.3.1 Changes of controlling shareholders and actual controller □Applicable ■Not Applicable 4.3.2 Controlling shareholders The controlling shareholders of JMC are JMCG and Ford, and there is no change in respect of the controlling shareholders in 2004. JMCG, a wholly state-owned enterprise founded on July 27, 1991, is subordinate to the State-owned Assets Administration Bureau of Nanchang. Its registered capital is RMB 420.85 million, and its legal representative is Mr. Wang Xigao. Main scope of business: manufacture of automobiles, engines, chassis, variant vehicles and automotive components, automotive quality test, sales of self-produced products, as well as related after-sale services. Ford, founded in 1903, is a US-based listed company. Its registered capital is US$ 1.222 billion. Chairman & CEO: William Clay Ford, Jr. Main scope of business: design, manufacturing, assembly and sales of cars, trucks, parts and component, financing, leasing of vehicles and equipment, and insurance business. 4.3.3 Ownership and control relations between the Company and the effective controlling parties Nanchang Municipal Government 100% Jiangling Motors Company (Group) Ford Motor Company 41.03% 29.96% Jiangling Motors Co., Ltd. 5 §5 Directors, Supervisors and Senior Management 5.1 Shareholding Changes of Directors, Supervisors and Senior Management Name Position Gender Age Term of office Shares at Share Cause of the end of change in share change Year 2004 Year 2004 Wang Xigao Chairman Male 55 2004.5～2005.6 0 0 Mei Wei Cheng Vice Chairman Male 55 2002.6～2005.6 0 0 Zhou Ming Director Male 43 2003.9～2005.6 0 0 Howard Welsh Director Male 48 2004.12～2005.6 0 0 Lu Shuifang Director Male 51 2002.6～2005.6 0 0 Gordon L. Director Male 56 2002.6～2005.6 0 0 Spaulding Independent 53 2003.9～2005.6 Xu Wenguang Male 0 0 Director Independent 47 2002.6～2005.6 Pan Yuexin Male 0 0 Director Independent 58 2003.9～2005.6 Lok Kim Chai Male 0 0 Director Wu Yong Chief supervisor Male 55 2002.6～2005.6 4,860 0 Alvin Qing Liu Supervisor Male 48 2002.6～2005.6 0 0 Zhu Yi Supervisor Male 35 2002.6～2005.6 0 0 Zhang Jianguo Supervisor Male 48 2002.6～2005.6 0 0 Jin Wenhui Supervisor Male 38 2002.6～2005.6 0 0 York Chen President Male 53 2005.1～2005.6 0 0 Tu Hongfeng EVP Male 57 2005.1～2005.6 0 0 Acquired Xiong Chunying EVP Female 41 2002.6～2005.6 1,200 1,200 from stock market Liu Nianfeng EVP Female 43 2002.6～2005.6 0 0 Manto Wong CFO Male 42 2002.6～2005.6 0 0 VP & Board Wan Hong Male 44 2002.6～2005.6 0 0 Secretary Zhong Wanli VP Male 42 2005.3～2005.6 0 0 Zhou Yazhuo VP Male 42 2002.6～2005.6 0 0 Kevin Whipp VP Male 38 2002.6～2005.6 0 0 6 5.2 Positions at the shareholder entities held by the JMC directors and the supervisors: ■Applicable □Not Applicable Name Shareholder Title Term of office Compensation paid by entity shareholder entity (Y/N) Wang Xigao JMCG Chairman 2003.9— Y Mei Wei Cheng Ford Vice President of Ford, 1999.1— Y Zhou Ming JMCG Board member and a Y 2003.6— Deputy General Manager Lu Shuifang JMCG Board member 1999.12— N Gordon Spaulding Ford Senior Manager 2005.3— Y Wu Yong JMCG Board member 1999.12— Y Zhu Yi JMCG Chief of JMCG Assets & Y 2000.3— Finance Department 5.3.Annual compensation of director, supervisors and senior management Total annual compensation About RMB 1.7 million for Chinese-side senior management About US$ 0.9 million for foreign senior management Total compensation for 3 directors Nil with the highest compensation Total compensation for 3 persons About RMB 1 million for these Chinese-side senior management with the highest compensation About US$ 900 thousand for these foreign senior management Allowance of independent RMB 30 thousand per person each year directors Other treatment of independent Nil directors Name of directors and supervisors Wang Xigao, Mei Wei Cheng, Zhou Ming, Howard Welsh, who were not paid by JMC Wu Yong, Alvin Qing Liu, Zhu Yi Compensation range Number About US$ 300 thousand 3 persons RMB 350-400 thousand 1 persons RMB 250-350 thousand 2 persons RMB 200-250 thousand 3 persons 7 §6 Report of the Board of Directors 6.1 Discussions and analysis on operating results during the reporting period 6.1.1 Operating Results JMC’ s core business is production and sales of light vehicles and related components. Its major products include JMC series light truck and pickup, and Transit series commercial bus. The Company also produces engine, casting and other components. In 2004, JMC sales volume reached a record of 67,203 units including 31,601 light trucks and microbuses, 22,798 pickups and 12,804 Transit commercial vehicles. Total sales volume was up 15% from over a year ago. Total production volume was 66,176 units, including 31,914 light trucks and microbuses, 21,368 pickups and SUV, and 12,894 Transits. JMC’ s sales increase was primarily due to light trucks price reduction and new model introduction, which made light truck sales volume increase by 39% compared with last year. Transit sales increased by 11%, owning to the price reductions of selected models, launch of New Space Edition, the Logistic Model, and aggressive marketing actions. In 2004, the Company achieved a market share of about 1.3% of the Chinese automotive market, about the same as 2003. JMC light trucks (including pickup) accounted for 7% of the light truck market, about the same as a year ago. Transit achieved about 10% of the light bus market (excluding MPV, SUV, chassis cab and quasi-car products), about 2 percentage points higher than last year. (Data source for above analysis: China Association of Automobile Manufacturers and the Company sales records) 6.1.2 Operational Challenges and Resolutions In 2004, the Company faced major challenges in the market place, intensifying cost pressures, and slowing pace of growth. In the market place, the Company continued to experience market share pressure from lower price competitors in all its segments. Lower than expected industry volumes resulted from macroeconomic adjustments further intensified price wars in all the markets JMC participated. In response, we took the following actions: - Transit: Lowered prices for the Transit Short Wheel Base models in November of 2003. And again, lowered prices for all Transit model in January 2005. Introduced New Space Edition and Logistic Model during 2004. - Light Cargo Truck: Lowered prices in February of 2004 for N-series. Introduced new KaiYun model. - Pickup: Lowered prices in October 2004. 8 Both Transit and Light Cargo gained market shares in 2004. In the pickup segment, price reductions in the passenger car segment and increasing popularity of low cost SUV continued to erode sales of mid to high-end models where JMC Pickup is positioned. Our price reduction action in October has allowed us to regain pickup sales momentum and better position the product for 2005. In the area of cost management, the Company had to deal with escalating marketing expenses to compete for market shares, continuing raw material price increases, and costs incurred to meet regulatory requirements. To maintain acceptable profit margins, the Company is placing high priority in cost management by forming a dedicated team to lead vigorous cost reduction and waste elimination activities for the entire enterprise. We are also moving more and more upstream into the product development process to reduce costs during design stage, in addition to tightening cost control on models currently in production and daily operating expenses. Finally, to address the issue of continuing growth, the Company's management is focusing on two areas: (1) leveraging existing product platforms to generate new revenue stream, and (2) introducing all new products. We introduced an all new Baowei SUV in First Quarter 2005. We have also kicked off a major program to develop an all new commercial vehicle (long lead funding was approved by the Board in January 2005). Furthermore, the management is working closely with our strategic partner to identify additional products which have high market potentials and generate acceptable returns on investment. 6.2 The Detailed Table of Reve nue & Cost of Goods Sold from Core Business. Unit: RMB’000 Year-on-year Year-on-year Costs in Year-on-year Margin changes of costs changes of Product Turnover core changes of (%) in core business margin business turnover (%) (%) (point) I. Vehicles 5,202,635 4,032,254 22.5% 7.0% 12.8% -4.01 II. Components 568,041 511,591 9.9% 145.3% 179.4% -11.0 Total 5,770,676 4,543,845 21.3% 13.3% 20.9% -5.0 Including: related party 523,338 441,963 15.6% 168.3% 175.1% -2.1 transactions Ford and its designated suppliers applied the negotiated arm- length pricing; the pricing Pricing principle for localized components from related parties were determined through the process of of related party suppliers quote, costing assessment and negotiation between both sides. The prices transactions were adjusted periodically. Sales to related parties applied market price. Necessity and The purchase of the imported components will immediately stop when the respective localization is achieved, and these components will be substituted by localized 9 ones; continuity of localization is achieved, and these components will be substituted by localized ones; related party some components from other related parties were unique parts for JMC’ s Transit series, N series and T series, and other general components were purchased through transactions open bidding. Jiangling Import and Export Co., Ltd had mature network and human resources in import & export trade, so JMC will continue to use its sales network to sell products to overseas markets. JMC will also continue supplying relevant components to Jiangling Land-wind Autos Co., Ltd. for the attractive margin from the supply. During the reporting period, the listing company sold products and provided labour services to controlling sharehodler and its subsidiaries and the total amount of related party transactions was RMB 523,338 thousand. 6.3 Particulars about main business classified according to region ■Applicable □Not Applicable Unit: RMB’000 Region Turnover North-east China 260,936 North China 585,800 East China 2,942,500 South China 1,129,185 Central China 316,400 North-west China 216,771 South-west China 319,084 6.4 Suppliers and customers Unit: RMB’000 Total amount of the purchase Ratio in total 1,164,070 27% from the top 5 suppliers purchasing amount Total sale amount to the top 5 Ratio in total 1,196,318 21% customers turnover 6.5 Operating results of associated companies □Applicable ■Not Applicable 6.6 Cause of major changes on core business and its structure □Applicable ■Not Applicable 6.7 Cause of year-on- year major changes on profitability (margin) of core business ■Applicable □Not Applicable 10 Higher profit from volume increase, cost reductions, and lower expenses, was mostly offset by price reduction, unfavorable mix and cost increase from steel price and regulatory compliance, which resulted in gross margin lower by 5 points in 2004 compared to last year. 6.8 Cause of year-on- year major changes on operating results and profit structure ■Applicable □Not Applicable Revenue in 2004 was RMB 5,771 million, up 13% from last year. This increase reflected higher vehicle sales volume and growth in automotive component business, partially offset by price reduction and unfavorable mix. Under International Financial Reporting Standards, net profit was RMB 415 million, up almost 9% from last year. Higher profit from volume increase, cost reductions and lower tax expenses were partially offset by price reduction, unfavorable mix and cost increase from steel price and regulatory compliance. Administration expenses were almost RMB 159 million lower, mainly due to lower product programs expenditure, ending of amortization of Housing Funds and Transit engineering service expenditure, reduction of daily expenses, and impact of other one-time factors. Income tax expense was almost RMB 19 million higher than last year, mainly due to the uncovered losses and offset from product programs expenditure in 2003, and subsitantially higher new added withholding expenses in 2004 compared to last year. Cause of year-on- year major changes on overall financial status ■Applicable □Not Applicable Cash flow from operations was positive RMB 750 million, reflecting profitability and operating-related changes. Cash flow from investing activities was negative RMB 77 million, reflecting primarily spending for capital goods such as facilities, equipment and tooling. Financing cash flow was negative RMB 296 million, reflecting mainly bank loan pay down and dividends payment for 2003. At the end of 2004, the Company had total of RMB 1,361 million cash and cash equivalents, up RMB 378 million from the end of 2003. The balance of bank borrowing was RMB 211 million, down RMB 145 million from the end of 2003 (reduced 41%). Total liabilities as percent of asset was reduced from 43% to 41%, compared with that of December 31, 2003. Total asset was RMB 4,179 million, up 9% from RMB 3,821 million at year-end 2003, reflecting mainly higher cash balance. Total liabilities were RMB 1,730 million, up 4% from the end of last year, reflecting mainly higher account payable from higher production volume, partially offset by bank debt reduction. Shareholder equity was RMB 2,449 million at December 31, 2004, up RMB 286 million from year-end 2003. This increase was due to net profit earned in the 11 reporting period. Dividends payment of 2003 year partially offset equity increase. 6.9 Impact on operation due to policy & statute changes □Applicable ■Not Applicable 6.10 Completion of profitability forecast □Applicable ■Not Applicable 6.11 Completion of business plan ■Applicable □Not Applicable 2004 business plan drafted Actual figures in 2004 formerly Turnover RMB 6.1-6.5 billion RMB 5.771 billion 6.12 Raised fund use □Applicable ■Not Applicable Changed projects □Applicable ■Not Applicable 6.13 Non-raised fund use ■Applicable □Not Applicable Total Investment Progress (incurred) Project Name Estimate Yield (RMB Mils) (RMB Mils) Euro III Project (Engine & Vehicle) 120.0 44.5 A3 Press Line 90.0 81.2 Euro II Project (Engine & Vehicle) 86.8 72.6 J116 Light Truck 60.3 Completed J117 Project 33.7 30.7 Transit Noise Reduction (Phase II) 17.8 8.6 1000T Press 8.3 6.0 Trial-manufacture Workshop 3.9 2.3 6.14 Explanation of the board of directors to abnormal opinions from accounting firms 12 □Applicable ■Not Applicable 6.15 2005 plan ■Applicable □Not Applicable The Company is projecting revenue in the range of Rmb 6,000 to 6,500 million for 2005. Intensifying competition is expected to continue into 2005 as the market slows down in response to macro economic adjustments from the Government. Further, product cost and investment are projected to be higher to meet regulatory requirements such as emission and noise compliance. In 2005, the Company continues to focus on generating cash and profits, and formulation of new product development strategy and plans for future growth. Specific actions include: (1) Accelerate efforts to strengthen our brands through enhancing the Company's distribution network, including specialty shop expansion and JMC Cares service strategy rollout. (2) Execute product updates from our existing platforms. (3) Increase cost reduction efforts by focusing on customer value and eliminating wastes through design optimization. (4) Work with our strategic partner to execute development program for the new generation commercial vehicle. 2005 profitability forecast □Applicable ■Not Applicable 6.16 The proposal on year 2004 profit distribution ■Applicable □Not Applicable Details on the profit available for appropriation of the Company in 2004 prepared in accordance with Chinese Accounting Standards (‘CAS’) and International Financial Reporting Standard (‘IFRS’) are as follows: Unit: RMB’000 CAS IFRS Retained earning at Dec 31, 2003 410,594 315,029 2004 profit after tax 386,858 415,134 Reserve -64,223 -58,028 Allocation of dividend for 2003 -129,482 -129,482 2004 profit available for distribution 603,747 542,653 The upper limit of profit available for distribution was based on the lower of the unappropriated profit calculated in accordance with CAS and that calculated in accordance with IFRS. Therefore, the Company’s profit available for distribution in 2004 was RMB 542,653 thousand. 13 The Board approved to submit to the 2005 Annual Shareholders’Meeting the following proposal on year 2004 profit distribution: (1). to appropriate 10% of the 2004 net profit calculated in accordance with CAS to statutory surplus reserve; (2). to appropriate 5% of the 2004 net profit calculated in accordance with CAS to statutory public welfare fund; (3). to appropriate for dividend distribution from the net profit the year, basing on the Company’s total share capital and a dividend of RMB 0.15 per share; and, (4). the balance of the unappropriated profit will be brought forward to the following financial year. Dividend distribution proposal: A cash dividend of RMB1.5 (including tax) will be distributed for every 10 shares held. Based on the total share capital of 863,214,000 shares as at 31 December 2004, total cash dividend distribution amounted to RMB 129,482,100. B share dividend is to be paid in Hong Kong Dollars exchanged from RMB based on the HKD-to-RMB exchange rate published by the People’s Bank of China on the first working day when the profit distribution proposal is approved at JMC’s Shareho lders’ Meeting. The Board decided not to transfer capital surplus reserve to share capital at this time. §7 Major events 7.1 Acquirement of operation □Applicable ■Not Applicable 7.2 Sales of operation □Applicable ■Not Applicable 7.3 Major guarantee □Applicable ■Not Applicable 14 7.4 Major related party transactions 7.4.1 Related party transactions for purchase of commodities and services unit: RMB’0000 Sales of products/providing labour Purchase of products/labour services to related parties services from related parties Related Party As % of total As % of total Amount Amount turnover purchases JMCG 344,656 8.09% - - Jiangxi Jiangling Special Purpose 219,378 5.15% 190,355 3.30% Vehicle Factory JMCG Interior Trim Factory 151,799 3.57% 68,145 1.18% Nanchang Gear Co., Ltd 144,233 3.39% - - Jiangling- Lear Interior Trim Factory 124,826 2.93% - - Ford 95,665 2.25% - - Jiangxi FuChang Climate System Co. 92,958 2.18% - - Jiangxi Huaxiang Auto Components 50,772 1.19% - - Co. JMCG Industrial Company 37,823 0.89% 89,736 1.56% JMCG Variant Vehicle Factory 32,029 0.75% - - Jiangling Import and Export Co., Ltd. - - 148,285 2.57% Jiangling Land-wind Autos Co., Ltd. - - 105,525 1.83% Total 1,294,139 30.39% 602,046 10.44% 7.4.2 Creditor’s rights and liabilities between listing company and related parties □Applicable ■Not Applicable 7.5 Trust investment □Applicable ■Not Applicable 7.6 Fulfilment of commitment □Applicable ■Not Applicable 7.7 Major litigation and arbitration □Applicable ■Not Applicable 7.8 Status of independent directors in execution of duty JMC has appointed three independent directors so far. The independent directors exercised their fiduciary duties regarding the routine work and major decision-making of the Board of Directors. They studied every proposal reviewed by the Board of Directors thoroughly and raised their opinions, inquired about the major events which required the opinions from the independent directors and issued their written opinions, and actively engaged in the affairs of Compensation Committee and Audit Committee in the reporting period, to protect the interests of the Company and all shareholders. 15 I. Particulars about independent directors’attendance to the Board meeting: Times that should Times of Times of Time of Name attend the Board presence in commissioned absence meeting person presence Xu Wenguang 12 11 1 0 Pan Yuexin 12 12 0 0 Lok Kim Chai 12 12 0 0 II. Dissidence for JMC related matters The independent directors of the Company did not raise objection on any proposals and issues of the Company reviewed at the Board meetings in the reporting period. §8 Report of Supervisory Committee □Applicable ■Not Applicable §9 Financial Report 9.1 Auditor’s opinion PwC Zhong Tian CPAs issued unqualified auditor’s reports without explanatory notes for JMC’s year 2004 financial report. 9.2 Financial Statements 16 Consolidated Income Statement (Prepared under International Financial Reporting Standards) Unit: RMB’000 Year ended 31 December 2004 2003 Sales 5,770,676 5,094,897 Sales tax and surcharge (84,807) (72,757) Net sales 5,685,869 5,022,140 Cost of sales (4,543,845) (3,757,513) Gross profit 1,142,024 1,264,627 Other operating income 35,865 22,971 Distribution costs (383,711) (315,038) Administrative expenses (316,836) (475,460) Other operating expense (11,740) (10,498) Profit from operations 465,602 486,602 Finance costs - net 8,135 (11,563) Share of result of associates before tax 4,228 4,993 Profit before tax 477,965 480,032 Income tax expense (39,908) (59,138) Group profit before minority interest 438,057 420,894 Minority interest (22,923) (38,639) Net profit 415,134 382,255 Earnings per share (RMB per share) 0.481 0.443 17 Consolidated balance sheet (Prepared under International Financial Reporting Standards) Unit: RMB’000 As at 31 December 2004 2003 ASSETS Non-current assets Property, plant and equipment 1,568,234 1,707,675 Land use rights 147,703 151,483 Investment property - 23,751 Investments in associates 20,068 18,891 Deferred tax assets 46,696 18,675 1,782,701 1,920,475 Current assets Inventories 558,144 602,533 Receivables and prepayments 477,014 314,059 Cash and cash equivalents 1,361,472 983,938 2,396,630 1,900,530 Total assets 4,179,331 3,821,005 Shareholder’ s equity Ordinary shares 863,214 863,214 Share premium 816,609 816,609 Reserves 226,543 168,514 Retained earnings 542,653 315,029 Total shareholders’equity 2,449,019 2,163,366 Minority interest 107,383 104,664 LIABILITIES Non-current liabilities Borrowings 121,111 191,111 Retirement benefit obligations 94,327 93,722 215,438 284,833 Current liabilities Trade and other payables 1,216,822 1,016,743 Current tax liabilities 11,585 3,592 Borrowings 90,000 165,000 Provisions 70,084 63,807 Retirement benefits obligations 19,000 19,000 1,407,491 1,268,142 Total liabilities 1,622,929 1,552,975 Total equity and liabilities 4,179,331 3,821,005 18 Consolidated cash flow statement (Prepared under International Financial Reporting Standards) Unit: RMB’000 Year ended 31 December 2004 2003 Cash flows from operating activities Cash generated from operations 824,468 876,967 Interest paid (14,613) (31,635) Tax paid (59,936) (50,480) Net cash from operating activities 749,919 794,852 Cash flows from investing activities Purchase of property, plant and equipment (135,101) (184,093) Proceeds from sale of property, plant and equipment 2,134 3,257 Proceeds from disposal of investment property 28,638 - Proceeds from disposal of held-to- maturity investments - 200 Interest received 24,334 20,213 Dividend received 3,044 1,193 Net cash used in investing activities (76,951) (159,230) Cash flows from financing activities Proceeds from borrowings 60,000 450,000 Repayments of borrowings (205,000) (817,406) Dividends paid to group shareholders (128,445) (85,625) Dividends paid to minority interest (20,203) (14,811) Other cash paid relating to financing activities (2,049) (1,152) Net cash used in financing activities (295,697) (468,994) Effects of exchange rate changes 263 574 Net increase in cash and cash equivalents 377,534 167,202 Cash and cash equivalents at beginning of year 983,938 816,735 Cash and cash equivalents at end of year 1,361,472 983,938 19