深物业A(000011)ST物业Ｂ2004年年度报告摘要（英文版）

SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LTD. SUMMARY OF ANNUAL REPORT 2004 §1. Important Notes 1.1 Board of Directors of Shenzhen Properties & Resources Development (Group) Ltd. (hereinafter referred to as the Company) 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. 1.2 Two directors were absent from the Board meeting due to some reasons, but they examined the relevant information before the meeting; among them, Director Guo Yuanxian entrusted Chairman of the Board Mr. Tian Chenggang and at the same time Jiang changlong entrusted Kong Yuquan to vote on his beha lf with the aye to all proposals involved in the said meeting respectively. 1.3 Wuhan Zhonghuan CPAs Ltd. issued an unqualified Auditors’Report with pinpoint events for the Company; and the Board of Directors and the Supervisory Committee of the Company made the corresponding explanations in details for the relevant matters, the investors are suggested to notice the content. 1.4 Chairman of the Board of the Company Tian Chenggang, General Manager Fang Yibing and Manager of Financial Department Zhang Wei hereby confirm that the Financial Report enclosed in the Annual Report is true and complete. 1.5 This report has been prepared in Chinese version and English version respectively. In the event of difference in interpretation between the two versions, the Chinese report shall prevail. §2. Company Profile 2.1 Basic information Short form of the stock ST Shen Wuye, ST Wuye-B Stock code 000011, 200011 Listed stock exchange Shenzhen Stock Exchange Registered address and office address 39/F and 42/F, International Trade Center, Ren Min South Road, Shenzhen Post code 518014 Internet Web Site www.szwuye.com.cn E-mail of the Company 0011@szwuye.com.cn 2.2 Contact person and method Secretary of the Board Securities Affairs Representative Name Guo Yumei Dong Wei Contact address 42/F, International Trade Center, 42/F, International Trade Center, Ren Min South Road, Shenzhen Ren Min South Road, Shenzhen Telephone (86) 755-82211020 (86) 755-82211020 Fax (86) 755-82210610 (86) 755-82212043 E-mail 0011@szwuye.com.cn 0011@szwuye.com.cn §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 1,326,289,977.75 1,079,474,318.91 22.86 781,284,955.43 operations Total profit 126,160,243.54 121,676,376.73 3.69 44,508,865.86 Net profit 90,449,977.35 77,001,831.44 17.46 34,622,176.84 Net profit after deducting 83,210,206.33 124,021,158.47 -32.91 35,892,303.95 non-recurring gains and losses Increase/decrease At the end of At the end of At the end of from the end of 2004 2003 2002 previous year（％） Total assets 2,302,935,990.54 2,437,227,899.69 -5.51 2,607,979,385.36 Shareholder’s equity (excluding minority 567,128,809.36 474,222,712.97 19.59 337,903,702.25 interests) Net cash flow arising from operating 261,714,529.31 187,629,855.85 39.48 -34,585,671.37 activities 3.2 Major financial indexes Unit: RMB Increase/decrease 2004 2003 2002 over last year（％） Earnings per share 0.167 0.142 17.61 0.064 Earnings per share (Note 2) 0.167 0.142 17.61 0.064 Return on equity 15.95% 16.24% an decrease of 0.29% 10.25% Return on equity calculated based on net profit after 15.32% 26.15% an decrease of 10.83% 10.62% deducting non-recurring gains and losses Net cash flow per share arising 0.483 0.346 39.60% -0.064 from operating activities Increase or decrease At the end At the end At the end from the end of of 2004 of 2003 of 2002 previous year（％） Net assets per share 1.047 0.875 19.66 0.624 Net assets per share after 0.793 0.513 54.58 0.146 adjustment Items of non-recurring gains and losses √Applicable □Inapplicable Items of non-recurring gains and losses Amount 1. Gains/losses from disposal of long-term equity investment, fixed assets, project in construction, intangible assets and other long-term assets 1,267,692.30 2. Gains/losses from short-term investment (62,326.73) 3. Various non-operating income after deducting daily reserve for impairment of assets in line with the regulations of Accounting System for Business Enterprise 990,455.48 4. Various non-operating expenses after deducting daily reserve for impairment of assets in line with the regulations of Accounting System for Business Enterprise (9,188,290.93) 5. Switching back various reserve for devaluation allotted over the previous years 10,823,541.67 Impact on income tax (246,138.16) Total 3,584,933.63 3.3 Difference of net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Adjustment statement on differences of financial statement Unit: RMB’000 Net profit (year Net assets (ended Items 2004) Dec. 31, 2004) As calculated in accordance with CAS 90,450 567,129 Switching back into fixed assets from amortization amount 32 615 Adjustment of expenses amortization -86 -30,436 Other 3,364 As calculated in accordance with IAS 90,396 540,672 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital Unit: share Increase/decrease in this time (+, - ) Before the Capitalization After the Rationed Bonus Additional Sub- change of public Others change share shares issuance total reserve I. Unlisted shares 1. Sponsors’ shares Including: State-owned share 323,747,713 323,747,713 Domestic legal person’s shares 65,200,850 65,200,850 Foreign legal person’s shares Others 2. Raised legal person’s shares 3. Inner employees’ shares 4. Preference shares or others Total unlisted 388,948,563 388,948,563 shares II. Listed shares 1. RMB 91,355,000 91,355,000 ordinary shares 2.Domestically listed foreign shares 61,459,312 61,459,312 3. Overseas listed foreign shares 4. Frozen shares held by senior executives 36,300 36,300 Total listed 152,850,612 152,850,612 shares III. Total shares 541,799,175 541,799,175 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Number of By the end of the report period, the Company had totally 37647 shareholders, shareholders at the including 29831ones of A-share and 7816 ones of B-share. end of report year Particulars about shares held by the top ten shareholders Increase / Shares held Share Type of shares Nature of Full name of decrease in at the Proportion pledged/ (Circulating/No shareholder Shareholders the report year-end (%) frozen n-circulating) s year (share) (share) (share) Shenzhen Construction 0 323,747,713 59.75 Non-circulating Naught State-owned Investment Holdings share Shenzhen Investmen 0 56,628,000 10.45 Non-circulating Naught Legal Holdings Corparation person’ s share Labor Union of 0 2,516,800 0.46 Non-circulating Naught Legal Shenzhen International person’ s Trade Property share Management Company 0 1,573,000 0.29 Non-circulating Naught Legal Shenzhen Special Zone person’ s Duty-free Company share Yiu Xian-hui 29,123 1,117,297 0.21 Circulating Unknown Public share of A-share Shanghai Zhaoda 0 1,010,000 0.19 Non-circulating Naught Legal Investment Consultant person’ s Co. Ltd. share Du Nian — 802,663 0.15 Circulating Unknown Public share of A-share China Eagle Securitiet 0 786,500 0.15 Non-circulating Naught Legal Co. Ltd. person’ s share GuoTai Junan — 653,579 0.12 Circulating Unknown Foreign Securities Hongkong shares Limited Shanghai Kunling 0 629,200 0.12 Non-circulating Naught Legal Industry & Trade Co. person’ s Ltd. share Explanation on There exists no associated relationship or consistent action among the associated top three shareholders. For other shareholders, the Company did not relationship among know their relationship. the top ten shareholders or consistent action Particulars about shares held by the top ten shareholders of circulation share Name of Number of circulation shares held at Type (A-share, B-share, shareholders (full the year-end (share) H-share and other) name) Yiu Xian-hui 1,117,297 A Du Nian 802,663 A Guotai Junan 653,579 B Securities Hongkong Limitied Zeng Ying 536,900 B Zhou Ting 418,066 A Li Ya-jie 399,600 A Wei Xi-guang 394,956 A Deng Shao-ping 392,898 B Pan Xian-li 392,401 B Huang 361,757 B Explanation on The Company did not know whether there exists associated relationship among associated the top ten shareholders of circulating share or not. relationship among the top ten shareholders of circulation share 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 Name of new controlling - shareholder Name of new actual controller Shenzhen Investment Holding Co., Ltd. Changing date Oct. 13, 2004 Publishing date and newspaper Nov. 4, 2004 Securities Times and Ta Kung Pao 4.3.2 Introduction of especial situation for controlling shareholder and other actual controller The controlling shareholder of the Company is Shenzhen Construction Investment Holdings (“the holding company”) presently. In the report period, according to the document of SGZW [2004] No. 223 “Decision on establishing Shenzhen Investment Holding Corporation”, Shenzhen Municipal Government incorporated Shenzhen Construction Investment Holdings with the other two municipal companies, namely Shenzhen Investment Holding Corporation and Shenzhen Trade and Business Corporation, and established Shenzhen Investment Holdings Co., Ltd.. Thus, Shenzhen Investment Holdings Co., Ltd. managed state-owned shares of the Company held by Shenzhen Construction Investment Holdings. There was no effect in the total share capital and its equity construction of the Company due to the change of state-owned equity management. The aforesaid matters and change of equity was still examined by CSRC for approval, for this, the Company has disclosed the relevant information in appointed media dated Nov. 4, 2004. The Company’ s actual controlling shareholder is Shenzhen Investment Holding Corporation, a state-owned sole limited company, who was established in Oct. 13, 2004; its legal representative is Mr. Chen Hongbo and the registered capital is RMB 4 billion. Main business scope: providing guarantee to municipal state-owned enterprises, management of state-owned equity, assets reorganization of enterprises, reformation and assets operation, and equity investment and etc.. As a government department, State-owned Assets Supervision and Administration Commission of Shenzhen implemented management for Shenzhen Investment Holding Co., Ltd. on behalf of Shenzhen municipal government. Thus, the actual controller of the Company is State-owned Assets Supervision and Administration Commission of Shenzhen with locating at Investment Bldg., Shen Nan Av., Futian District, Shenzhen and postcode “518026”. §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Holding shares Holding Name Title Sex Age Office term at the shares at the year-begin year-end Jun. 2004- Tian Chenggang Chairman of the Board Male 51 0 0 Jun. 2007 Director, General Jun. 2004- Fang Yibing Male 43 Jun. 2007 0 0 Manager Jun. 2004- Guo Yuanxian Director Male 50 Jun. 2007 0 0 Director, Deputy Jun. 2004- Zha Shengming Male 56 Jun. 2007 18150 18150 General Manager Yang Director, Deputy Jun. 2004- Male 56 Jun. 2007 0 0 Shuncheng General Manager Director, Chairman of Jun. 2004- He Wenhua Male 59 Jun. 2007 18150 18150 Labor Union Director Jun. 2004- Li Zhen Male 41 0 0 Jun. 2007 Director Jun. 2004- Wang Huimin Female 37 0 0 Jun. 2007 Jun. 2004- Zhang Jianjun Independent Director Male 40 0 0 Jun. 2007 Jiang Jun. 2004- Independent Director Male 39 Jun. 2007 0 0 Changlong Jun. 2004- Kong Yuquan Independent Director Male 39 0 0 Jun. 2007 Chairman of the Jun. 2004- Cao Ziyang Male 53 Jun. 2007 0 0 Supervisory Committee Supervisor, Manager of Jun. 2004- Tong Qinghuo Male 41 Jun. 2007 0 0 Human Resource Supervisor, Deputy Jun. 2004- Liu Jiake Director of the Male 55 Jun. 2007 0 0 Discipline Committee Supervisor, Deputy Jun. 2004- Jin Chenggui M anager of Auditing Male 57 Jun. 2007 0 0 Department Supervisor, Leader of Jun. 2004- Ma Deqin Female 51 Jun. 2007 0 0 Labor Union Vice secretary of the Party Committee, Jun. 2003- Xiu Xuguang Male 50 Jun. 2007 0 0 Secretary of the Discipline Committee Deputy General Jan. 2003- Luo Junde Male 54 Jun. 2004 0 0 Manager Jun. 2003- Liu Yinhua Chief Engineer Male 44 0 0 Jun. 2004 Secretary of the Board, Jun. 2004- Guo Yemei Director of the Board of Female 45 0 0 Jun. 2007 Directors Office 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment Name of Shareholding Title in Shareholding Name Office term from the Shareholding Company Company Company (Yes / No) Shenzhen Construction Jun. 2002 to Sep. Guo Yuanxian Vice-president No Investment Holdings 2004 Shenzhen Construction Nov. 2002 to Sep. Manager of HR No Investment Holdings 2004 Wang Huimin Manager of Shenzhen Investment Department of Oct. 2004 to now No Holding Co., Ltd. Personnel Shenzhen Investment Assistance president, Nov. 2001 to Sep. Li Zhen No Holding Corporation director of Office 2004 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 6,821,000 Total annual payment of the top three directors drawing RMB 1,729,000 the highest payment Total annual payment of the top three senior executives RMB 1,557,400 drawing the highest payment Allowance of independent director RMB 30,000 per person Other treatment of independent directors Naught Name of directors and supervisors receiving no payment Guo Yuanxian, Wang Huimin and Li Zhen or allowance from the Company Scope of payment Number of persons Over RMB 550,000 3 Over RMB 500,000 6 Over RMB 300,000 5 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In 2004, the Company realized income from main operations, profit from main operations and net profit amounting to RMB 1,326,289,977.75, RMB 423,765,125.70 and RMB 90,449,977.35 respectively, an increase of 23%, 17% and 17% respectively over the last year. Increase of operation outstanding achievement was due to the increase of sale of real estate projects in the report period, and projects of real estate reached the condition of settlement and transferred into income. Ended the end of the report period, the shareholders’equity was RMB 567,128,809.36, an increase of 20% over the beginning of the year, which was mainly because that the Company realized net profit of RMB 90,449,977.35 and affiliated companies trans ferred the payables on account to be paid in long term amounting to RMB 2,456,119.04 into capital reserve during the report period. Net cash flow arising from operating activities as of the year 2004 was RMB 261,710,000, which was because that the Company reinforced the sales and assets withdrawal. 6.2 Statement of main operations classified according to industries or products Unit: RMB’000 Classified Income Cost of Gross Increase/decrease Increase/decrease Increase/decreas according to from main main profit in income from in cost of main e in gross profit industries operations operations ratio (%) main operations operations over ratio over the over the last year the last year (%) last year (%) (%) Development of 1112296 657634 40.88 23.61 25.07 -1.64 real estate Property management and 137513 110520 19.63 11.23 11.88 -2.34 lease Commercial retail 34294 32095 6.41 -9.71 -8.21 -19.27 Taxi passenger 33506 8991 73.17 18.15 24.03 -1.71 transport Tourism and food 12977 6335 51.18 118.39 121.74 -1.42 6.3 Particulars about main operations classified according to areas Unit: RMB’000 Areas Income from main Increase/decrease in income from main operations (RMB) operations over the last year (%) Shenzhen 1040803 23.13 East China 275470 30.10 Hainan 10017 -55.42 6.3 Particulars about main operations classified according to areas Unit: RMB’000 Areas Income from main operations Increase/decrease in income (RMB) from main operations over the last year (%) Shenzhen 845270 13.9 East China 211730 229.14 Hainan 22470 -40.84 6.4 Particulars about the customers of purchase and sales Total amount of sales of the top - Proportion in the total 1% five sales customers amount of sales 6.5 Operation of share- holding companies (applicable to the situation where investment equity takes over 10% of its net profit) √Applicable □Inapplicable Name of share-holding company Shenzhen Huangcheng Real Estate Co., Ltd. Investment income contributed RMB 125.748 million Proportion in net profit - in the period of the listed company Share-holding Business scope Development, construction, operation and management of company auxiliary commercial service facilities of Huanggang Port Net profit RMB 125.748 million Name of share-holding company Shanghai Shenzhen Property Development Co., Ltd. Investment income contributed RMB 69.766 million Proportion in net profit - in the period of the listed company Share-holding Business scope Development and operation of real estate company Net profit RMB 69.766 million 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 The reason for great increase in profitability of main operations was that the sales of real estate increased and the income was carried forward in the report period. 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year √Applicable □Inapplicable Amount (RMB) Proportion in total profit (%) In 2004 In 2003 In 2004 In 2003 Total profit 126,160,243.54 121,676,376.73 - - Profit from main 432,765,125.70 363,255,274.91 335.89 298.54 operations Profit of other 5,556,502.01 1,579,345.53 4.40 1.30 operations Period expense 292,089,933.00 182,499,501.31 231.52 149.99 Investment income -4,141,308.02 -15,361,512.84 -3.28 -12.62 Subsidy income - - 0.00 0.00 Net non-operating -6,930,143.15 -45,297,229.56 -5.49 -37.23 income and expenses Explanations: ① In the report period, total profit increased by 3.69% over the same period of last year, which was mainly due to the increase in sales of real estate in the report period, resulting in the income carried forward. ② Period expense increased by RMB 109.59 million over the same period of last year, which was mainly because that the Company withdrew reserve for bad debts amounting to 71.34 million and withdrew in advanced responsibility goal award amounting to RMB 34.91 million. ③ Investment income increase by RMB 11.22 million compared with last year, mainly due to an increase of net increase/decrease amount of owners’equity of the investees in the report period compared with last year. ④ In the year, net non-operating income and expenses changed by a relatively large margin. The non-operating expense decreases by 80.78% compared with last year, which was mainly because that there was estimated liabilities of lawsuits amounting to RMB 50,002,304.07 in the non-operating expenses in the 2003. Analysis to reasons of material changes in the whole financial position than that in the last year √Applicable □Inapplicable Unit: RMB Items Amount of the Amount of the Amount of Increase/ report year previous year increase/decrease decrease rate Total assets 2,302,935,990.54 2,437,227,899.69 -134,291,909.15 -5.51% Inventories 1,381,621,649.40 1,422,357,820.15 -40,736,170.75 -2.86% Long-term 206,257,799.94 227,484,127.09 -21,226,327.15 -9.33% liabilities Shareholders’ 567,128,809.36 474,222,712.97 92,906,096.39 19.59% equity Profit from main 423,765,125.70 363,255,274.91 60,509,850.79 16.66% operations Net profit 90,449,977.35 77,001,831.44 13,448,145.91 17.46% Net increase in -31,389,724.18 26,782,432.94 -58,172,157.12 -217.20 cash and cash equivalents Explanations: ① Decrease in total assets mainly resulted from bank loan refund and real estate project settlement. ② Decrease in inventories was mainly because that the real estate project reached the condition of settlement and corresponding cost was carried forward in the year. ③ Decrease in long-term liabilities was mainly because that the Company has refunded part of long-term bank loans. ④ Increase in shareholders’equity was mainly because that the Company realized net profit and accounts payable on account to be paid in long term amounting to RMB 2,456,119.04 were transferred in contributed surplus by the affiliated subsidiaries. ⑤ Increase in profit from main operations was mainly due to increase of sales for real estate and the real estate project reached the condition of settlement and corresponding cost carried forward into income. ⑥ Increase in net profit was mainly due to increase of profit from main operations. ⑦ Decrease in net increase amount of cash and cash equivalents mainly because that the Company has refunded bank loans. 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 In the report period, the macro control over the overheating fields of national economic exerts great influences on the competitive real estate industry. Although the Company had good performances in the real estate projects developed in the past several years and the operation profit grew continuously in 2004, it was prevented from expanding new projects by the relatively deficient operating funds. On the State-owned Enterprises Reformation and Development Work Meeting held in Shenzhen at the beginning of 2004, the Company was ranked as one of the macro-reformation enterprises in 2004. Thereafter, all the creditor banks demand that the Company refund the due loan to evade risk. Besides, the loan on guarantee amounting to RMB 265.5 million was changed into mortgage on real estate loan. The loan principal repayments amounted to RMB 216.3 million, whereas the newly added loan was only RMB 18 million. In 2005, however, the company will face more difficulties in funds. 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 6.13 Application of the proceeds not raised through shares offering √Applicable □Inapplicable Unit: RMB’000 Name of project Amount of Progress of project Earning of Earnings rate of project project project Junfeng Lishe Project 287000 Completed and taken 72.9% sold 22% possession District B of Feng He Ri 34900 Land price is paid off - - Li The 5th Stage of Shanghai 35000 Completed and taken 98.6% sold 20% Pastoral City possession Total 356900 - - - 6.14 Explanation of the Board of Directors and Independent Directors on the “Qualified Opinion”issued by the Certified Public Accountants √Applicable □Inapplicable As stated in Notes to Accounting Statements (IX) 1 (1), after the application of retrial on lawsuits of real estate trade contract with such eight owners as Haiyi Industrial (Shenzhen) Co., Ltd. and etc. presented by the Company to Guangdong Higher People’ s Court was rejected in 2003, such eight owners as Haiyi Industrial (Shenzhen) Co., Ltd. still did not apply for forcible implementation to Guangdong Higher People’ s Court. At present, the Company is actively applying for retrial to the Supreme Court of the P.R.C.. The Company has predicted relevant losses amounting to RMB 41,772,906.07 according to the appropriation of book value of property. As stated in Notes to Accounting Statements (IX) 1 (2), in July 2001, Guangdong Higher People’s Court judged Shenzhen Jiyong Property Development Company to pay the Company transfer account amounting to RMB 143.86 million, in Nov. 2001, the Company has applied forcible implementation for Guangdong Higher People’ s Court, and Guangdong Higher People’ s Court sealed up the property amounting to 28,000 sq. m. of the opposing party by forcible implementation. Later, since Industrial & Commercial Bank of China Zhejiang Branch had objection that the Company sealed the property, Guangdong Higher People’ s Court judged to release the Company’ s sealing of property of Shenzhen Jiyong Property Development Company approximately amounting to 10,000 sq. m.. The Company has demurred to Guangdong Higher People’ s Court and the said demur is under examination. In the course of examination, the said judgment was unimplement ed. As stated in Notes to Accounting Statements (IX) 1 (3), according to (2002) YGFMYZZ No. 90 Judgment issued by Guangdong Higher People’ s Court, the Company should pay principal amounting to RMB 10.80 million and corresponding interests to Hubei Foreign Economic Cooperation Hall Shenzhen Office. The company did not accept the said judgment and apply for a retrial to the Supreme Court of the P.R.C.. On Jan. 18, 2005, the Supreme Court has made hearing of witnesses on the said case. For the said issues, Certified Public Accountants considered that the Company has estimated the relevant losses reasonably. The said interpretative issues do not influence the type of auditors’opinion released. Independent directors’opinion: Independent director Jiang Changlong, Kong Yuquan and Zhang Jianjun agreed the Board’ s explanation on the auditors’report for 2004. 6.15 Business plan as of the next year of the Board of Directors √Applicable □Inapplicable In 2005, the Company shall continue to be focus on real estate development and property lease, and also engage in property management, automobile transportation and operation of food service, so to catch any market opportunity and reinforce the aftereffect of enterprise development. 1. To ensure the construction progress of key real estate projects and practically make the sales strategy of projects, strict the management on project cost, ensure the profit growth of the main operation, namely development of real estate. 2. To enhance the level of operating management, continue to carry out and improve the departmental objective responsibility letter of the headquarter of the Company and management on “Double Civilizations” responsibility letter and real estate project responsibility letter of the 2nd grade companies. 3. To continue to reinforce the lease and operation of earning properties to keep increase steadily. 4. To catch the opportunity, enhance the land reserves so as to establish the base of sustainable development for the Group. 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 After researched and determined by the Board, the Company realized net profit amounting to RMB 90,449,977.35 in 2004, plus the undistributed profits at the beginning of the year, the distributable profit for the year amounted to RMB –436,909,934.66. The Company shall not distribute profits or convert capital reserve into share capital, and the profit earnings were used to offset the losses in the previous years. The said proposal would be submitted to Annual Shareholders’ General Meeting for examination. §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable 7.3 Important guarantee √Applicable □Inapplicable Guarantee Name of Date of Complete for the happening (date Amount of Guarantee Guarantee type Implementation related Company of signing guarantee term or not party (yes guaranteed agreement) or not) Gintian June 1998 RMB 6 million Guarantee 11 months No No Company Gintian Oct. 1998 RMB 59 million Guarantee 6 months No No Company Gintian Dec. 1998 RMB 2.6 million Guarantee 9 months No No Company Total amount of guarantee in the report period Note 19 Total balance of guarantee at the end of the report period Note 19 RMB 36.3 million Guarantee of the Company for the controlling subsidiaries Total amount of guarantee for controlling subsidiaries in the report RMB 49 million period Total balance of guarantee for controlling subsidiaries at the end of the RMB 49 million report period Particulars about the external guarantee of the Company (Including the guarantee for the controlling subsidiaries) Total amount of guarantee RMB 85.3 million The proportion of the total amount of guarantee in the net assets of the 15.04% Company Particulars about the guarantees out of line Total amount of guarantee for other related parties, which the Company or controlling shareholders held less than 50% The debts guarantee amount provided for the guarantee of which the assets-liability ratio exceeded 70% Proportion of total amount of guarantee in net assets of the Company exceeded 50% (Yes of No) Total amount of guarantee breaking regulations 7.4 Related credits and liabilities current 7.4.1 Related purchase and sale √Applicable □Inapplicable Unit: RMB’0000 Selling products and supplying labor Purchasing products and accepting labor Related parties service to related parties service to related parties Transaction amount Proportion in the Transaction amount Proportion in the transaction amount transaction amount of the same kind of the same kind Shenzhen Jianye Construction Project 4990 Company Shenzhen Yuezhong 18,4140 (Group) Co., Ltd. Total 189130 7.4.2 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Supply funds to related parties Related parties supplied funds to the Related parties Company Occurred amount Balance Occurred amount Balance Shenzhen Guomao Tianan 2,9710 Property Co., Ltd. Shenye Real Estate Development 13,4520 Co., Ltd. Anhui Nanpeng Paper-making Co., 1,1480 Ltd. Shenzhen Construction Investment 6780 Holding company Shenzhen Guomao Industry 2430 Development Co., Ltd. Shenzhen Tianan International Building Property Management 0 Co., Ltd. Shenzhen Wufang Chinaware 1750 Industry Company Shenzhen Construction Group 0 2,0000 Financing Company Shenzhen Properties and 2020 2260 Resources Jifa Storage Co., Ltd. Shenzhen International building Properties & Resources 0 39520 Development Co., Ltd. Shenzhen Yuezhong (Group) Co., 0 Ltd. Total 186670 2020 61780 Including: In the report period, the amount of capital of the listed company provided for controlling shareholders and its subsidiaries was RMB 0.00, and the balance was RMB 6.78 million. 7.5 Entrusted assets □Applicable √Inapplicable 7.6 Implementation of commitment items √Applicable □Inapplicable In the report period, the controlling shareholder of the Company, Shenzhen Construction Investment Company occupied capital of the Company amounting to RMB 6,784,280. To carry out the requirements of CSRC No. 56 Document and Shenzhen Securities Regulatory Administration Bureau, through active negotiations, controlling shareholder, Shenzhen Construction Investment Company committed dissolving the problem by assets offsetting before the end of August 2004. According to the requirements of Shenzhen Securities Regulatory Administration Bureau, the Company disclosed on Jul. 3, 2004. No long time after that, because three assets operation companies of Shenzhen incorporated. The plan committed by the controlling shareholder paid by assets was not carried out.Shenzhen Investment Holdings Co., Ltd. at present actively took actions to negotiate with the Company for dissolving problem. The Company would disclose timely the detail progress. 7.7 Significant lawsuit and arbitration √Applicable □Inapplicable 1. Concerning the “Haiyi Company” lawsuit disclosed in 2000-2003 Annual Report and 2004 Semi-annual Report of the Company, because the 2nd trial unclearly cognized truth and improperly applied for laws, Guangdong Higher Cour t decided to retry the case in Aug. 1999 under the Company’ s application. According to the decision of the retrial, Shenzhen Intermediate Court ended the execution of the case after the Company provided possession’ s drawing. At the end of 2003, Guangdong Higher Court overruled the application of the Company after check. After the retrial application was overruled, the eight owners including Haiyi Industrial (Shenzhen) Co., Ltd. have not applied the compulsive execution for Guangdong Higher Court. At present, the Company is dealing with the item of retrial application for the Supreme People’ s Court. 2. Concerning “Jiyong Company” lawsuit disclosed in 2000-2003 Annual Report, Provisional Public Notice dated Apr. 12, 2001 and 2004 Semi-annual Report of the Company, Guangdong Higher Court judged according to laws the transfer contract signed by the Company and Jiyong Company was valid and Jiyong Company should pay the transfer payment amounting to RMB 0.14 billion stated in the contract to the Company. The Company has applied compulsive execution for Guangdong Higher Court and the case is the process of execution. Because Industrial and Commercial Bank of China, Zhejiang Branch demurred that the Company sealed up property, Higher Court judged to determine the Comp any’ s sealing of Jiyong Company’ s property amounting to 10,000 sq. m.. The Company considered that improperly applied for laws in the said judgment, and has demurred to Guangdong Province Higher Court and the said demur is under examination. 3. Concerning “Huang Fuming” lawsuit disclosed in Provisional Public Notice dated Aug. 18, 2001, 2001-2003 Annual Report, Provisional Public Notice dated Jan. 29, 2003 and 2004 Semi-annual Report of the Company, Guangdong Province Higher People’ s Court rejected Huang Fuming’s lawsuit claim in 2nd trial in the report period, kept the original judgment, and the Company recovered. The Company disclosed the aforesaid event in the appointed medias on Dec. 28, 2004. 4. Concerning “Luohu Hotel’ s Bankruptcy” lawsuit disclosed in 2001-2003 Annual Report, the Provisional Public Notice dated July 23, 2003 and 2004 Semi-annual Report of the Company, by confirmation, the Company held Luohu Hotel’ s bankruptcy credit amounting to RMB 38,872,166.78 judged by the Court. Ended Oct. 31, 2004, Luohu Hotel’ s liquidation team drew back the property of RMB 75,290,538.26 in total. By confirmed by the liquidation team and the Court, the ordinary bankruptcy credit amounted to RMB 64,889,951.42 and the preferential bankruptcy credit amounting to RMB 13,062,277.31. After deducting liquidation fees, employees’wages, taxes and various preferential credits, the distributable bankruptcy to ordinary creditors totaled up to RMB 43,216,707.65 and the distribution proportion was 66.60%. Thus, the Company could take back bankruptcy credit of RMB 25,888,863.08. 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 Note Independent of attending the person presence (Times) Directors Board meeting (times) Jiang Changlong 8 8 0 0 - Zhang Jianjun 8 7 1 0 Entrust Kong Yuquan to attend the meeting dated Apr. 15, 2004 Kong Yuquan 8 8 0 0 - Particulars about the independent directors proposed different opinions about the relevant matters of the Company Name Issues proposed different Detail content of different Note opinions opinions Jiang Changlong No - - Zhang Jianjun No - - Kong Yuquan No - - Independent Opinions presented Present independent opinions on unqualified opinions of CPA and execution of CSRCZJF [2003] No. 56 Document □Applicable √Inapplicable §8.Report of the Supervisory Committee Wuhan Zhonghuan Certified Public Accountants issued unqualified auditor’s report with emphasized events. The Supervisory Committee patiently inquired about the situations involved in the explanation of Auditor’ s Report and believed that the explanations of the Board of Directors and the management team of the Company on the involved events was in accordance with the actual situation and the adopted relevant accounting disposal was in accordance with the financial and accounting policy. §9. Financial Report (Attached) 9.1 Auditor’ s opinion Report of the Auditors ZHSZ(2005)No. 041 To the Shareholders of ShenZhen Properties & Resources Development (Group) Ltd.: We have audited the accompanying consolidated balance sheet of Luthai Textile Company Limited (the “Company”) as of 31 December 2004 and the related consolidated statements of income, cash flows and changes in shareholders’equity for the year then ended attached. These consolidated financial statements set out are the responsibility of the Company’ s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We planned and conducted our audit in accordance with China Certified Public Accountants on Independent Auditing Principles. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial position of the Company as of 31 December 2004, and of the results of its operations and cash flows for the year then ended in accordance with regulations of Enterprises Accounting Principles promulgated by the State and Enterprises Accounting System In Addition, we noticed the user of accounting statements to pay attention to: As stated in Notes to Accounting Statements (IX) 1 (1), after the application of retrial on lawsuits of real estate trade contract with such eight owners as Haiyi Industrial (Shenzhen) Co., Ltd. and etc. presented by the Company to Guangdong Higher People’ s Court was rejected in 2003, such eight owners as Haiyi Industrial (Shenzhen) Co., Ltd. still did not apply for forcible implementation to Guangdong Higher People’ s Court. At present, the Company is actively applying for retrial to the Supreme Court of the P.R.C.. The Company has predicted relevant losses amounting to RMB 41,772,906.07 according to the appropriation of book value of property. As stated in Notes to Accounting Statements (IX) 1 (2), in July 2001, Guangdong Higher People’s Court judged Shenzhen Jiyong Property Development Company to pay the Company transfer account amounting to RMB 143.86 million, in Nov. 2001, the Company has applied forcible implementation for Guangdong Higher People’ s Court, and Guangdong Higher People’ s Court sealed up the property amounting to 28,000 sq. m. of the opposing party by forcible implementation. Later, since Industrial & Commercial Bank of China Zhejiang Branch had objection that the Company sealed the property, Guangdong Higher People’ s Court judged to release the Company’ s sealing of property of Shenzhen Jiyong Property Development Company approximately amounting to 10,000 sq. m.. The Company has demurred to Guangdong Higher People’ s Court and the said demur is under examination. In the course of examination, the said judgment was unimple mented. As stated in Notes to Accounting Statements (IX) 1 (3), according to (2002) YGFMYZZ No. 90 Judgment issued by Guangdong Higher People’ s Court, the Company should pay principal amounting to RMB 10.80 million and corresponding interests to Hubei Foreign Economic Cooperation Hall Shenzhen Office. The company did not accept the said judgment and apply for a retrial to the Supreme Court of the P.R.C.. On Jan. 18, 2005, the Supreme Court has made hearing of witnesses on the said case. For the said issues, Certified Public Accountants considered that the Company has estimated the relevant losses reasonably. The said interpretative issues do not influence the type of auditors’opinion released. Wuhan Zhonghuan Certified Public Accountants CPA: CPA: Wuhan, China Mar. , 2005 9.2 Comparative Balance Sheet, Profit Statement and Cash Flow Statement of consolidation and the parent company (attachment) Contents of notes involving emphasized matters: (IX) Contingenc ies 1. Unexecuted lawsuits (1) In Dec. 1997, such eight owners as Haiyi Industrial (Shenzhen) Co., Ltd. and etc. prosecuted the Company and Shenzhen International Trade Plaza Property Development Co., Ltd. a subsidiary company of the Company, to Shenzhen Intermediate People’ s Court (hereinafter referred to as Shenzhen Intermediate Court) due to the Company’ s overdue transfer of property, and required to cancel the Purchasing and Sale Contract and returned the fee for house purchasing and penalty amounting to RMB 0.3 billion. The Company took the counterclaim due to the prosecutor’ s unpaid fees of real estate, Shenzhen Intermediat Court judged that the Company won a lawsuit. The prosecutor did not accept and sued an appealing to Guodong Higher People ’ s Court (hereinafter referred to as Guangdong Higher Court), Guangdong Higher Court made the final judgment in Apr. 1999 and judged that the Contract on Purchasing and Sale of Real Estate of Shenzhen City signed between the both parties was effective, the opposing party has paid all fees of property, and the Company paid penalty, compensation and legal fare totally amounting to HKD 79.16 million to the opposing party. The said eight companies applied the execution for Shenzhen Intermediate Court in June 1999. Because the 2nd trial unclearly cognized truth and improperly applied for laws, Guangdong Higher Court decided to retry the case in Aug. 1999 under the Company’ s application. According to the decision of the retrial, Shenzhen Intermediate Court ended the execut ion of the case after the Company provided possession’s drawing. At the end of 2003, Guangdong Higher Court overruled the application of the Company after check. After the retrial application was overruled, the eight owners including Haiyi Industrial (Shenzhen) Co., Ltd. have not applied the compulsive execution for Guangdong Higher Court. At present, the Company is dealing with the item of retrial application for the Supreme People’ s Court. The Company has predicted relevant losses amounting to RMB 41,772,906.07 according to the appropriation of book value of property. (2) In 1993, the Company signed Development Equity Transfer Contract of Jiabin Building (present name of Jiabin Building is Jinlihua Building) with Shenzhen Haibin Property Devlopment Co., Ltd. (Now called: Shenzhen Jiyong Property Devlopment Co., Ltd., hereinafter referred to as Jiyong Company). In Jan., 1999, Jiyong Company indicted the company to Guangdong Higher People ’ s Court for the squares of real estate did not accord with the contract, and asked to remove the transfer contract and pay back the transfer payment and construction payment which have been paid. With respect to this, the company counterclaimed the opposing party to pay back the rest transfer payment and appealed the court to seal up the property amounting to 28,000 sq. m.. On Jul. 29, 2001, Guangdong Higher People’s Court verdicted Jiyong Company paid the Company transfer account amounting to RMB 143.86 million. On Nov. 27, 2001, the Company applied forcible implementation for Guangdong Higher People’ s Court and the case was in the process of implementation. since Industrial & Commercial Bank of China Zhejiang Branch had objection that the Company sealed the property, Guangdong Higher People’ s Court judged to release the Company’ s sealing of property of Shenzhen Jiyong Property Development Company approximately amounting to 10,000 sq. m.. The Company believed the verdict applied to law error. The Company has demurred to Guangdong Higher People ’ s Court and the said demur is under examination. In the course of examination, the said judgment was unimplemented. (3) In July 2000, with an excuse that the Company didn’t deliver the houses overdue, Hubei Foreign Economic Cooperation Hall Shenzhen Office (Hereinafter referred to as The Office) appealed to Shenzhen Intermediate People’s Court to cancel the Agreement signed by the Office and the Company for purchasing houses of 4000 sq. m. used as office in Jiabing Building (now called Jinlihua building), and require the Company return the fee for house purchasing amounting RMB 10.8 million and compensate for its losses amounting to RMB 18.6756 million. According to (2002) YGFMYZZ No. 90 Judgment issued by Guangdong Higher People’ s Court, the Company should pay principal amounting to RMB 10.80 million and corresponding interests to Hubei Foreign Economic Cooperation Hall Shenzhen Office. Hubei Foreign Economic Cooperation Hall Shenzhen Office applied to the court for execution. In 2003, according to (2002) YGFMYZZ No. 90 Judgment issued by Guangdong Higher People’ s Court, the Company is estimated to suffer loss amount RMB 8, 229, 398.00. The Company rejected the judgment and applied for retrial to the Supreme Court of the P.R.C.. On Jan. 18, 2005, the Supreme Court of the P.R.C. held the hearing of this case. 9.3 There were no changes of accounting policy, accounting estimation and settlement compared with the latest annual report 9.4 Contents, correct amount, reason and its influence of significant accounting errors □Applicable √Inapplicable 9.5 Explanation on change of consolidation scope compared with the latest annual report: Change of the consolidated units this year: Consolidated or Consolidated or Reason of Reason of Name of company not last year not this year change change Shenzhen Royal City Property No Yes Shutout Shutout Management Co., Ltd. Board of Directors of ShenZhen Properties & Resources Development (Group) Ltd. March 1st, 2005 CONSOLIDATED INCOME STATEMENT YEAR ENDED DECEMBER 31, 200４ Notes 2004 2003 RMB’000 RMB’000 Turnover 5 1,326,290 1,079,474 Cost of sales (902,525) (716,219) Gross profit 423,765 363,255 Other revenue/ (expenses), net (2,632) (44,630) Administrative expenses (218,441) (121,339) Distribution costs (33,219) (34,491) Profit from operations 7 169,473 162,795 Finance costs 8 (41,293) (30,560) Share of profits/ (losses) of associates 3,692 (11,091) Loss on investments, net 9 (5,766) (2,011) Profit before taxation 126,106 119,133 Taxation 10 (35,710) (44,675) Profit after taxation and attributable to shareholders 90,396 74,458 Earnings per share Basic and diluted 11 RMB0.17 RMB0.14 CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2004 Notes 2004 2003 RMB’000 RMB’000 Non-current assets Property, plant and equipment 12 339,142 311,854 Intangible assets 13 59,792 61,704 Interests in subsidiaries not consolidated 15 119,612 135,206 Interests in associates 16 107,235 120,148 Investments in securities 17 13,036 17,036 638,817 645,948 Current assets Inventories 18 1,316,712 1,397,145 Trade and other debtors and prepayments 19 21,334 37,566 Trading securities 20 10,062 14,305 Cash and bank balances 240,234 266,624 1,588,342 1,715,640 Current liabilities Trade and other creditors 21 865,356 864,424 Provisions 22 58,602 50,002 Taxes payable 68,314 51,833 Borrowings 23 559,980 777,500 1,552,252 1,743,759 Net current assets/(liabilities) 36,090 (28,119 ) Total assets less current liabilities 674,907 617,829 Non-current liabilities Borrowings 23 96,000 130,000 Long-term deferred income 24 38,235 40,009 134,235 170,009 540,672 447,820 CAPITAL AND RESERVES Share capital 25 541,799 541,799 Reserves (1,127) (93,979) ) 540,672 447,820 Approved by the board of directors on February 24, 2005. DIRECTOR DIRECTOR 1. SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LIMITED 深圳市物業發展(集團)股份有限公司 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEAR ENDED DECEMBER 31, 2004 Statutory Public Share capital welfare Retained capital reserve fund earnings Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 25) Balance at January 1, 2003 541,799 288,346 79,511 (595,６１３ ) 314,043 Profit for the year - - - 74,458 74,458 Transfer of reserve - 59,319 - - 59,319 Balance at December 31, 2003 541,799 347,665 79,511 (521,155 ) 447,820 Profit for the year - - - 90,396 90,396 Transfer of reserve - 2,456 - - 2,456 Balance at December 31, 200４ 541,799 350,121 79,511 (430,759 ) 540,672 2. 3. SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LIMITED 深圳市物業發展(集團)股份有限公司 CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED DECEMBER 31, 2004 2004 2003 RMB’000 RMB’000 Profit from ordinary activities before taxation 126,106 119,133 Adjustment for: Share of results of associates (3,692) 11,091 Interest expense 47,689 81,708 Interest income (2,067) (2,260) Bad or doubtful debts written back (50) (47,088 ) Provision for doubtful debts 71,586 10,600 Provision for inventories written back (10,515) (3,160) Provision for impairment in investments in securities - (15,461 ) Decrease in bank balances pledged as 5,000 3,000 securities Provision for trading securities (7,838) 2,169 Depreciation of property, plant and 26,640 25,027 equipment Amortisation of intangible assets 3,04３ 1,881 Gain on disposal of property, plant and 476 equipment (4,251) (Loss)/ gain on dealing of listed investments 62 (4) Operating cash flows before movements in working capital 256,44０ 182,385 Decrease in inventories 80,433 39,289 Decrease in receivables 16,232 131,960 Increase/(decrease) in payables 10,782 (128,931) Cash generated by operations 363,887 224,703 Taxes paid (119,846) (57,153) Net cash flows from operating activities 244,041 167,550 Investing activities Interest received 2,067 2,260 Proceeds on disposal of other investments 916 3,051 Decrease in trading securities 4,243 2,505 Proceeds on disposal of property, plant and equipment 3,967 27,143 Purchases of property, plant and equipment (10,922) (12,831) Decrease/(Increase) in interests in associates 28,507 49,312 Net cash flows from investing activities 28,778 71,440 Financing activities Interest paid on bank loans and other loans (47,689) (81,708) New bank loans raised 473,600 589,000 Repayments of bank loans (725,120) (716,500) Net cash flows in financing activities (299,209 ) (209,208) 4. SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LIMITED 深圳市物業發展(集團)股份有限公司 CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED DECEMBER 31, 2004 2004 2003 RMB’000 RMB’000 (Decrease)/ increase in cash and cash equivalents (26,390) 29,782 Cash and cash equivalents at beginning of year - as previously registered 266,624 251,531 - effect of exclusion of subsidiaries consolidated in prior year - (14,689) As adjusted 266,624 236,842 Cash and cash equivalents at end of year Represented by cash and bank balances 240,234 266,624