特力Ａ(000025)ST特力Ｂ2004年年度报告摘要（英文版）

SHENZHEN TELLUS HOLDING CO., LTD. SUMMARY OF ANNUAL REPORT 2004 §1. Important Notes 1.1 The Board of Directors of Shenzhen Tellus Holding 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 nor errors which would render any statement misleading. This report was prepared in both Chinese and English, should there be any difference in interpretation between the two versions, the Chinese version shall prevail. The summary of annual report 2004 is abstracted from the annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 No director 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 attended the Meeting. 1.4 Shenzhen Nanfang Minhe Certified Public Ac countants and Moore Stephens (Shenzhen) Nanfang Minhe Certified Public Accountants issued a standard unqualified Auditors’Report for the Company. 1.5 Chairman of the Board of the Company Mr. Zhang Ruili, Chief Financial Officer Mr. Ren Yongjian and Manager of Financial Department Ms. Li Mingjun hereby confirm that the Financial Report enclosed in the Annual Report is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock ST Tellus-A, ST Tellus-B Stock code 000025, 200025 Listed stock exchange Shenzhen Stock Exchange Registered address and office address Registered address: Shenzhen Office address: 3/F, Tellus Bldg., No. 56 of Shui Bei Er Road, Luohu District, Shenzhen Post code Post code of registered address: 518020 Post code of office address: 518020 Internet web site of the Company http://www.sdgtellus.com.cn E-mail of the Company sztljtgf@public.szptt.net.cn 2.2 Contact person and method Secretary of the Board Securities Affairs Representative Name Ren Yongjian Li Mingjun Contact address 3/F, Tellus Bldg., No. 56 of Shui Bei 3/F, Tellus Bldg., No. 56 of Shui Bei Er Road, Luohu District, Shenzhen Er Road, Luohu District, Shenzhen Telephone (86) 755-25536888-388 (86) 755-25536888-351 Fax (86) 755-25536658 (86) 755-25536658 E-mail szryj@tom.com szlmj@tom.com 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 1,124,745,615.76 1,436,382,877.72 -21.70% 1,289,321,184.23 Total profit 13,903,513.53 13,630,669.73 2.00% -34,302,617.24 Net profit 4,319,754.28 5,175,063.43 -16.53% -40,980,896.04 Net profit after deducting -2,056,290.71 -5,157,990.61 60.13% -35,020,226.61 non-recurring gains and losses Net cash flow arising from -79,921,661.82 100,750,071.64 -179.33% 120,412,420.24 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 1,063,458,822.65 1,274,704,955.23 -16.57% 1,232,340,347.02 Shareholder’s equity (excluding 216,276,817.86 211,162,165.06 2.42% 20,523,567.11 minority interests) 3.2 Major financial indexes Unit: RMB Increase/decrease over 2004 2003 2002 last year（％） Earnings per share 0.02 0.02 0.00% -0.19 Earnings per share (note) 0.02 - - - Return on equity 2.00% 2.45% -0.45% -20.14% Return on equity calculated based on net profit after deducting non-recurring gains -0.95% -2.44% 1.49% -17.21% and losses Net cash flow per share arising from -0.36 0.46 -178.26% 0.55 operating activities Increase or decrease At the end At the end At the end from the end of of 2003 of 2002 of 2001 previous year（％） Net assets per share 0.98 0.96 2.08% 0.92 Net assets per share after adjustment 0.14 0.10 40.00% 0.04 Note: Earnings per share was calculated based on new share capital if the Company’ s share capital from the end of report period to disclosure date of this report had been changed. Items of non-recurring gains and losses √Applicable □Inapplicable Unit: RMB Items of non-recurring gains and losses Amount Income from equity transfer 4,804,661.63 2 Reserve for impairment losses switched back 1,800,000.00 Non-operating income 1,738,351.79 Non-operating expenses after deducting reserve for impairment losses -1,394,441.99 Losses from debts reorganization -193,791.39 Funds occupied fee received from non-finance enterprises 428,802.29 Impact on income tax -807,537.35 Total 6,376,044.98 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 4,319,754.28 4,73,800.00 The Company’s net profit as of year 2004 was RMB 4,320,000 audited by domestic certified public accountants and RMB 4,738,000 audited by international certified public accountants respectively, which has increased by RMB 418,000 than the domestic result. The reasons are as follows: the evaluation and amortization of long-term investment has decreased by Explanation on the difference RMB1,938,000, valuation with object investment has decreased by RMB 269,000, switching back excess deficit of subsidiaries has decreased by RMB 139,000, expenses for capital occupied due to related transaction has increased by RMB 730,000, income from debts reorganization has increased by RMB 204,000, and fair value of investment house property has increased by RMB 1,830,000. §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share (Unit: share) Increase / decrease in this Before the After the time (+, -) change change Sub-total I. Unlisted Shares 1. Sponsors’shares 159,588,000 0 159,588,000 Including: State-owned share 159,588,000 0 159,588,000 Domestic legal person’ s shares 0 0 0 Foreign legal person’ s shares 0 0 0 Others 0 0 0 2. Raised legal person’ s shares 0 0 0 3. Inner employees’shares 0 0 0 4. Preference shares or others 0 0 0 Total unlisted shares 159,588,000 0 159,588,000 II. Listed Shares 1. RMB ordinary shares 34,284,100 0 34,284,100 3 2. Domestically listed foreign shares 26,400,000 0 26,400,000 3. Overseas listed foreign shares 0 0 0 4. Others 9,500 0 9,500 Total listed shares 60,693,600 0 60,693,600 III. Total shares 220,281,600 0 220,281,600 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 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Total number of shareholders at the end of report year 14,976 Particulars about shares held by the top ten shareholders Number of Nature of Increase / Shares held Type of shares share shareholders decrease in at the Proportion (Circulating/ Full name of Shareholders pledged/ (State -owned the report year-end (%) Non-circulating frozen shareholder/foreign year (share) (share) ) (share) shareholder) Shenzhen Special Economic Zone State-owned 0 159,588,000 72.45% Non-circulation 0 Development (Group) Company shareholder ZHUANG XIN JIAN 490,499 0.22% Circulation Foreign shareholder WANG FU CHANG 330,000 0.15% Circulation Foreign shareholder LIU ZI XIAN 288,387 0.13% Circulation Foreign shareholder DBS BICKERS (HONG KONG) LTD A/C Circulation Foreign shareholder 261,100 0.12% CLIENTS WANG XING 210,000 0.10% Circulation Foreign shareholder MEI ZHENG SHUI 201,000 0.09% Circulation Foreign shareholder YAO MING CHUN 195,800 0.09% Circulation Foreign shareholder YE JING 194,900 0.09% Circulation Foreign shareholder CAI XIAO LIN 181,148 0.08% Circulation Foreign shareholder Particulars about shares held by the top ten shareholders of circulation share Full name of shareholders Number of circulation shares at the Type (A-share, B-share, H-share year-end (share ) and other) ZHUANG XIN JIAN 490,499 A-share WANG FU CHANG 330,000 B-share LIU ZI XIAN 288,387 A-share DBS BICKERS (HONG KONG) LTD A/C CLIENTS 261,100 B-share WANG XING 210,000 B-share MEI ZHENG SHUI 201,000 A-share YAO MING CHUN 195,800 A-share YE JING 194,900 B-share 4 CAI XIAO LIN 181,148 A-share ZHUANG GONG DONG 180,088 B-share Explanation on associated relationship among the Among the top ten shareholders of circulation share as listed above, the top ten shareholders or consistent action Company is unknown whether there exists associated relationship or not. 4.3 Particulars about controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in controlling shareholders and actual controller of the Company √Applicable □Inapplicable Shenzhen Special Economic Zone Development (Group) Name of new controlling shareholder Company Name of new actual controller Shenzhen Investment Holding Co., Ltd. Changing date Changing date of new actual controller: Sep. 29, 2004 Disclosure date and newspaper of the Shenzhen Special Economic Zone Development (Group) changing of controlling shareholder Company Disclosure date and newspaper of the Nov. 4, 2004 changing of actual controller Securities Times and Ta Kung Pao 4.3.2 Introduction of situation on the controlling shareholder and actual controller Shenzhen Special Economic Zone Development (Group) Company Legal representative: Hu Ge Date of establishment: In October 1981 Registered capital: RMB 104.85 million Company type: state-owned enterprise of Shenzhen City Business scope: principal business: industry, traffic and transportation, land development, real estate, tourism, finance and trust, issuing securities, information consulting, textile, textile products, general merchandize, grains and oil, other products, hardware, traffic electrical appliances, chemicals. Minor businesses: cultural and office equipment, computer and components, feeds, general parts, steel materials, pig iron, non-ferrous metal, building materials, mineral products, import of raw and auxiliary materials and equipment for self- use, local and animal by-products and fire extinguishing equipment and materials. 4.3.3 Property right and controlling relationship between the actual controller of the Company and the Company is as follows: Shenzhen Investment Shenzhen Special Economic ShenZhen 100% 72.45% 72.45% Holding Co., Ltd. Zone Development (Group) Tellus Holding Company Co., Ltd. §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives 5 Number of holding shares (share) Reason for Name Title Gender Age Office term At the At the change period-begin period-end Jiang Qinjian Director Male 42 Apr. 18, 2003- 9,000 9,000 Apr. 18, 2006 Hu Xiaomei Supervisor Female 44 Apr. 18, 2003- 0 500 Purchasing Apr. 18, 2006 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment from the Title in Shareholding Name Name of Shareholding Company Office term Shareholding Company Company (Yes / No) Shenzhen Special Economic Zone Deputy Chief Nov. 1, 2001 to Wang Hailin No Development (Group) Company Economist now Shenzhen Special Economic Zone Minister of human Jun. 1, 2000 to Yang Feng No Development (Group) Company resource Dept. now Shenzhen Special Economic Zone Minister of Planing & Jan. 1, 2004 to Jiang Qinjian No Development (Group) Company Financial Dept. now Shenzhen Special Economic Zone Minister of the 2nd Jul. 1, 1996 to Luo Tao No Development (Group) Company Dept. of the Group now Shenzhen Special Economic Zone Director of Geneal Jan. 1, 2004 to Feng Yu No Development (Group) Company Office now 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 940,000 Total annual payment of the top three directors RMB 410,000 drawing the highest payment Total annual payment of the top three senior RMB 560,000 executives drawing the highest payment Allowance of independent director RMB 30,000 per person/ year Other treatment of independent directors Naught Name of directors and supervisors receiving no Wang Hailin, Yang Feng, Jiang Qinjian, Luo Tao, Feng payment or allowance from the Company Yu, Hu Xiaomei and Wu Yonggang Payment Number of persons RMB 130,000 ～ RMB 150,000 1 RMB 150,000 ～ RMB 180,000 3 RMB 200,000 ～ RMB 220,000 1 6 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In the report period, under the correct lead of the Board of Directors, after collective efforts of all employees and tacit cooperation, the Company surmount ed difficulties, settled problems, adjusted in advancement, developed amidst adjustment, gained better outstanding achievement of operations and achieved main operation target. The new point of profit growth of the Group is forming, and the Company entered into a phase with continual payoff and steady development. In 2004, Tellus Holding realized sales income amounting to about RMB 1.124 billion in the whole year; and realized total profit of RMB 13.9 million and net profit of RMB 4.32 million. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 Classified according to Income from Cost of main Gross Increase/decrease Increase/decreas Increase/decrease industries or products main operations profit in income from e in cost of main in gross profit ratio operations (RMB) ratio (%) main operations operations over over the last year (RMB) over the last year the last year (%) (%) (%) Other social service 9,766.00 6,433.00 34.13% -10.99% -16.38% 4.24% Other wholesale and 97,964.00 93,767.00 4.28% -22.46% -22.62% 1.19% retail trade Lease service 4,744.00 1,525.00 67.85% -24.96% -18.41% -2.59% Including: related transactions Automobile inspection 9,766.00 6,433.00 34.13% -10.99% -16.38% 4.24% and maintenance Automobile trade 97,964.00 93,767.00 4.28% -22.46% -22.62% 1.19% Lease service 4,744.00 1,525.00 67.85% -24.96% -18.41% -2.59% Including: related transactions Pricing rules for related Naught transactions Necessity and durative Naught of related transactions 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 7 Areas Income from main Increase/decrease in income from main operations (RMB) operations over the last year (%) Shenzhen 112,474.00 -21.70% 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase Proportion in the total 80,000.00 90.00% of the top five suppliers amount of purchase Total amount of sales of the Proportion in the total 500.00 0.30% 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 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) than that in the last year □Applicable √Inapplicable 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 Particulars about the changed projects □Applicable √Inapplicable 8 6.13 Application of the no n-raised proceeds through shares offering □Applicable √Inapplicable 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 In 2005, the guiding thought in work of Tellus Group is: to strengthen management, integrate resources, perfect mechanism, settle crisis and steady development. The following some aspects were included: 1. To strengthen management, increase income save expenses, gain benefit from management and further perfect budget checking system; 2. To integrate internal resources of the Group, integrate assets, and enhanced integration of management level and human resource simultaneity; 3. To perfect corporative administrative mechanism, standardize enterprise’ s business and operation and explore scientific long-effective encouragement mechanism; 4. To settle legal crisis, appropriative settle bank liabilities, widen financing channel and enhance financing capability; 5. To solidify existing market, strengthen industrial basis, fix attention to doing well in the two new projects of Benz and Quick Repairing Chain, and actively and reliably exploit new point of market growth. Profit estimation of the next year □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors □Applicable √Inapplicable The Company did not appropriate share distribution preplan though the Company achieved the profit in the report period √Applicable □Inapplicable The reasons why the Company did not appropriate share Usage and plan of undistributed profit distribution preplan though the Company achieved the profit in the report period In 2004, neither profit distribution nor capitalization The undistributed profits will be used would be conducted. to offset the losses in the previous The undistributed profits will be used to offset the years. losses in the previous years. The said profit distribution plan still should be submitted to Annual Shareholders’ General Meeting 2004 for examination and approval. 9 §7. Significant Events 7.1 Purchase of assets □Applicable √ Inapplicable 7.2 Sales of assets √Applicable □ Inapplicable Unit: RMB’0000 Contribution to net Assets Debts and profit of the Profit ownership Liabilities Related Explain Transaction The assets Date of Sale Company of the or loss involved in involved in transaction principle of parties sold sale price assets sold from the from the assets the assets or no pricing year-begin to the sale transferred or transferred or date of sale not not Shenzhen Xinhua Based on Dec. 29, Chen Yibin Wire 641.00 19.00 408.00 No evaluation Yes No 2004 &Cable report Co., Ltd. 7.1, 7.2 Influence on consistence of business and stability of managers caused by the issues interfered in purchase and sale The transaction would increase cash flow of the Company. The inflow would help the Company explored core business with all efforts, which had positive influence on the production and operation of the Company. 7.3 Important guarantee √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) Gintian Joint Industry Aug. 1, 1997 1,654.00 responsible One year No No (Group) Co., guarantee Ltd. Shenzhen Automobile Industry Mar. 26, 2004 800.00 Credit One year No Yes Import & Export Co. 10 Shenzhen Automobile Industry Aug. 13, 2004 1,000.00 Credit One year No Yes Import & Export Co. Shenzhen Automobile Industry Aug. 17, 2004 800.00 Credit One year No Yes Import & Export Co. Shenzhen Automobile Industry Aug. 10, 2004 1,000.00 Credit One year No Yes Import & Export Co. Total amount of guarantee in the report period 3,600.00 Total balance of guarantee at the end of the report period 5.254.00 Guarantee of the Company for the controlling subsidiaries Total amount of guarantee for controlling subsidiaries in the report period 944.00 Total balance of guarantee for controlling subsidiaries at the end of the report 995.10 period Particulars about the external guarantee of the Company (Including the guarantee for the controlling subsidiaries) Total amount of guarantee 6,249.10 The proportion of the total amount of guarantee in the net assets of the 28.89% Company Particulars about the guarantees out of line Total amount of guarantee for other related parties, which the Company or 3,600.00 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 3,600.00 7.4 Significant related transactions 7.4.1 Related sale and purchase □Applicable √Inapplicable 7.4.2 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Providing capital to the The related parties provided Related Parties related parties capital to the Company Amount Balance Amount Balance occurred occurred SDG -82.32 14,846.34 163.72 5,326.03 11 Shenzhen SD Swan Industrial Company 92.68 2,271.37 0.00 0.00 Shenzhen Xinglong Machinery Mould Company 7.57 127.35 0.00 0.00 Shenzhen Machinery Export-Import Company 11.24 494.40 0.00 0.00 Hong Kong Yujia Investment Co., Ltd. -21.02 0.00 254.58 254.58 Shenzhen Telongfa Industrial Co., Ltd. 0.00 55.50 0.00 847.76 Shenzhen Zhenhai Kitchen Control Machinery 0.00 51.84 0.00 0.00 Co., Ltd. Tellus (Jinbian) Development Co., Ltd. 6.11 36.00 0.00 0.00 Shenzhen Tellus Real Estate Yueyang Company 3.60 25.55 0.00 0.00 Shenzhen Chihe Automobile Co., Ltd. 500.00 500.00 0.00 0.00 Shenzhen SD Development Center Construction 0.00 0.00 19.00 651.50 Supervision Co., Ltd. Shenzhen Automobile Industry Import & Export 0.00 0.00 -705.00 792.20 Company Shenzhen Longgang Tellus Real Estate Company 0.00 0.00 0.00 109.57 Shenzhen Biaoyuan General Automobile Co., 0.00 0.00 -152.00 469.37 Ltd. Shenzhen Biaoyuan Investment Company 0.00 0.00 999.00 999.00 Shenzhen Tellus Yangchun Real Estate Company 0.00 0.00 7.46 33.06 Total 517.86 18,408.35 586.76 9,483.07 Including: In the report period, the amount of capital of the listed company provided for controlling shareholders and its subsidiaries was RMB 102,900, and the balance was RMB 177,291,600. 7.5 Entrust financing □Applicable √ Inapplicable 7.6 Implementation of commitment items √ Applicable □ Inapplicable In 1997, the Company transferred equity of Telongfa Company, the subsidiary of the Company, to SDG and other business and it produced credit to the principal shareholder. Related creditors and SDG negotiated to change from credit to share equity to the principal shareholder on the balance of part short-term loan and interest payable. Because the work of debt-to-equity swap is in the process, SDG made commitment not reversible as follows on the debt owed to the Company: SDG takes in charge of dealing with the legal procedure of debt-to-equity swap as soon as possible. If debt-to-equity swap is not implemented due to any reason, SDG will accept the aforesaid bank debts and corresponding interest of the Company to repay the debts SDG owed to the Company. The commitment letter is subject to Chinese law and binds SDG. 7.7 Significant lawsuit and arbitration √ Applicable □ Inapplicable 12 On Aug. 20, 2004, about the case that Shenzhen Shangbu sub-branch of Agricultural Bank of China indicted Shenzhen Petrochemical Industrial Group Co., Ltd. didn’t pay loan amounting to RMB 57.6 million over due and the Company provided guarantee for it, Shenzhen branch of Agricultural Bank of China appealed to Shenzhen Intermediate People’ s Court, and claimed the borrower Shenzhen Petrochemical Industrial Group Co., Ltd. paid back loan 57.6 million and interest RMB 16,652,286.37, loan interests lasting to the implementation period, of which Shenzhen Petrochemical Industrial Group Co., Ltd. didn’t fulfill the obligation overdue that the Court verdict it should pay double interests, and expenses for realizing creditors’ rights, the Company bore clearing responsibilities for total liabilities of Shenzhen Petrochemical Industrial Group Co., Ltd.. At present, the case was in hearing. On Sept. 11, 2004, the Company published Public Notice on Lawsuit on Securities Times and Ta Kung Pao respectively. 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) Shi Weihong 9 9 0 0 Zhou Chengxin 9 9 0 0 Zhang Yuan Business 9 4 4 1 trip 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 totally held seven entire meetings in the report period and the main content: 1. Examine the significant matters of the Company, successively examine and approve Proposal on Revising relevant terms of the Articles of the Association, Trial Regulations on Accident Disposal of Working Quality of Tellus Group, and Trial Regulations on Salary Management of the headquarters of Tellus Group; examine and approve Proposal on share equity of Xinhua Cable Co., Ltd., Answering Lawsuit Plan about Agricultural Bank of China indicted the Company for bank guarantee and relevant proposal on changes on share equity of wholly enterprise; present independent opinion on Dongguan automobiles marketing program of Xinyongtong Company. 2. Seriously examine Work Report of the Board, Business Report pf Operating Group, Financial Quarterly Report and Annual Report of the Company and Profit Distribution Plan. 3. Approve Work Report 2004 of the Supervisory Committee and form resolutions. For one year, the members of the Supervisory Committee of the Company attended all meetings of the Board of the Company. According to the duty scope stated in relevant 13 laws, regulations and Articles of Association of the Company, the Supervisory Committee of the Company supervised over and knew the operation according to law of the Company, work and behavior of the members of the Board of Directors and other senior executives through attending the meeting of the Board as non-voting delegates and other approaches, strictly fulfilled supervision obligations. The Supervisory Committee expressed the following independent opinion on relevant events of the Company in 2004: 1. Opinio n on the Company’ s operation according to law According to Company Law, Administration Rules for Listed Companies, Articles of Association of the Company and other relevant laws and regulations, the Supervisory Committee supervised over the procedure of ho lding and resolutions of the Shareholders’ General Meeting and the Board of Directors, implementation of resolutions of the Shareholders’ General Meeting by the Board of Directors, implementation of duties of senior executives of the Company and the Company’ s management system. The Supervisory Committee believes that every decision- making procedure of the Company was in accordance with the Company Law, Administration Rules for Listed Companies and Articles of Association of the Company, the Company can carry out resolutions of Shareholders’General Meeting and corrected emerging problems in operation timely, and actively protected interests of the Company. In the report period, there found no actions of breaking laws, regulations and Articles of Association of the Company and damaging the interest of the Company when the directors and senior executives of the Company implemented their duties of the Company. 2. Opinion on inspection of the Company’ s financing The Supervisory Committee inspected patiently and carefully the financial system and financial status of the Company and believed that the Company had sound inner control system and perfect management, and 2004 Financial Report of the Company could reflect truly the financial status and operation result of the Company. Shenzhen Nanfang Minhe Certified Public Accountants and Moore Stephens (Shenzhen) Certified Public Accountants has issued the unqualified auditor’ s report. 3. In the report period, the Company had no raised capital. 4. Opinion on purchase and sale of assets of the Company In this accounting year, as researched and decided by the Board of Directors of the Company and authorized by the relevant superior departments, the Company transferred 15.54% equity of Shenzhen Xinhua Cable Co., Ltd.. The transfer price of share equity transfer was reasonable, and the procedures of it were lawful. There found unreasonable transaction and insider trade, which didn’t cause the outflow of the assets of the Company and harm the interests of shareholders. 5. In the report period, to respite actual difficulties of capital turnover, through negotiation of both parties, the loan amounting to RMB 6 mil from SD Supervision, controlling subsidiary of SDG, the controlling shareholder of the Company would extend for one year. The related transaction didn’t cause significant influence on the Company. 14 §9. Financial Report 9.1 Auditor’s opinions Auditor ’s opinions : Standard unqualified auditor ’ s opinions 9.2 Financial statement 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 2003, the Company consolidated income statement and cash flow statement of Shenzhen Huatong Automobile Company from Jan. to Sep.. Because the Company transferred 70% share equity of Shenzhen Huatong Automobile Company, the Company lose control on the company, which led to change on the consolidation scope pf statements. Board of Directors of ShenZhen Tellus Holding Co., Ltd. Mar. 15, 2005 15 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 Turnover 4 1,124,746 1,436,383 Cost of sales （ 1,020,822） （ 1,311,843） Gross profit 103,924 124,540 Other operating income 55,700 37,138 Distribution costs （ 50,953） （ 52,861） Administrative expenses （ 52,440） （ 62,416） Other operating expenses （ 35,418） （ 24,723） Profit from operations 5 20,813 21,678 Finance costs 6 （ 15,406） （ 19,861） Income from associates 2,550 2,697 Dividend income from investments 1,699 2,025 Gain from disposal of associates -- 3,203 Gain from disposal of investments 4,805 14,058 Loss from disposal of a subsidiary -- (5,803) Profit before tax 14,461 17,997 Income tax expense 7 （ 4,430） （ 3,930） Profit after tax 10,031 14,067 Minority interest （ 5,293） （ 4,370） Net profit for the year 4,738 9,697 Profit per share 8 Basic RMB 0. 01 RMB 0. 04 Diluted N/A N/A The accompanying notes form part of these financial statements. 16 CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 Non-current assets Goodwill 9 11,119 12,808 Property, plant & equipment 10 120,500 135,262 Investment properties 11 270,532 268,702 Interests in associates 13 12,715 25,315 Long-term investments 14 88,405 83,775 503,271 525,862 Current assets Properties held for sale 15 37,258 61,593 Inventories 16 126,728 88,025 Accounts receivable and prepayments 105,477 179,403 Amount due from ultimate holding company 17 95,203 95,389 Pledged bank deposits 18 38,599 179,117 Cash and bank balances 86,740 86,511 490,005 690,038 Current liabilities Accounts payable 77,439 109,382 Accruals and other payables 164,922 161,955 Provision for staff welfare 5,838 7,344 Bills payable 18 100,175 272,092 Bank loans 19 207,132 233,162 Other loans 20 172,586 192,482 Tax payable 5,805 3,426 733,897 979,843 Net current liabilities (243,892) (289,805) 259,379 236,057 Capital and reserves Share capital 21 220,282 220,282 Reserves 22 (10,677) (15,415) 17 Minority interests 49,774 31,190 259,379 236,057 __________ __________ Director Director The accompanying notes form part of these financial statements. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 Note 2004 2003 RMB’000 RMB’000 OPERATING ACTIVITIES Cash received from sale of goods or rendering of services 1,327,288 1,708,985 Other cash received relating to operating activities 28,848 29,972 Cash paid for goods and services (1,212,148) (1,448,580) Cash paid to and on behalf of employees (60,344) (60,860) Tax paid (34,107) (57,364) Cash paid relating to other operating activities (129,459) (71,403) Interest paid (13,903) (21,468) Net cash from operating activities (93,825) 79,282 INVESTING ACTIVITIES Cash received from disposal of investments 3,567 36,317 Dividends received and interest received 1,845 9,732 Net cash received from the sale of fixed assets, intangible assets and other long-term assets 5,857 5,983 Other cash received relating to investing activities 140,517 - Cash paid to acquire fixed assets, intangible assets and other long-term assets (4,347) (9,802) Cash paid to acquire investments (18,879) (24,853) Cash paid relating to other investing activities - (73,892) 18 Net cash used in investing activities 128,560 (56,515) FINANCING ACTIVITIES Proceeds from borrowings 201,870 268,515 Other cash received relating to financing activities - - Repayments of borrowings (236,376) (309,876) Cash paid relating to other financing activities - - Net cash used in financing activities (34,506) (41,361) NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS 229 (18,594) Cash and cash equivalents at beginning of year 86,511 105,105 Cash and cash equivalents at end of year 86,740 86,511 The accompanying notes form part of these financial statements. 19