中集集团(000039)中集Ｂ2004年年度报告摘要（英文版）

CHINA INTERNATIONAL MARINE CONTAINERS (GROUP) CO., LTD. (Incorporated in People’ s Republic of China) ANNUAL REPORT 2004 (SUMMARY) Ended Dec. 31, 2004 1. Important Notes 1.1 The Board of Directors of CHINA INTERNATIONAL MARINE CONTAINERS (GROUP) CO., LTD. (hereinafter referred to as the Company) and its directors individually and collectively accept full responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there is neither any omission of material facts, untrue presentations, nor any misleading statement contained in the information herein. The 2004 annual report summary 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 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 Seven directors were expected to attend the Board meeting and actually all of them were present. 1.4 KPMG Certified Public Accountants issued an unqualified Auditors’Report 1.5 Chairman of the Board of the Company Mr. Li Jianhong, President Mr. Mai Boliang and General Manager of Financing & Management Dept. Mr. Jin Jianlong hereby confirm that the Financial Report contained in the Annual Report is authentic and complete. 2. Company Profile 2.1 Basic information Short form of the stock CIMC Stock code 000039、200039 Listed stock exchange Shenzhen Stock Exchange Registered address 5/F, Financial Center of Shekou Industrial Zone, Shenzhen, Guangdong Province, P.R.C Office address R&D Center of CIMC, No. 2 Gangwan Avenue, Shekou Industrial Zone, Shenzhen, Guangdong Province, P.R.C Post code 518067 Internet web site of the Company www.cimc.com E-mail of the Company shareholder@cimc.com 1 2.2 Liaison person and liaison method Authorized Representative in Charge Secretary of the Board of Directors of Securities Affairs Name Yu Yuqun Wang Xinjiu Liaison address R&D Center of CIMC, No. 2 R&D Center of CIMC, No. 2 Gangwan Avenue, Shekou Industrial Gangwan Avenue, Shekou Industrial Zone, Shenzhen, Guangdong Zone, Shenzhen, Guangdong Telephone (86) 755-2669 1130 (86) 755-2669 1130 Fax (86) 755-2682 6579 (86) 755-2681 3950 E-mail shareholder@cimc.com shareholder@cimc.com 3. Summary of Accounting Data and Financial Indexes 3.1 Three-year financial information summary Three-year Financial Information Summary (Prepared under International Financial Reporting Standards [“IFRS”]) Unit： RMB’000 Items 2004 2003 2002 Container sales volume (TEU) 1,570,809 1,173,293 751,578 Revenue 26,557,657 13,705,212 9,025,986 Net operating profit before net 2,858,463 905,376 512,948 financing costs Share of the profit of associates 25,534 8,747 121,677 Profit before tax 2,847,209 888,830 569,622 Income tax expense (277,105) (111,361) (58,669) Profit for the year 2,570,104 777,469 510,953 Minority interests 105,112 83,418 87,660 Profit for the year 2,570,104 694,051 423,293 Basic earnings per share* (RMB Yuan) 2.44 0.77 0.83 Total assets 16,986,315 10,258,356 8,073,894 Total equity attributable to equity 7,521,276 5,295,653 2,850,497 holders of the parent Net assets per share (RMB Yuan) 7.46 8.40 5.59 Rate of Return on Stockholders’Equity 34.17% 13.11% 14.85% (ROE) Cash flows from operating activities 1,315,196 615,122 -677,635 Net (decrease)/increase in cash and 776,561 324,667 -9,441 cash equivalents Dividend (per share) Cash dividend of Cash dividend of Cash dividend RMB0.50, RMB0.38, RMB0.50 per converting public converting public share, 0.50 share reserve into share reserve into share bonus capital at the rate of capital at the rate 1.0 share of 0.6 share 2 * The calculation of basic earnings per share is based on the profit attributable to shareholders of RMB2,464,992,000 (2003: RMB694,051,000) and 1,008,483,353 shares (2003: 900,428,277 shares after adjusting for the share premium capitalisation issue in 2004) in issue during the year. There were no diluting potential ordinary shares in existence during the years ended 31 December 2003 and 2004. 3.2 Reconciliation of the Group’s consolidated results and net assets prepared under International Financial Reporting Standards (“IFRS”) and the PRC Accounting Rules and Regulations: √Applicable □Non-applicable Profit attributable to shareholders for the year ended Net assets at 31 December 31 December 2004 2004 RMB’000 RMB’000 Prepared under the PRC Accounting Rules and Regulations 2,389,024 7,471,364 Adjustments to align with IFRS: (i) Adjustment to minority interests 918 9,553 (ii) Adjustment to deferred tax assets 32,168 52,370 (iii) Adjustment to goodwill and negative goodwill 18,571 (47,470) (iv) Adjustment to interest capitalisation 6,152 19,090 (v) Others 18,159 16,369 Prepared under IFRS 2,464,992 7,521,276 ======== ======== 4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital 3 Unit: share Before the Increase/decrease (+/-) After the Share ratio change Shares capital transferred Other change (%) from public reserve I. Unlisted shares Sponsor’ s shares 227,363,133 +136,417,880 363,781,013 36.07 Including: Shares held by domestic legal person 102,313,410 +61,388,046 163,701,456 16.23 Shares held by foreign legal person 125,049,723 +75,029,834 200,079,557 19.84 Total unlisted shares 227,363,133 +136,417,880 363,781,013 36.07 II. Listed shares 1. RMB ordinary shares 189,333,262 +113,599,957 302,933,219 30.04 Including: shares held by senior executives 237,024 +142,213 －66,925 312,312 0.03 2. Domestically listed foreign shares 213,605,701 +128,163,420 341,769,121 33.89 Total listed share 402,938,963 +241,763,377 644,702,340 63.93 III. Total shares 630,302,096 +378,181,257 1,008,483,353 100.00 Note 1: Changing in the aforesaid share capital was because the Company implemented 2003 Dividends Distribution Plan and plan on conversion of capital reserve into share capital in the report period. Note 2: Shares held by senior executives refer to the shares held by directors and senior executives frozen with amounting to 312,312 shares in total. At the end of the report period, shares held by senior executives has decreased by 66,925 shares, which is mainly because that Gu Hongren, original vice-president of the Company, no longer took the post of vice-president since June 2004 and shares of the Company held by Gu Hongren was unfrozen in Dec. 2004. 4.2 Statement of shares held by the top ten shareholders 4.2.1 the top ten shareholders Total shareholders at the end of Ended Dec. 31, 2004, the Company has totally 40,947 shareholders, of them, 30,073 report year shareholders of A-share and 10,874 shareholders of B-share. Particulars about shares held by the top ten shareholders Increase / Number of Holding shares Proportion Type of shares decrease in share Nature of Name of Shareholder at the year-end in total (Circulating/Non-ci the report pledged or shareholders (share) shares (%) rculating) year frozen 1. COSCO Container Industries Limited 61,388,046 163,701,456 16.23 Non-circulating 0 Foreign shareholder 2. CHINA MERCHANTS CONTAINER 61,388,046 163,701,456 16.23 Non-circulating 0 Foreign shareholder INDUSTRIES CO., LTD. 3. FAIR OAKS DEVELOPMENT LIMITED 24,494,098 62,772,778 6.22 Circulating 0 Foreign shareholder 4. PROFIT CROWN ASSETS LIMITED 13,641,788 36,378,101 3.61 Non-circulating 0 Foreign shareholder 5. GT PRC FUND 4,783,476 12,422,602 1.23 Circulating Unknown Foreign shareholder 6. NIKKOCITI TB S/A RE:JF CHINA Unknown 10,495,949 1.04 Circulating Unknown Foreign shareholder MOTHER FD(716000) 4 7. LONG HONOUR INVESTMENTS 3,596,890 9,591,707 0.95 Circulating 0 Foreign shareholder LIMITED 8. JPMBLSA RE FTIF TEMPLETON Unknown 9,221,971 0.91 Circulating Unknown Foreign shareholder CHINA FUND GTI 5497 9. INDUSTRIAL AND COMMERCIAL Unknown 8,259,751 0.82 Circulating Unknown BANK OF CHINA - CHINA SOUTH STEADY GROWTH SECURITIES INVESTMENT FUND 10.FF GREATER CHINA FD GT1 24037 Unknown 8,000,040 0.79 Circulating Unknown Foreign shareholder Note: Among the above the top ten shareholders, there exists the associated relationship as well as the consistent action between the No. 1 shareholder and No. 7 shareholder, namely Long Honour Investment Limited is the affiliated wholly-owned subsidiary company of COSCO (Hong Kong) Group, a Hongkong wholly-owned subsidiary company of China Ocean Shipping (Group) Company (COSCO). COSCO Container Industries Limited is the affiliated wholly-owned subsidiary company of COSCO Pacific Limited of COSCO Hong Kong Holdings, the said two shareholders didn’ t belong to the persons acting in concert regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Explanation on associated Companies with the other shareholders. relationship among the top ten There existed the associated relationship as well as the consistent action between the shareholders or consistent No. 2 shareholder and the No. 3 shareholder, namely China Merchants Container Industries Co., Ltd. and Fair Oaks Development Limited are the wholly-owned action affiliated companies of China Merchant Holdings (International) Company Limited (CMHI), a shareholding subsidiary company of China Merchant Group; the said two shareholders didn’ t belong to the persons acting in concert regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies with the other shareholders. The Company is not aware of their associated relationships among other shareholders of circulation share, or whether belongs to the persons acting in concert regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies. 4.2.2 The top ten shareholders of circulating share Holding shares at the Shareholders’name Proportion Type of shares period-end (share) 1. FAIR OAKS DEVELOPMENT LIMITED 62,772,778 6.22% B-share 2. GT PRC FUND 12,422,602 1.23% B-share 3. NIKKOCITI TB S/A RE:JF CHINA MOTHER FD(716000) 10,495,949 1.04% B-share 4. LONG HONOUR INVESTMENTS LIMITED 9,591,707 0.95% B-share 5. JPMBLSA RE FTIF TEMPLETON CHINA FUND GTI 5497 9,221,971 0.91% B-share 6. INDUSTRIAL AND COMMERCIAL BANK OF CHINA - CHINA SOUTH 8,259,751 0.82% A-share STEADY GROWTH SECURITIES INVESTMENT FUND 7. FF GREATER CHINA FD GT1 24037 8,000,040 0.79% B-share 8. BANK OF CHINA- HAIFUTONG INCOME GROWTH SECURITIES 7,886,489 0.78% A-share INVESTMENT FUND 9. TEMPLETON DRAGON FUND, INC. 7,773,186 0.77% B-share 10. JIUJIA SECURITIES INVESTMENT FUND 6,601,935 0.65% A-share Note: Among the top ten shareholders of circulating share, there exists the associated 5 relationship between Long Honour Investments Limited and COSCO Container Industries Limited: Long Honour Investments Limited is the affiliated wholly-owned subsidiary of COSCO Hong Kong Group; COSCO Container Industries Limited is the affiliated wholly-owned subsidiary of COSCO Pacific Limited. COSCO Hong Kong Group holds 53.07% equity of COSCO Pacific Limited directly and indirectly. There exists the associated relationship between Fair Oaks Development Limited and China Merchants Container Industries Co., Ltd.: China Merchants Container Industries Co., Ltd. and Fair Oaks Development Limited are wholly-owned affiliated companies of China Merchants Holdings (International) Company Limited. The Company is not aware of their associated relationships among other shareholders. 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 □Non-applicable 4.3.2 Introduction of controlling shareholder and other actual controller There are no shareholders (holding shareholder) who hold over 30% of the Company’s total shares. Legal Date of Registered Structure Shareholder’s name Proportion Business scope representative foundation capital of equity COSCO CONTAINER INDUSTRIES 16.23% Lu Apr. 26, 2004 USD 1 Wholly held Investment and Shareholding LIMITED Chenggang, by COSCO Wang Zhi, Shi Pacific Jingwei Limited CHINA MERCHANTS CONTAINER 16.23% - Jan. 17, 1995 HKD Wholly held Investment and Shareholding INDUSTRIES CO., LTD. 10,000 by CMHI (1) COSCO is a limited company which was set up in British Virgin Islands, and it is an affiliated wholly-owned subsidiary company of COSCO Pacific Limited. COSCO Hong Kong held 53.07% equity of COSCO Pacific Limited directly and indirectly. Ended Dec. 31, 2004, COSCO Container Industries Limited held 16.23% equity of the Company; Long Honour Investments Limited is an affiliated wholly-owned subsidiary company of COSCO Hong Kong, and held 0.95% equity of the Company. (2) China Merchants Container Industries Co., Ltd. is the affiliated wholly-owned subsidiary company of China Merchant Holdings (International) Company Limited (“CMHI”). China Merchants Group held 53.146% equity of CMHI. China Merchants Container Industries Co., Ltd. held 16.23% equity of the Company, at the same time, Fair Oaks Development Limited, a wholly-owned affiliated company of CMHI, held 6.22% equity of the Company, China Merchants Container Industries Co., Ltd. and Fair Oaks Development Limited are the wholly-owned affiliated companies of CMHI, thus, CMHI held 22.45% equity of the Company actually. 4.3.3 The property right and controlling relationship between the Company and the actual controller is as follows: 6 COSCO China Merchants Group (HongKong) Co., Ltd. 100% 53.146% 100% COSCO (Hong Kong) Group Ltd China Merchants Holdings (International) Company Limited 53.25% 100% COSCO Pacific Limited Long Honour Investment China Merchants Containers Industrial Co., Limited Ltd. 100% 100% 0.95% COSCO Container Industries Ltd. Fair Oaks Development Limited 16.23% 16.23% CIMC 6.22% 5. Particulars About Director, Supervisor, Senior Executive 5.1 Particulars about changes in shares held by Directors, Supervisors and Senior executives Name Title Sex Age Office term Holding Holding Increase or Reason for share at the share at the decrease change year-begin year-end Li Jianhong Chairman of the Male 49 Apr. 21, 2004- 0 0 0 Board Apr. 21, 2007 Zhao Huxiang Vice Chairman of Male 49 Apr. 21, 2004- 0 0 0 the Board Apr. 21, 2007 Director Apr. 21, 2004- 117,117 187,387 70,270 Transferring Apr. 21, 2007 capita reserve Mai Boliang Male 46 into share capital President Mar. 16, 2004- Mar. 16, 2007 Feng Jinhua Director Male 49 Apr. 21, 2004- Dec. 31, 2004 Wang Zhixian Director Male 39 Apr. 21, 2004- 0 0 0 Apr. 21, 2007 Xiao Zhuoji Independent Male 71 Apr. 21, 2004- 0 0 0 director Apr. 21, 2007 Han Xiaojing Independent Male 50 Apr. 21, 2004- 0 0 0 director Apr. 21, 2007 Zhang Limin Independent Male 50 Nov. 2002- 0 0 0 director Nov. 2005 Du Yongcheng Chairman of the Male 56 May 2002- 0 0 0 7 Supervisory May 2005 Committee Li Xibei Supervisor Male 43 Apr. 21, 2004- 0 0 0 Dec. 31, 2004 Feng Wanguang Supervisor Male 58 May 2002- 0 0 0 May 2005 Zhao Qingsheng Vice-president M ale 52 Mar. 16, 2004- 0 0 0 Mar. 16, 2007 Li Ruiting Vice-president Male 57 Mar. 16, 2004- 78,078 124,925 46,847 Transferring Mar. 16, 2007 capita reserve into share capital Wu Fapei Vice-president Male 46 Mar. 16, 2004- 0 0 0 Mar. 16, 2007 Li Yinhui Vice-president Male 37 Mar. 16, 2004- 0 0 0 Mar. 16, 2007 Liu Xuebin Vice-president Male 46 Mar. 16, 2004- 0 0 0 Mar. 16, 2007 Jin Jianlong General Manager Male 51 Mar. 16, 2004- 0 0 0 of Financing Dept. Mar. 16, 2007 Yu Yuqun Secretary of the Male 39 Mar. 16, 2004- 0 0 0 Board Mar. 16, 2007 5.2 Particulars about directors, supervisors holding the post in Shareholding Company √Applicable □Non-applicable Name Name of Shareholding Company Title in Shareholding Company Office term Whether draw remuneration from shareholding company Li Jianhong COSCO Vice-president Aug. 2000- Drawing from associated company of shareholder Zhao Huxiang China Merchants Group Vice-president Nov. 2001- Drawing from associated company of shareholder Feng Jinhua COSCO General Manager of Financial Oct. 2001 Drawing from associated Dept. company of shareholder Wang Zhixian CMHI General Manager of Enterprise Mar. 2002 Drawing from associated Management Dept. company of shareholder Du Yongcheng CMHI Director and Deputy General 1998- Drawing from associated Manager company of shareholder Li Xibei COSCO Deputy General Manager of Dec. 2002 Drawing from associated Supervision Dept. and Deputy company of shareholder Director of Supervision Office 5.3 Particulars about the annual payment of directors, supervisors and senior executives 8 Total annual payment RMB 5,720,000 Total annual payment of the top three Directors --- drawing the highest payment Total annual payment of the top three Senior RMB 3,100,000 executives drawing the highest payment Allowance of independent Director RMB 80,000 /per person/ year Other treatment of Independent Directors No Name of Directors and Supervisors received no Director Li Jianhong, Director Zhao Huxiang, Director payment or allowance from the Company Feng Jinhua, Director Wang Zhixian and Supervisor Du Yongcheng and Supervisor Li Xibei received their salary from the Shareholding Company that they held the post respectively. Payment Number of persons RMB 1,500,000 ～ RMB 1,800,000 1 RMB 500,000 ～ RMB 1,000,000 2 RMB 500,000 ～ RMB 700,000 2 RMB 300,000 ～ RMB 500,000 4 6. Report of the Board of Directors 6.1 Discussion and analysis of the whole operation in the report period Ⅰ Discussion and analysis of the management 1. Summary of industry background and operation achievements 2004 was the year when the world economy developed most rapidly over the last 30 years, with the world trade increased by 8.8%. Driven by the global consumer market and multinational purchasing, international container transportation market had been on a sharp upward trend in 2004. The transport volume of main courses grew by two-digits that the berths for containers of main stem were continually not quite enough. The total throughput of containe rs in main ports of China increased by 27%. Due to the booming export and insufficient transportation, the price index of export container in China increased tremendously, hitting a historical high of the century. Thanks to this situation, the demand for purchasing new global containers enhanced enormously from 2.38 million TEU to 3 million TEU in 2004, breaking a historical high. Moreover, due to the sharp rise in the price of steel and especially hot-roll plate and local board (the main raw material for container manufacture), the price of dry freight container increased greatly. According to the statistics of related institutes, the price of dry freight container rose by more than 40% over the same period last year. In this prosperous background, the Group made full preparations in the production base layout in advance to capture this historical chance. In this case, the Group grew greatly in business scale and payoff, achieving some historical breakthroughs. It realized revenue amounting to 26.558 and net profit amounting 2.46 billion, an increase of 93.78% and 255.16% respectively. The Group produced containers amounting to 1639.6 thousand TEU accumulatively and sold containers amounting to 9 1570.8 thousand TEU, an increase of 41.42% and 33.88% respectively over the same period of the last year, breaking a historical high. The road transport vehicles bushiness was the new business that the Group started in 2002. In 2004, with the rapid increase in the miles of high- grade roads, the road logistics manageme nt has improved rapidly, thus the demand for road transport vehicles grew greatly. Meanwhile, the state intensified its administration over the transportation market by formulating Road Transport Vehicles Ordinance and technical standards about the road and transport vehicle production to standardize and adjust the road charge. In the second half- year, seven ministries and commissions including the Ministry of Communications took the actions with a duration of one year to curb the overload on road. These measures have standardized the market access and production of road transport and vehicle in China and improved the road transport vehicle market. All these led to the significant increase in the demand of heavy loading road transport vehicles in China. To meet the fast development of market demand, the Group rapidly expanded its production capacity. In 2004, the Group sold 37,926 vehicles of all sorts accumulatively, an increase of 321.82% over the same period last year. It realized sales revenue amounting to RMB 2.912 billion (of which 2.323 billion was listed into the consolidated scope of the Company’ s financial statement), an increase of 325.11% over the same period last year. In road transport vehicles business, the Company made progress in production base formation, products, marketing, purchasing, co-operation and management as expected, continually integrating the resources and further enhancing the production scale and efficiency. The Group has become the greatest manufacturer of road transport vehicles industry. Looking forward to 2005, the global economy will continue to grow steadily, especially the inter-region trade will be hopefully expanding. The global overseas market will continue to be promising and the trade of containers will grow continua lly. Moreover, the elimination number of old containers will hopefully rise to a considerably high level in recent years. Therefore, there remains the steady demand for containers. In addition, since the steel and electricity and other resources are relatively insufficient, the price of containers will remain steady. In respect of road transport vehicles manufacturing, the business of the Group will continue to develop rapidly in the more broad and beneficial operating environment in 2005. The Group will be consistent in improving layout of the production, diversifying product series, expanding overseas market and sharpening competitive edge of products. 2. Analysis to the main financial data (1) Particulars about Revenue, profit and cash flow Analysis: Revenue increased by 93.78% over the same period of last year, which was mainly because that the demand for containers in the whole year kept growing fast and the sales volume of containers increased sharply and the price picked up. Gross Profit and net profit increased by １46.48% and 255.16% respectively over the 10 same period of last year, which was mainly because that the sales volume of containers and price increased by a big margin and the gross profit of containers increased significantly. Net increase in cash and cash equivalents increase by 139.19% over the same period of last year, which was mainly due to the enlargement of the operation scale and the increment of the fund returned at the end of the year and the net increase in the cash flow arising from operation activities. (2) Particulars about assets and shareholders’equity Analysis In the report period, the total assets increased by 65.59%, which was mainly because that the operating scale and sales of products grew, resulting in an increase in current assets than those at the beginning of the year. Current assets increased 80.03% over the period-begin; in current assets, Cash and cash equivalents increased by 109.90% than that at the beginning of the period, inventory increased by 128.62%, Trade and other receivable increased by 35.62%. The indexes of main assets kept in good level: The turnover of current assets was 2.28 times, which was quicker than 2.17 times of last year. The turnover of accounts receivable was 4.57 times, an increase of 0.46 times over last year. The turnover inventory was 6.48 times, a decrease of 1.97 over last year. The Total asset- liability ratio was 50.69%, an increased of 8.74% versus 41.95% in the same period last year, which was at the normal level. In the report year, the Group had cash flow for operating activities amounting to RMB 1,315,196,000 , with RMB 1.304 of net cash flow per share. In the whole, the Group realized reflow of sales income amounting to RMB 26,255.89 million, an increase of 78.3% compared with RMB 814.48 million of net cash flow in the same period last year. The Group’s container business took 90.6% of income from the main operations. The container industry normally has the peak season from April to October. Due to material preparation for production, the purchase amount was usually large in the first half year. Moreover, Sales usually were usually done by way of taking the delivery of goods before payment, and the main payment incurred in the second half year. Therefore, the operation cash flow was negative in the first half year. However, since the return of fund from sales increased and the purchase amount reduced in the second half year, especially in the fourth quarterly, the operation cash flow was positive. The total equity attributable to equity holders of the parent increased 42.03% than that at the beginning of last year, which was mainly because the net profit in the report period increased by RMB 2,464,992. Ⅱ Review of operation of main operations 1．Structure of main operations The Group mainly engages in the manufacture and sales of modern transportation equipment, including the design, manufacture, sales and services of containers, road transport vehicle and airport facilities such as passenger boarding bridge, air cargo handling system and other transportation equipment. Besides, the Group also manages 11 timber, real estate and other businesses. The Group is the largest manufacturer of containers in the world with the most complete range of articles. The products range from dried food containers, reefer containers and special containers to containers for region purpose. The road transport vehicle is new service, on which the Group is giving emphasis to expand. The Group has become the largest manufacturer in the road transport vehicle since it started this service in 2002. 2．Container business The Company’s output and sales volume, revenues and profit all increased by a large margin and created a company record. In 2004, the Company accumulatively produced containers amounting to 163,96 TEU and sold containers amounting to 157.08 TEU, an increase of 41.42% and 33.88% respectively, hitting a historical high. The sales income from container business amounted to 24,043,267,000, up 83.30% over the same period last year. Therein, the sales of standard dry freight containers amounted to 1,447,749 TEU accumulatively, an increase of 34.58%. The sales of reefer containers amounted to 55,818 TEU, an increase of 5.97%, and the sales of special containers amounted to 67,243 TEU, an increase of 63.85%. The reasons why the container business increased benefits greatly are as follows: The Group made significant achievements in its layout strategy of container industry, further consolidating and enhancing its leadership in the industry. In the last three years, the Group has been optimizing the production base layout, by strategically surveying the development trend of the global container industry. In 2004, it captured the market opportunity of the industry. The group also further improved the base network layout. In Jan. 2004, the Group purchased 100% equity of Zhangzhou Merchants Container Co., Ltd. and renamed it as Zhangzhou CIMC Containers Co., Ltd.. In May, 2004, Ningbo CIMC Logistic Equipment Co., Ltd of the Group was completed and put into production. In the same year, the Group trusted Yongzhou Tongyun Container Co., Ltd. and Yangzhou Tonglee Reefer Yangzhou Tongli Container Co., Ltd in 2004. Ended the end of 2004, the Group owned 16 container factories, with coverage in ports along the seaside in China. The Group enhanced the investment and market expansion of special container business. By reorganizing the companies of special contains and tank containers in Nantong, the pallet containers in Dalian and Tianjin, the special reefer containers in Qindao and special containers in Xinhui, the group made its basis for further developing special containers in future. In the first half of the 2004, the Group purchased 60% equity of Clive-Smith Cowley Ltd. (hereinafter referred to as CSC) in England and owned the patent technology of DOMINO pucker container series. The DOMINO pucker containers presently account for approximately 70% of the world market share of pucker containers. This Purchase was beneficial for sharpening the competitive edge of the Group in pucker containers. Qindao CIMC Special Reefer Equipment Co., Ltd. newly established by the Group started operation formally in July, 2004. The Group had the first production base of special reefers in the world. The annual productive capability designed by the Company could reach 4000 pieces. The special reefer containers are high-end transport vehicles that can meet customers’ demand of special goods transportation, which were widely used in storage and remote transportation of fruits, vegetables, drinks, milk products, meats and animals. 12 At present, non-standard special reefers developed by the Group also entered into such four trade zones in the world as mainland of Japan, ma inland of North America, Europe and Australia etc. In 2004, Nantong CIMC Tank Equipment Co., Ltd. sold tank containers amounting to 3,944 pieces, an increase of 219.87% over the same period of last year. Tank containers were one of main storage tools for gas, chemicals and liquid goods in foods industry characteristic of safety, environmental protection, connection transport between sea and land and door-to-door service. The Group continually improved its collectivization operation management. In the respect of supply link, driven by the fast increasing demand of containers, the rapid rise in the price of raw materials especially hot-roll armor plate and the insufficient supply, the Group reinforced tracking and forecasting the macro economy and industry trends and adopted flexible management strategies. By promoting strategic co-operation with the main suppliers of raw materials, the Group exerted its overall resources advantages to ensure normal manufacture and operation and effectively control the purchase costs of raw material. Moreover, by means innovation of technology and management, the Group reinforced the control of production costs and various costs to steadily enhance the payoff. The Croup also improved the management system of product quality and adjusted its performance management from “cost control”to “operation performance improvement”with all-round attention. In the aspect of technological innovation, the Group made some breakthroughs in pioneering the industry. It participated in formulating the standards on containers and special vehicles in the industry, nationally or internationally. It also had some achievements in technological research and development. For example, it made some breakthroughs in the Smart and Secure Container (SSC) technology and the development of new species for wooden floor of containers. In Jan. 2005, the Group completed the first commercial test of Tamper Evident Secure Container (TESC) with Safeguard Service Company, a subsidiary of General Electric Co., Ltd., which symbolized the successful experiment of a new container product that can swiftly receive security check, enhance the efficiency of supply link and save commercial costs. In the aspect of manufacturing technology, the Group continued to improve productivity while reducing labor intension. Shenzhen Special Vehicles Base was the first to adopt the standard production line in the domestically. In addition, the Group furthered the research of environment protection, energy saving, security and labor protection and have gained some obvious achievements. The Group gained preliminary achievements in the construction of information system. It ranked the top 500 enterprises 2004 by the CECA National Information Test Center and Internet Weekly. 3．Road Transport Vehicle Business The modern road transport vehicle business mainly included manufacture, sales and maintenance of special vehicles besides semi-trail. The Group sold 37,926 vehicles of all sorts accumulatively in the whole year, an increase of 321.82% over the same period last year. It realized sales revenue amount of RMB 2.912 billion (of which 2.342 billion was listed in the consolidated scope of the Company’ s financial statements), an increase of 325.11% over the same period last year. Among them, 13 Shenzhen CIMC Special Vehicle Co., Ltd., Yangzhou CIMC Tonghua Special Vehicle Co., Ltd. and Jinan CIMC Kogel Special Automobile Co., Ltd. realized sales amounts of RMB 396.434 million, RMB 849.45 million and RMB 203.532 million respectively. The Group sold 2,507 vehic les to Vanguard National Trailer Corporation in America, realizing sales amount of RMB 436,787 thousand, but it has not realized payoff. From Oct. 1, 2004, CIMC Huajun Vehicle Co., Ltd. was listed in the consolidated scope of the Company’s financial statements and the sales income amounted to RMB 367,238 million. From Nov.11, 2004, Zhang Jiagang City Sanctum Chemical Machinery Co., Ltd was listed in the consolidated scope of the Company’ s financial statements and the sales income amounted to RMB 78.117 million. The service frame has preliminarily completed. Ended Dec. 31, 2004, there were three product series: Logistic vehicle, tank equipment and construction engineer vehicle, including dry freight vans, refrigerated vans, tank trailer & other special vehicles, container chassis &platform and dump truck, container tank, tank truck (normal pressure), low-temperature storage tank, low-temperature tanker, cement-stirrer, trailer, special vehicle, mobile communication vehicle, etc., which can cover the regions of road logistics transportation. In Oct. 2004, CIMC Vehicle Group purchased 60% equity of Zhangjiagang Sanctum Chemical & Mechanism Co., Ltd. at RMB 42 million. Sanctum Chemical & Mechanism Co., Ltd. is a leader in the manufacturing technology of low-temperature liquid storage tanker and tank truck. The registered capital in 1997 was RMB 30 million. It mainly engaged in the design, manufacture and sales of low-temperature liquid storage tanker, tank truck, large normal pressure tanker, petrochemical equipment, storage tanker for liquid natural gas (LNG), tank truck, tank container, load fuel tank, L-CNG auto aeration stop and relevant technology service. These will make the Group further improve the production layout of main operations, diversify the series of vehicle product line, especially promote the manufacture and expansion of the storage tank for low-temperature liquid, low-temperature pressure tank truck and tank container. The production base layout basically took shape. Ended Dec. 31, 2004, the Group owned eight bases, namely, Shenzhen CIMC Special Vehicle Co., Ltd., Yangzhou CIMC Tonghua Special Vehicle Co., Ltd. Zhumadian CIMC Huajun Co., Ltd., Jinan CIMC Kogel Special Automobile Co., Ltd., Qingdao CIMC Special Vehicle Co., Ltd., Zhangjiagang Sanctum Chemical & Mechanism Co., Ltd., CIMC Baowei and the American base. They are situated in Yangtze River Delta, Zhujiang Delta, Central China, Bohai Bay and other regions where the economy develops rapidly. The technology reform and construction expansion of the production base made some preliminary achievements. In Mar. 2004, Shenzhen CIMC Special Vehicle Co., Ltd. was completed and put into operation. CIMC American Company completed production line restructure. CIMC Tonghua Co., Ltd. finished the technological restructure of the tank truck production line. All of these quickly enhanced the Group’s production capacity of road transport vehicles. Other factories of the Group also started new construction and technological restructure. In respect of manufactur ing technology, the Group continued to enhance the productivity while reducing labor intension. Shenzhen Special Vehicle Base was the first to adopt the 14 standard production line domestically. The construction of marketing network and service system has started. Shanghai CIMC Commercial Auto Industry and CIMC Shanghai 4S Shop project have started operation. The Group sold 10,000 container semi-trailers in the North American market. Moreover, it has entered the Japanese market and gained batch orders of container trailers. The Group also innovated the ocean transportation means of semi-trailers to largely cut down the transportation cost, enhance the transportation efficiency and support the expansion of overseas market. The Group has made material progress in collectivizing the operation of vehicle business. “CIMC Vehicle (Group) Co., Ltd”has been authorized by the Industrial and Commercial Department. The collectivization operation and notice sharing have been authorized by the State Development and Reform Commission. The Group has become the first experimental unit whose special vehicles can run collectively as per the uniform VIN code and the sequence number of catalogue. The group is gradually integrating the inside management such as technology, purchase and marketing in an effort to establish a resources sharing platform. 6.2 Statement of main business classified according to industry or product Unit: RMB’000 Business Revenue of 2004 Revenue of 2003 Containers 24,043,267 13,117,175 Trailers 2,322,996 58,665 Mechanical and electrical equipment 164,570 136,434 Property development 4,292 329,151 Timber logging 22,532 63,787 Total 26,557,657 13,705,212 Unit: RMB ’000 Product Sales income Cost of sales Gross profit (%) Containers 24,043,267 19,955,912 17.00% 6.3 Particulars about main business classified according to region Unit: RMB’000 Increase/decrease of revenue Region Revenue compared with the previous year (%) USA 6,606,070 83.94 Europe 13,747,940 117.94 Asia 5,729,132 63.46 Other regions 474,515 57.72 Total 26,557,657 93.78 6.4 Particulars about the customers of purchase and sales 15 Unit: RMB’000 Total purchase amount of Proportion in the total 8,872,020 42.86% the top five suppliers purchase amount (%) Total sales amount of the Proportion in the total 11,559,238 43.51% top five sales customers sales amount (%) 6.5 Operation of associates companies (applicable to investment income taking over more than 10% of net profit of the Company) □Applicable √Non-applicable 6.6 Explanation of reason of material change of main business and its structure □Applicable √Non-applicable 6.7 Explanation of reason of material change of profitability capability of main business (gross margin) compared with the previous year □Applicable √Non-applicable 6.8 Analysis of reason of material change of operating results and profit structure compared with the previous year □Applicable √Non-applicable Analysis of reason of material change of the whole financial position compared with the previous year √Applicable □Non-applicable Main financial position of the Company were as follows: Unit: RMB’000 Item 2004 2003 Increase Main Reasons of changes /decrease (%) Total assets 16,986,315 10,258,356 65.59 The enlargement of operational scale Long-term Liabilities 432,126 90.96% The enlargement of operational scale 825,188 and increase in capital demand Total equity attributable 7,521,276 5,295,653 42.03 The increase in net profit to equity holders of the parent Gross Profit 4,396,273 1,783,653 146.48% The increase in sales of containers and price and gross profit Net profit 2,464,992 694,051 255.16% The increase in sales of containers and price and gross profit 6.9 Explanation of the past, current and future important effects of the material change of production and operation environment, macro-policies and regulations on the Company’s financial position and operating results 16 √Applicable □Non-applicable In 2004, the demand in global ship transportation market increased enormously, and the global container trading grew considerably. The international trade of China was booming. These exerted some influence on the Group’s business: The demand for containers kept growing rapidly, and the container price rose sharply to the highest level in recent years. The orders, sales volume and profit increased tremendously. 6.10 Completion of the profit estimation □Applicable √Non-applicable 6.11 Completion of the business plan □Applicable √Non-applicable 6.12 Application of the raised funds proceeds √Applicable □Non-applicable On Nov. 20, 2003, the Company has raised capital of RMB 1.751 billion by the accomplishment of additional issuance of 120,000,000 A shares (issuance costs deducted) Unit: RMB’000 Raised capital amount that have 189,373 been used in the report period Raised capital amount 1,770,900 Accumulated amount of raised 1,437,663 capital that have been used Planned Amount of Whether it Actual amount of Planned amount of Progress of income Committed projects the project investment of the investment investment in completion changed period the period Transform of dry van container plant 329,060 No 32,9060 32,9060 100% — Improvement of the productivity of No 74,628 container for district purpose and container for special purpose 413,500 202,803.5 202,803.5 49% Remolding for improving the No — productivity of the reefer container 221,060 182,060 182,060 82% Tin Container 145,390 No 115,800 115,800 80% 26,721 Compartmental semi-Trailer 231,560 No 231,560 231,560 100% 46,985 Container chassis No Not accrued 190,210 155,860 155,860 82% yet Compartmental semi-Trailer for the No Not accrued processing of overseas raw materials 240,120 220,519.5 220,519.5 92% yet Total 1,770,900 — 1,437,663 1,437,663 81% 148,334 Ended the end of the report period, the raised capital amounting to RMB 333,237 million, which hasn’t been put into use, would supplement the current fund 17 temporarily. 6.13 Application of the proceeds not raised by issuing share √Applicable □Non-applicable Unit: RMB’000 Name of item Amount of item Progress of project Profit of project Additional investment to Yangzhou CIMC Tong 33,390 Completed 23,470 Hua Special Vehicles Co., Ltd.. Additional investment to Jinan CIMC - KOGEL 110,040 Not accrued yet Completed Special Automobile Co., Ltd. Setting up Innermongolia Holonbuir CIMC 99,360 Not accrued yet Completed Wood Co., Ltd. Setting up Qingdao CIMC Special Vehicles Co., 35,000 Completed Not accrued yet Ltd. Setting up Shanghai CIMC Vehicles Logistic s 78,400 Completed Not accrued yet Equipment Co., Ltd Additional investment to Shenzhen Southern 146,560 Completed 23,623 Zhongji Containers Manufacture Co., Ltd. Total 502,750 — — These will make the Group further improve the production layout of main operations, diversify the series of vehicle product line. 6.14 Explanation of the “Non-standardized Opinion” of Certified Public Accountants by the Board of Directors □Applicable √Non-applicable 6.15 Business plan as of the new year of the Board of Directors √Applicable □Non-applicable 1. Development background and operation goal of the Company ’ s business in 2005 1. Operation guideline of the Company in 2005 (1) In aspect of container business, the Group will make progress in the industry through systematic strategy, try to be practical in basic management, and strengthen technological and management innovation. It will also improve production base layout and production quality while expanding the service region. Besides, it will speed up the establishment of service operation platform and provide service of container yard. In this way, it will promote the sustainable, healthy and steady development of the industry. (2) In aspect of road transport vehicles, the Group will be consistent in improving the production base layout to complete the technological reform and expansion of the operation base in existence. It will continue to expand and improve the production line, including the manufacture and sales of logistics vehicles, tank equipment and construction vehicles. It will also speed up the construction of marketing network and 18 service system. (3) In aspect of other services, the Group will manage to continually expand the market by firstly controlling risks. 2. Operation measure of the Company ’ s business in 2005 The overall operation guideline is: being down-to-earth and optimizing the inside of the Company to build systematic competitive edge and achieve sustainable growth. The Group will bring its advantages in the container industry to full display, further tap the Group’s operation potential, reinforce performance the management of performance, supply link, finance and capital as well as human resources, so as to improve the operating management. The Group will also better the product management system to enhance quality competitiveness and pioneer the health development of the industry. It will extend its industry link to build a network service system characteristic of “one-stop whole lifecycle”. Moreover, the Group will establish itself as a responsible industry leader by further devoting efforts in environment protection, energy saving, security and labor protection pursuant to the sustainable development strategy. Profit estimation of the New Year □Applicable √Non-applicable 6.16 The preplan of profit distribution and capital public reserve Audited by Shenzhen Pan-China Schinda Certified Public Accountants, in 2004, the Company realized net profit after tax and minority interests amounting to RMB 2,389,023,556.10. Based on the Company’ s share capital amounting to 1,008,483,353 shares ended Dec. 31, 2004, an earnings per share is RMB 2.37. The suggested preplan on profit and dividends distribution in 2004 is: according to the Articles of Association of the Company and current Accounting System, based on the net profit amounting to RMB 2,269,304,559.89 of the parent company in 2004, appropriating 10% of the net profit as statutory surplus reserve amounting to RMB 226,930,455.99, appropriating 5% of the net profit as statutory public welfare fund amounting to RMB 113,465,227.99, plus the undistributed profit at the year-begin amounting to RMB 254,850,554.60, the total profit available for distribution to the shareholders in 2004 was RMB 2,243,584,455.96. Based on the total share capital of the Company amounting to 1,008,483,353 shares ended Dec. 31, 2004, distributing cash dividends at the rate of RMB 5.00 (tax included) for every 10 shares, which total dividends amounts to RMB 504,241,676.50. After the distribution, RMB 1,474,533,737.22 is appropriated as discretionary capital reserves. Preplan on conversion of public reserve into share capital: suggest converting public reserve into share capital at the rate of 10 shares for every 10 shares. After the conversion, the total share capital of the Company increases from 1,008,483,353 shares to 2,016,966,706 shares. 19 The above preplans are subject to Annual Shareholders’ General Meeting for examination and approval before implementation and are to be submitted to the Shareholders’General Meeting for authorizing the Board of Directors to amend the Articles of Association on the clauses relevant to registered capital after their implementations 7. Significant Events 7.1 Purchase of assets □Applicable √ Non-applicable Unit: RMB’000 Net profit contributed to the Company Related Complete The other party of Assets of Date of Price of The pricing from date of transacti Implementation transaction acquisition acquisition transaction rules acquisition to on or not or not the end of report period 18 natural person shareholders 51% share Net assets of including Guo equity of Oct.1, 2004 100,000 20,000Not Huajun Complete Yonghua, Zhang Huajun Vehicles Yungen and Zhang Vehicles Guoqing etc.. the price of 60% equity equity of of Zhang Xinjiang Sanctum based Jiagang Guanghui on the net City Industry Nov.1, 2004 42,000 5,000Not assets audited Complete Sanctum Investment and Chemical (Group) Ltd considering the Machinery premium in a Co., Ltd. certain margin. 7.2 Sales of assets □Applicable √Non-applicable 7.3 Important guarantee □Applicable √ Non-applicable 7.4 Related credits and liabilities transaction □Applicable √ Non-applicable 7.5 Entrusted assets 20 □ Applicable √ Non-applicable 7.6 Implementation of commitment items □Applicable √Non-applicable 7.7 Significant lawsuit and arbitration □ Applicable √ Non-applicable 7.8 Particulars about the performance of Independent Directors 7.8.1 Particulars about independent directors’presenting the Board meeting: Name of Times that should Times of Times of Times of independent be attend the personal commission absence directors Board meeting presence presence Xiao Zhuoji 11 11 0 0 Zhang Limin 11 11 0 0 Han Xiaojing 11 10 1 0 In the report period, 3 independent directors of the Company did not propose the objection on all proposals and other issues of the Company exa mined at the Board meetings, and they conducted seriously check on significant events, which need independent opinion presented by the Independent Directors, and presented written independent director opinion letter. 7.8.2(1) Special-item explanation on the accumulated and current guarantee of the Company for external parties and implementation of regulation of Document No. 56 of CSRC (1) The Company has not provided guarantee for any company and person outside the Group and only provided guarantee for the operation capital of the auxiliary subsidiaries of the Group. The Company is a wholly- listed one and provided guarantee for operation capital in budget of the auxiliary subsidiaries mainly due to the need of operation and development of businesses. (2) According to the regulation of Document No. 56 of CSRC of 2003, the listed company can not provide guarantee for other related parties, of whom the Company held less 50% equity The Company provided guarantee for Xinhui CIMC Container Flooring Co., Ltd.. The Company has 40% equity capital of Xinhui CIMC Container Flooring Co., Ltd.. but the Company contracted and operated it through the Company’ s wholly-owned subsidiary-China International Marine Container (HK) Co., Ltd.. In the contact period from Jan. 1, 2001 to Dec. 31, 2005, China International Marine Container (HK) Co., Ltd. wholly manages the affairs of Xinhui CIMC Container Flooring Co., Ltd. such as operation, operation, financing and personal and etc., so it has actual control right. Ended at Dec. 31, 2004, the total guarantee provided for Xinhui CIMC by the 21 Company was RMB 0, and contingent liabilities caused by guarantee that the Company provided for Xinhui CIMC Container Flooring Co., Ltd. was RMB 0. (3) According to the regulation of Notification of Problem on Standardizing Current Capital between Listed Company and Related Party and Listed Company’ s Guarantee for External Parties (ZJF[2003] No. 56), the total amount of guarantee the Company provides for external parties can not exceed 50% of net assets in the latest accounting year. Ended Dec. 31, 2004, the balance of contingent liabilities caused by guarantee the Company provided for its subsidiaries was RMB 983 million; (including the above guarantee amount for Xinhui CIMC Container Co., Ltd.), taking by 13.16% of net assets at the end of 2004 amounting to RMB 7471million. 7.8.2(2). Independent opinions We believe that the control of guarantee for external parties of the Company is better and the control of financial risk is steady. Although the above guarantee for external parties is need of business development, the proportion does not exceed the regulation, there exists no large risk and causes no damage for the interest of the Company’ s shareholders, especially the minority shareholders, the Company’ s guarantee for external parties in the future will continue to be conducted according to relevant regulations. 8.Report of the Supervisory Committee (Omitted) 9. Financial Report 9.1 Auditor’s Opinion KPMG Certified Public Accountants audited 2004 Financial Report of the Company, and issued unqualified Auditor’s Report. 9.2 Balance Sheet (attached), Income Statement (attached), Cash Flow (attached) 22 Consolidated income statement for the year ended 31 December 2004 Note 2004 2003 RMB’000 RMB’000 Revenue 26,557,657 13,705,212 Cost of sales (22,161,384) (11,921,559) Gross profit 4,396,273 1,783,653 Other operating income 272,529 141,126 Distribution expenses (427,604) (342,007) Administrative expenses (1,072,874) (496,964) Other operating expenses (309,861) (180,432) Net operating profit before net financing costs 2,858,463 905,376 Financial income 33,851 36,745 Financial expenses (70,639) (62,038) Net financing costs (36,788) (25,293) Share of the profit of associates 25,534 8,747 Profit before tax 2,847,209 888,830 Income tax expense (277,105) (111,361) Profit for the year 2,570,104 777,469 ========= ========= Attributable to: Equity holders of the parent 2,464,992 694,051 Minority interests 105,112 83,418 Profit for the year 2,570,104 777,469 ========= ========= Basic earnings per share (RMB Yuan) 2.44 0.77 === === 23 Consolidated statement of recognised income and expense for the year ended 31 December 2004 Note 2004 2003 RMB’000 RMB’000 Revaluation reserve realised on dissolution of subsidiaries (4,571) - Exchange reserve realised on dissolution of subsidiaries 4,717 - Net income recognised directly in equity 146 - Profit for the year 2,570,104 777,469 Total recognised income and expense for the year 2,570,250 777,469 ========= ========= Attribute to: Equity holders of the parent 2,465,138 694,051 Minority interests 105,112 83,418 2,570,250 777,469 ========= ========= 24 Consolidated balance sheet for the year ended 31 December 2004 Note 2004 2003 RMB’000 RMB’000 Assets Property, plant and equipment 3,103,926 2,248,866 Lease prepayments - non-current portion 486,007 251,434 Construction in progress 446,778 172,435 Timber concession rights 81,237 175,129 Intangible assets 90,867 9,243 Interests in associates 94,248 57,555 Investments in equity securities 271,907 274,260 Long-term receivables 92,503 45,005 Prepayment for investments 4,471 193,008 Deferred tax assets 52,373 20,205 Total non-current assets 4,724,317 3,447,140 --------------- -------------- Lease prepayments - current portion 13,460 9,572 Investments in equity securities 140,081 168,775 Properties under development 92,934 62,162 Completed properties for sale 55,693 61,074 Inventories 4,438,417 1,350,628 Trade and other receivables 6,038,248 4,452,401 Cash and cash equivalents 1,483,165 706,604 Total current assets 12,261,998 6,811,216 --------------- -------------- Total assets 16,986,315 10,258,356 ========= ======== 25 Consolidated balance sheet as at 31 December 2004 (continued) Note 2004 2003 RMB’000 RMB’000 Equity Share capital 1,008,483 630,302 Reserves 6,512,793 4,665,351 Total equity attributable to equity holders of the parent 7,521,276 5,295,653 Minority interests 854,499 659,804 Total equity 8,375,775 5,955,457 --------------- --------------- Liabilities Interest-bearing bank loans 822,728 422,084 Total non-current liability 822,728 422,084 --------------- --------------- Interest-bearing bank loans 1,692,529 512,326 Non interest-bearing bank loan - 29,670 Trade and other payables 5,343,023 2,906,130 Provisions 552,150 383,846 Taxation 200,110 48,843 Total current liabilities 7,787,812 3,880,815 --------------- --------------- Total liabilities 8,610,540 4,302,899 --------------- --------------- Total equity and liabilities 16,986,315 10,258,356 ========= ========= 26 Consolidated cash flow statement for the year ended 31 December 2004 2004 2003 RMB’000 RMB’000 Operating activities Profit for the year 2,570,104 777,469 Adjustments for: Depreciation 226,714 168,136 Impairment losses of property, plant and equipment 76,505 39,248 Net amortisation of goodwill / negative goodwill 9,155 18,956 Gain on recognition of negative goodwill (4,776) - Amortisation of other intangible assets 1,733 4,455 Amortisation of negative goodwill in an associate (255) (255) Loss on sale of property, plant and equipment 9,274 21,282 Interest income (14,457) (19,007) Interest expenses 56,820 45,406 Gain on disposal of listed equity securities (18,527) (7,990) Impairment losses of unlisted equity securities 3,694 21,805 Amortisation of timber concession rights 3,205 7,967 Impairment losses of prepayment for investments 6,044 - Impairment losses of timber concession rights 90,687 45,871 Dividend income (13,377) (8,705) Income from associates (25,534) (8,747) Income tax expenses 277,105 111,361 Operating profit before changes in working capital and provisions 3,254,114 1,217,252 Increase in lease prepayments (161,075) (61,255) (Increase) / decrease in long-term receivables (47,498) 41,616 Increase in trade and other receivables (659,931) (951,811) Increase in inventories (2,682,299) (184,745) Increase in trade and other payables 1,650,927 533,745 Increase in provisions 168,304 10,412 (Increase) / decrease in properties under development (30,772) 88,270 Decrease in completed properties for sale 5,381 10,953 Cash generated from the operations 1,497,151 704,437 PRC income tax paid (181,955) (89,315) Cash flows from operating activities 1,315,196 615,122 --------------- -------------- 27 Consolidated cash flow statement for the year ended 31 December 2004 (continued) Note 2004 2003 RMB’000 RMB’000 Investing activities Interest received 17,307 15,590 Payment for property, plant and equipment (175,073) (70,674) Payment for construction in progress (903,252) (767,783) Payment for acquisition of equity securities (291,694) (300,948) Payment for acquisition of associates (13,816) (13,500) Prepayment for investments (7,640) (186,259) Payment for acquisition of minority shareholdings (1,998) (102,425) Loan to an associate - (13,500) Repayment of loan to an associate - 108,697 Payment for acquisition of subsidiaries, net of cash acquired 4 (109,745) (76,857) Payment for dissolution of subsidiaries, net of cash disposed of (13,973) - Dividend received 13,486 16,878 Proceeds from sales of property, plant and equipment 2,599 14,972 Proceeds from dissolution of an associate - 477,592 Proceeds from disposal of partial interest in subsidiary 1,739 5,982 Proceeds from sales of equity securities 353,606 156,899 Repayment of advance to minority interests 17,486 14,460 Advance to minority shareholders (2,405) (8,000) Cash flows from investing activities (1,113,373) (728,876) --------------- --------------- 28 Consolidated cash flow statement for the year ended 31 December 2004 (continued) Note 2004 2003 RMB’000 RMB’000 Financing activities Interest paid (54,640) (55,338) Proceeds from bank loans 33 12,232,448 12,210,004 Repayment of bank loans 33 (10,892,959) (13,437,263) Repayment of advances from Receivables Framework Agreement 23 (414,000) - Proceeds from Receivables Framework Agreement 23 - 55,943 Net proceeds from issuance of shares - 1,751,105 Capital injection from minority shareholders 24,856 22,432 Dividends paid 10 (239,515) - Dividends paid to minority shareholders (81,452) (108,462) Cash flows from financing activities 574,738 438,421 ------------- ------------- Net increase in cash and cash equivalents 776,561 324,667 Cash and cash equivalents at 1 January 706,604 381,937 Cash and cash equivalents at 31 December 24 1,483,165 706,604 ======== ======== 9.3 There occurred change in settlement method of guarantee reserve fund compared with the latest annual report. □ Applicable √ Non-applicable 9.4 Explanation of change of consolidation scope in the report period compared with the latest annual report. In the report year, the subsidiaries brought into the consolidation scope are as following: 29 Name Date to be brought Registered capital Equity held Main Business Type into the consolidation scope Shenzhen CIMC Special 2004.5.17 RMB60,000,000 100% Manufacture of trailers Limited Company Vehicle Co., Ltd. Shenzhen CIMC Vehicle Sales 2004.5.28 RMB3,000,000 100% Sales of trailers Limited Company Company Ltd. Qingdao CIMC Special Reefer 2004.5.31 US$11,500,000 93.85% Manufacture of Limited Company Co., Ltd. containers Qingdao CIMC Special 2004.11.01 RMB35,000,000 100% Manufacture of trailers Limited Company Vehicles Co., Ltd. Innermongolia Holonbuir 2004.8.24 US$12,000,000 100% Further processing of Limited Company CIMC Wood Co., Ltd. timber Shanghai Meiyang Real Estate 2004.11.22 RMB9,000,000 100% Property development Limited Company Co., Ltd. Jinan CIMC - KOGEL Special 2004.1.1 USD 13,730,100 71.78% Manufacture of trailers Limited Company Automobile Co., Ltd. (note) Yangzhou CIMC Tong Hua 2004.1.1 RMB67,390,000 75.53% Manufacture of trailers Limited Company Special Vehicles Co., Ltd. Zhangzhou CIMC Cont ainer 2004.1.1 US$12,000,000 100% Manufacture of Limited Company Co., Ltd. containers Zhumadian CIMC Huajun 2004.10.01 RMB105,340,000 51% Manufacture of trailers Limited Company Vehicle Co., Ltd. Zhangjiagang CIMC Sanctum 2004.11.01 RMB30,000,000 91% Manufacture of trailers Limited Company Machinery Co., Ltd. CIMC Vehicle Investment 2004.11.01 US$1 100% Investment holding Limited Company Holdings Co., Ltd. Clive-Smith Cowley Ltd. 2004.3.01 GBP100 60% Design, manufacture Limited Company and sales of tanks and related equipmen 30