*ST中华A(000017)ST中华Ｂ2004年年度报告摘要（英文版）

SHENZHEN CHINA BICYCLE COMPANY (HOLDINGS) LIMITED SUMMARY OF ANNUAL REPORT 2004 §1. Important Notice 1.1 Board of Directors of the Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) and its members 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. The summary of annual report 2004 is abstracted from the full text of annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 No director stated that they couldn’t ensure the correctness, accuracy and completeness of the contents of the Annual Report or have objection for this report. 1.3 Due to work, Mr. Shi Zhanxiong and Mr. Yi Xiaoming were absent from the Board meeting, in which the Annual Report 2004 was examined, and respectively entrusted Mr. Li Hai and Mr. Wan Nianqing to vote on his behalf. 1.4 K.C.OH & Company Certified Public Accountants issued an Auditors’ Report with reserved opinion, the Board of Directors and the Supervisory Committee of the Company made explanations on the relevant matters in details; the investors are suggested to notice the content. 1.5 Mr. Zhang Xiaofeng, Chairman of the Board, Mr. Ye Qing, General Manager and Mr. Li Shiyong, Chief Accountant hereby confirm that the Financial Report of the Annual Report is true and complete. 1.6 This report was prepared in both Chinese and English. Should there be any difference in interpretation between the two versions, the Chinese version shall prevail. §2. Company Profile 2.1 Basic information Short form of the stock ST ZHONGHUA –A, ST ZHONGHUA – B Stock code 000017, 200017 Listed stock exchange Shenzhen Stock Exchange Registered address and Office address Registered address: No. 3008, Buxin Road, Shenzhen Office address: Shenzhen China Bicycle Company (Holdings) Limited, No. 3008, Buxin Road, Shenzhen -1- Post code Post code of registered address: 518019 Post code of office address: 518019 Internet web site of the Company www.szcbc.com E-mail of the Company dmc@szcbc.com 2.2 Contact person and method Secretary of the Board of Directors Name Li Hai Contact address Shenzhen China Bicycle Company (Holdings) Limited, No. 3008, Buxin Road, Shenzhen Telephone (86)755-25516998 Fax (86)755-25516620 E-mail dmc@szcbc.com §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB’000 2003 Increase/decrease 2004 After Before over last year adjustment adjustment （％） Turnover 138,192 99,015 99,015 Other income 11,336 19,932 19,932 Profit before taxation -16,416 340,579 340,767 Profit attributable to shareholders -16,402 340,632 340,820 Shareholders’equity -1,705,678 -1,689,276 -1,687,614 Net cash inflow arising from -4,152 -10,495 -10,495 operating activities Items of non-recurring gains and losses √Applicable □Inapplicable Unit: RMB’000 Items of non-recurring gains and losses Amount Projected losses of guarantee - Gains and losses from disposal of fixed assets - Total 675.00 Total 675.00 -2- 3.2 Difference of net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Unit: In RMB CAS IAS Net profit -17,230,298.62 -16,401,172.09 Income from the funds need not pay was adjusted as income based on IAS, Explanation on the difference while it was adjusted as capital reserve based on CAS. §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital Unit: share Increase / decrease in this Before the After the time (+, -) change change Subtotal I. Unlisted Shares 1. Sponsors’shares 204,612,836 0 204,612,836 Including: State-owned share 16,340,000 0 16,340,000 Domestic legal person’s shares 95,267,002 0 95,267,002 Foreign legal person’s shares 93,005,834 0 93,005,834 Others 0 0 0 2. Raised legal person’s shares 0 0 0 3. Inner employees’shares 135,000 0 135,000 4. Preference shares or others 0 0 0 Total Unlisted shares 204,747,836 0 204,747,836 II. Listed Shares 0 1. RMB ordinary shares 76,617,000 0 76,617,000 2. Domestically listed foreign 0 198,068,167 198,068,167 shares 3. Overseas listed foreign 0 0 0 shares 4. Others 0 0 0 Total Listed shares 274,685,167 0 274,685,167 III. Total shares 479,433,003 0 479,433,003 -3- The amount of shares offered by funds, inner employees’shares traded in the counter, shares offered by strategic investor and shares offered ordinary juridical person should be disclosed respectively □Applicable √Inapplicable 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Total number of shareholders at the end of report year 45,041 Particulars about shares held by the top ten shareholders Increase / Number of Nature of decrease in Holding shares Type of shares share shareholders Proportion Full name of Shareholders the report at the year-end (Circulating/No pledged/ (State -owned (%) year (share) n-circulating) frozen shareholder/foreign (share) (share) shareholder) China Huarong Assets Management State-owned 0 65,098,412 13.58% Non-circulating 0 Company shareholder Hong Kong Zhuorun Technology Foreign shareholder 0 62,003,890 12.93% Non-circulating 57,899,644 Co., Ltd. Hong Kong (Link) Bicycles Limited 0 26,000,000 5.24% Non-circulating 26,000,000 Foreign shareholder Guangdong Sunrise Group Co., Ltd. State-owned -7,000,000 11,968,590 2.50% Non-circulating 11,968,590 shareholder Shanghai Xinliyi Investment State-owned 0 11,200,000 2.34% Non-circulating 0 Management Co., Ltd. shareholder Airline Trust and Investment Co., State-owned 0 10,340,000 2.16% Non-circulating 0 Ltd. shareholder STEPHEN &PARTNERS LIMITED -4,101,242 7,176,630 1.50% Circulating 0 Foreign shareholder Shenzhen International Trust & State-owned 0 6,000,000 1.25% Non-circulating 0 Investment Co., Ltd. shareholder Jingchao Investment Co., Ltd. 0 5,001,944 1.04% Non-circulating 0 Foreign shareholder Huabao Trust and Investment Co., State-owned 3,500,000 3,500,000 0.73% Non-circulating 0 Ltd. shareholder Particulars about shares held by the top ten shareholders of circulation share Name of shareholders Circulating shareholders held in the Types of circulating shares year-end (share) (A-share, B-share, H-share or others) STEPHEN & PARTNERS LIMITED 7,176,630 B-share -4- LAI WEN RONG 1,755,784 B-share XAMMAX INTERNATIONAL LINIT 1,645,563 B-share HUANG CAI XIANG 1,354,494 B-share CHEN XIONG 1,074,868 B-share JIANG LAN 1,060,900 B-share WANG LI SI 869,650 B-share LIAO XIAO YAN 786,228 B-share NGAI KWOK PAN 747,600 B-share ZHANG HUI LING 727,048 B-share Explanation on associated relationship The Company was unaware of whether there existed any associated among the top ten shareholders or consistent relationship among the top ten circulation shareholders and whether there action existed consistent actionist regulated in the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies. 4.3 Particulars about the controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in the controlling shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for controlling shareholder and other actual controller China Huarong Assets Management Company is a state-owned sole company limited, which was wholly-owned company possessed by the Ministry of Finance of PRC. Its registered capital is RMB 10 billion; legal representative is Mr. Yang Kaisheng. China Huarong Assets Management Company was located in No. 10, Baiyun Road, Xicheng District, Beijing. Business scope: purchase and operation of bad assets peeled off from China Industrial and Commercial Bank, recovery of debts, replacement of assets, transfer and sale; reorganization of debts and enterprise; debt-to-equity; staggered holding share, securitization of assets, listing recommendation, underwriting of bond and shares in the scope of assets management; direct investment; issuance of bond; commercial loan; loan from finance organization, application of reloan from People’ s Bank of China; investment, finance and law consultation; evaluation of assets and project; bankruptcy liquidation and enterprise auditing; and the other business approved by the financial supervisory department. 4.3.3 Property right and controlling relationship between the actual controller of the Company and the Company is as follows: -5- China Huarong Assets Management Company 13.58% Shenzhen China Bicycle Company (Holdings) Limited §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Holding shares at Holding shares Reason for Name Title Sex Age Office term the year-begin at the year-end change Chairman of the Zhang Xiaofeng Male 34 Jun. 2004 - Jun. 2007 0 0 Naught Board Vice Chairman of Pan Shiming Male 34 Jun. 2004 - Jun. 2007 0 0 Naught the Board Liu Linfeng General Manger Male 48 Jun. 2004 - Jun. 2007 0 0 Naught Standing Deputy Ye Qing Male 43 Jun. 2004 - Jun. 2007 0 0 Naught General Manger Shi Zhanxiong Director Male 61 Jun. 2004 - Jun. 2007 75,000 75,000 Naught Yi Xiaoming Director Male 44 Jun. 2004 - Jun. 2007 0 0 Naught Wan Nianqing Director Male 31 Jun. 2004 - Jun. 2007 0 0 Naught Independent Yang Lixun Male 42 Jun. 2004 - Jun. 2007 0 0 Naught Director Independent Wang Fuqing Male 38 Jun. 2004 - Jun. 2007 0 0 Naught Director Independent Ma Hong Male 38 Jun. 2004 - Jun. 2007 0 0 Naught Director Independent Zhuang Yuemin Male 34 Jun. 2004 - Jun. 2007 0 0 Naught Director Secretary of the Li Hai Board, Deputy Male 37 Jun. 2004 - Jun. 2007 Naught General Manger He Xiongsen Supervisor Male 45 Jun. 2002 - Jun, 2005 0 0 Naught Lan Qihua Supervisor Male 54 Jun. 2002 - Jun, 2005 0 0 Naught Peng Tiesheng Supervisor Male 55 Jun. 2002 - Jun, 2005 0 0 Naught He Eryi Deputy General Female 41 Sep. 2004 - Sep. 2007 0 0 Naught -6- Manger Li Shiyong Chief Accountant Male 35 Sep. 2004 - Sep. 2007 0 0 Naught 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment Title in Shareholding Name Name of Shareholding Company Office term from the Shareholding Company Company (Yes / No) Zhang China Huarong Assets Management Senior Manager of Apr. 6, 2001 to Yes Xiaofeng Company Shenzhen Office now May 6, 2002 to Pan Shiming Guangdong Sunrise Group Co., Ltd. General Manager Yes now China Huarong Assets Management Senior Manager of Sep. 6, 2000 to Yi Xiaoming Yes Company Shenzhen Office now China Huarong Assets Management Manager of Shenzhen Nov. 6, 2001 to Wan Nianqing Yes Company Office now China Huarong Assets Management Senior Manager of Jan. 6, 2002 to He Xiongsen Yes Company Shenzhen Office now 5.3 Particulars about the annual remuneration of directors, supervisors and senior executives Total annual payment RMB 748,600 Total annual payment of the top three directors RMB 345,100 drawing the highest payment Total annual payment of the top three senior RMB 191,800 executives drawing the highest payment Allowance of independent director RMB 20,000 per person/ year Other treatment of independent directors The Company reimbursed the expenses for business trips according to the actual situation, which independent directors attended the Board meeting and shareholders’ general meeting. Name of directors and supervisors receiving no Director: Zhang Xiaofeng, Pan Shiming, Shi Zhanxiong, payment or allowance from the Company Yi Xiaoming and Wan Nianqing Convener of the Supervisory Committee: He Xiongsen Payment Number of persons Over RMB 150,000 2 -7- RMB 100,000 ～ RMB 150,000 1 Under RMB 100,000 3 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In 2004, the core business of the Company adhered to the operating guideline of “Brand leading and Electrical bicycles oriented”, firmly followed the steps of the market, and sped up R&D of products and exploitation of the market, which realized big development of core business. In the whole year, the Company realized sales income amounting to RMB 138,192,000, with an increase of 39.57% over the previous tear. However, because the debt reorganization of the Company didn’t accomplish at last, relative debt burden and serious shortage of capital still restricted development of the core business of the Company. Therefore, the operation of the Company still suffered losses amounting to RMB 16,402,000, with a decrease of 95.19% over last year. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 Main operations classified according to industries Classified according to Income from Cost of main Gross Increase/decrease Increase/decreas Increase/decrease industries or products main operations profit in income from e in cost of main in gross profit ratio operations ratio (%) main operations operations over over the last year over the last year the last year (%) (%) (%) Manufacture of bicycles 4,211.71 4,012.36 4.73% -0.47% 3.83% 2.34% Manufacture of bicycles 9,055.14 7,848.01 13.33% 72.81% 71.73% 4.26% Including: related transactions Main operations classified according to products Naught Including: related transactions Pricing rules for related Naught transactions -8- Necessity and durative Naught of related transactions Including: total amount of related transactions that the listed company sold products or provided labor service to the controlling shareholder and its subsidiaries was RMB 0.00 in the report period. 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Areas Income from main Increase/decrease in income from main operations operations over the last year (%) Shandong 3,322.72 51.89% Henan 2,510.37 88.14% 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase Proportion in the total 3,765.15 52.88% of the top five suppliers amount of purchase Total amount of sales of the Proportion in the total 1,590.95 11.51% top five sales customers amount of sales 6.5 Operation of share-holding companies □Applicable √Inapplicable 6.6 Explanation on reasons of material changes in main operations and its structure □Applicable √Inapplicable 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) compared with the previous year □Applicable √Inapplicable 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year □Applicable √Inapplicable Analysis to reasons of material changes in the whole financial position than that in the last year □Applicable √Inapplicable -9- 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment, macro-policies and regulations on the Company’ s financial position and operating results □Applicable √Inapplicable 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds □Applicable √Inapplicable Particulars about the changed projects □Applicable √Inapplicable 6.13 Application of the proceeds non-raised through shares offering □Applicable √Inapplicable 6.14 Explanation of the Board of Directors on the “Qualified Opinion” made by the Certified Public Accountants √Applicable □Inapplicable The Board of the Company agreed the auditors’report presented by K.C.Oh & Company Certified Public Accountants. Since the Company’ s liabilities reorganization was still not accomplished finally in 2004 and liabilities risks with great amount still existed, the Certified Public Accountants expressed doubt to the Company’ s sustainable operating capability in the auditors’report and expressed reserved opinion. Thus, the Board of the Company made explanation as follows: Since China Huarong Assets Management Company, the largest creditor of the Company, occupied Shenzhonghua formally since Mar. 2002, based on gaining progress in the last year, the Company has gained piercing progress again in the liabilities reorganization, namely the Company’ s financial institutions and creditors’ cutting liabilities had no obstacle in policies. At present, the said creditors has exempted and stopped calculating all interests owed by the Company amounting to RMB 392 million. The relevant detail debt reorganization plan was in the process of approval of superior administration organs. Other debt reorganization plan was being active propelled. While gaining progress of liabilities reorganization, the Company’ s main operations also had increase by great margin and main operations continued to realize profitability. Thus, the Board of the Company considered that the Company’ s pressure in - 10 - short-term payments was reduced greatly and the sustainable operating capability had been improved in certain. Along with the continuous progress of the Company’ s liabilities and assets reorganization and the continuous increase in the Company’ s achievements, the Company’ s operating environment and operating position would be further improved. 6.15 Business plan as of the next year of the Board of Directors (If it has) √Applicable □Inapplicable 1. Quicken the general reorganization progress including liabilities reorganization in order to improve the wicked internal and external operating environment of the Company in the several years, and realize success of debt reorganization in the year. 2. Further enlarge the present scale of production and sale of main business and make efforts to realize the increase with high speed of main business. 3. Continue to quicken liquidizing the present remnant assets to supple current capital for the production and operation and further relax the intense situation of current capital. 4. Further perfect legal person administration structure and establish high-efficiency encouragement and binding mechanism. Profit estimation of the next year (If it has) □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors □Applicable √Inapplicable The Company made profits in the report period, but didn’t propose Preplan on Dividend Distribution. □Applicable √Inapplicable §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable - 11 - 7.3 Significant guarantee □Applicable √Inapplicable 7.4 Significant related transactions 7.4.1 Related purchase and sale □Applicable √Inapplicable 7.4.2 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Provided capital to related Provided capital to listed companies by Related parties parties related parties Occurred Balance Occurred Balance Hong Kong (Link) Bicycles Limited 0.00 62,905.44 0.00 0.00 Diamond Back (HongKong) Co., Ltd. 0.00 24,155.70 0.00 0.00 Zhigao Resource International Co., Ltd. 0.00 13,939.64 0.00 2,491.76 Hong Kong Huajiaming Industry Trade Co., 0.00 0.00 0.00 896.20 Ltd. Shenzhen Canghai Industrial Co., Ltd. 0.00 0.00 0.00 18.94 Shenzhen Danxia Bicycle Accessory Co., 0.00 0.00 0.00 45.66 Ltd. Jiangsu Huaiyin Huayu Bicycle Accessory 0.00 0.00 0.00 496.53 Factory Co., Ltd. Shantou Economic Special Zone Dapeng 0.00 0.00 0.00 689.74 Industrial Co., Ltd. China Complex Material Products 48.18 6,310.05 0.00 0.00 (Shenzhen) Co., Ltd. Shenzhen Huajiaming Industry Trade -155.92 3,402.10 0.00 0.00 Development Co., Ltd. China Huarong Assets Management 0.00 0.00 299.29 72,164.90 Corporation Guangdong Sunrise Group Co., Ltd. 0.00 0.00 39.43 23,280.17 Shenzhen Jinhuan Printing Format Co., Ltd. 0.00 0.00 0.00 60.00 Daming International Co., Ltd. 0.00 0.00 0.00 1,083.44 Shenzhen Goodyear Industrial Co., Ltd. 0.00 0.00 0.00 1,289.69 Total -107.74 110,712.93 338.72 102,5178.03 Including: in the report period, the capital amount the listed company provided to controlling - 12 - shareholder and its subsidiaries was RMB –1,077,400 and the balance was RMB 1,107,129,300. 7.5 Entrusted financing □Applicable √Inapplicable 7.6 Implementation of projects committed □Applicable √Inapplicable 7.7 Significant lawsuit and arbitration □Applicable √Inapplicable 7.8 Particulars about the performance of obligations of Independent Directors Particulars about the independent directors attending the Board Name of This year times Presence in Entrusted Absence Notes Independent of attending the person presence (Times) Directors Board meeting (times) Yang Lixun 9 8 1 0 Wang Fuqing 9 8 1 0 Ma Hong 9 9 0 0 Zhuang Yuemin 5 4 1 0 Particulars about the independent directors proposed different opinions about the relevant matters of the Company □Applicable √Inapplicable §8. Report of the Supervisory Committee In the spirit of being responsible to shareholders and strictly according to regulations in PRC Company Law and Articles of Association, the Supervisory Committee has dutifully performed its obligations endowed by relevant laws and legislations, carried out work positively and hard, and safeguarded the legal rights and interests of the Company and shareholders in 2004. It has also put forward its opinions and suggestions promptly towards significant decisions made for productions, management and investment, and supervised the behaviors of directors and senior executives in terms of implementation of their obligations. I. Work of the Supervisory Committee in the report period In the report period, the Supervisory Committee of the Company held altogether two meetings. - 13 - 1. The 5th meeting of the 4th Supervisory Committee was held on Apr. 19, 2004. The meeting examined and approved Annual Report 2003, Work Report of the General Manager, Financ ial Final Report 2003, Profit Appropriation Plan 2003, Provisional Measures of the Special Funds Control of the Board and Proposal on Rewarding the Administrative Team of the Company of 2003. 2. The 6th meeting of the 4th Supervisory Committee was held on Sep. 3, 2004 and the meeting examined and approved the Proposal on Hiring a General Manager for the Company. II. Opinions on relevant issues in 2004 expressed by the Supervisory Committee 1. Operation according to law: Sticking to relevant national laws and regulations, the Supervisory Committee has carried out supervision work on the holding procedures of Shareholders’General Meetings and Board meetings, resolution, implementation of resolutions of Shareholders’General Meetings by the Board of Directors, performance of duties of senior executives as well as the Company’ s administration system etc.; it believes that, in 2004, the Board of Directors strictly complied with PRC Company Law, Securities Law, Rules for Stock Listing, Articles of Association and other relevant regulations and systems, operated in a standardized manner, worked conscientiously, conducted business and made decisions in a scientific and reasonable way, and further improved internal administration and internal control system; the directors and managers haven’t violated any laws, regulations, the Articles of Association or done harm to the interests of the Company and shareholders when performing duties. 2. Financial Inspection In the report period, Hong Kong K.C. Oh & Company Certified Public Accountants issued qualified Auditors’Report for the Financial Statement 2004 of the Company. The Auditors’Report of the Company objectively and truly reflected the financial status and operation achievements of the Company this year. 3. Use of raised funds: The Company has not raised funds in the report period. 4. Purchases and sales of assets: In the report period, the Company has no purchases or sales of assets. 5. Opinions towards related transactions Related transactions conducted by the Company are fair and square, and haven’t done harm to the interests of the Listed Company, and there was no insider dealing. 6.Opinoin on the qualified Auditors’ Report issued by Hong Kong K.C.Oh & Company Certified Public Accountants - 14 - The Supervisory Committee agrees with the explanation of the Board of Directors on the qualified Auditors’Report issued by Hong Kong K.C.Oh & Company Certified Public Accountants. §9. Auditor’ s Report 9.1 Auditor’ s opinion Report of the auditors to the members of Shenzhen China Bicycle Company (Holdings) Limited (A joint stock limited company incorporated in the People’ s Republic of China) We have audited the accompanying balance sheet of the Group as of December 31, 2004 and the related statements of income, cash flows and changes in equity for the year then ended. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. However, the evidence available to us was limited in the following manner. As explained in note 2 to the financial statements, the company’ s adoption of going concern basis is based on the probable outcome of the debt restructuring as well as the resulting improvement in the financial position. As we were unable to obtain sufficient evidence and explanation to assess the adequacy of the going concern basis, our opinion is qualified in this respect. In addition, we were unable to estimate the financial impact on the Group should the going concern basis not be adopted. Except for the matter as referred to above, in our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2004 and the results of its operations and its cash flows for the year then ended, in accordance with International Financial Reporting Standards. K. C. Oh & Company Certified Public Accountants Hong Kong : April 20, 2005 9.2 Accounting statement (attached back) 9.3 Explanation on changes of accounting policy, accounting estimation and settlement compared with the latest annual report □Applicable √Inapplicable 9.4 Contents, correct amount, reason and its influence of significant accounting errors - 15 - □Applicable √Inapplicable 9.5 Explanation on change of consolidated scope compared with the latest annual report □Applicable √Inapplicable Board of Directors of Shenzhen China Bicycle Company (Holdings) Limited Apr. 22, 2005 Shenzhen China Bicycle Company (Holdings) Limited Consolidated income statement for the year ended December 31, 2004 Note 2004 2003 RMB’000 RMB’000 ‘restated Turnover (5) 138,192 99,015 Cost of sales ( 127,116 ) ( 90,963 ) Gross profit 11,076 8,052 Other revenue 11,336 19,932 22,412 27,984 Distribution costs ( 10,706 ) ( 9,104 ) Administrative expenses ( 23,218 ) ( 28,070 ) Other operating expenses ( 618 ) ( 477 ) Operating loss ( 12,130 ) ( 9,667 ) Finance costs ( 3,436 ) ( 3,906 ) Operating loss before exceptional items (6) ( 15,566 ) ( 13,573 ) Exceptional items (7) 675 355,831 Operating profit/(loss) after exceptional items ( 14,891 ) 342,258 Share of loss from associates ( 1,525 ) ( 1,679 ) Profit/(loss) before taxation ( 16,416 ) 340,579 Taxation (8) ( 2) ( 2) Profit/(loss) after taxation ( 16,418 ) 340,577 Minority interests 16 55 Profit/(loss) for the year ( 16,402 ) 340,632 Earnings/(loss) per share (9) (RMB0.0342 ) RMB0.7105 - 16 - Shenzhen China Bicycle Company (Holdings) Limited Consolidated balance sheet as at December 31, 2004 Note 2004 2003 RMB’000 RMB’000 ‘restated Non-current assets Fixed assets (10) 242,787 257,654 Interests in associates (11) 17,534 19,059 Other investments (12) 2,800 6,903 263,121 283,616 Current assets Inventories (13) 71,998 68,882 Accounts receivable (14) 16,026 8,887 Others receivable and prepayments (15) 55,345 60,042 Amounts due from related companies (16) - - Bills receivable 1,192 275 Cash and bank balances 6,781 5,585 151,342 143,671 Total assets 414,463 427,287 Capital and reserves Share capital (17) 479,433 479,433 Reserves ( 2,185,111 ) ( 2,168,709 ) ( 1,705,678 ) ( 1,689,276 ) Minority interests (18) - - Non-current liabilities Long-term loans due to related companies (19) 954,450 951,063 Loan-term borrowings (20) 532,804 532,975 Provision for loss on guarantees (21) 166,790 166,271 1,654,044 1,650,309 Current liabilities Amounts due to related companies 59,408 59,408 Accounts payable 119,455 117,946 Bills payable 1,419 716 Others payable and receipts in advance 208,895 210,292 Accruals 43,169 44,156 Tax payable 33,751 33,736 466,097 466,254 Total equity and liabilities 414,463 427,287 - 17 - Shenzhen China Bicycle Company (Holdings) Limited Consolidated statement of changes in equity for the year ended December 31, 2004 Capital Share Statutory Discretionary Statutory public Accumulated ‘reserve ‘capital ‘surplus reserve ‘surplus reserve ‘welfare fund ‘loss Total RMB’000 RMB’ 000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance as at January 1, 2003 479,433 - - - 32,673 ( 2,540,540 ) ( 2,028,434 ) Prior period adjustments (note 24) - - - - - ( 1,474 ) ( 1,474 ) Restated balance 479,433 - - - 32,673 ( 2,542,014 ) ( 2,029,908 ) Profit for the year - - - - - 340,632 340,632 Balance as at December 31, 2003 479,433 - - - 32,673 ( 2,201,382 ) ( 1,689,276 ) Balance as at January 1, 2004 479,433 - - - 32,673 ( 2,199,720 ) ( 1,687,614 ) Prior year adjustments (note 24) - - - - - ( 1,662 ) ( 1,662 ) Restated balance 479,433 - - - 32,673 ( 2,201,382 ) ( 1,689,276 ) Loss for the year - - - - - ( 16,402 ) ( 16,402 ) Balance as at December 31, 2004 479,433 - - - 32,673 ( 2,217,784 ) ( 1,705,678 ) According to the Company’ s Articles of Association and the PRC’s relevant laws and policies, as well as after making up the Company’ s loss, the Company is required to make a transfer at the rate of 10% from the profit after taxation, determined in accordance with the PRC accounting standards, of the Company to the statutory surplus reserve until the reserve balance has reached 50% of the registered capital of the Company. Again, after making up the loss, the Company is also required to transfer 5% from the profit after taxation to the statutory public welfare fund. The statutory surplus reserve and the capital reserve may be applied only for the following purposes : i may be used to make up loss; and ii may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by them, but when the statutory surplus reserve is converted into share capital, the amount remaining in the reserve shall be no less tha n 25% of the newly increased registered capital. The statutory public welfare fund shall only be applied for the collective welfare of the Company’ s employees, and upon utilisation, an amount equal to expenditure spent on the collective staff welfare shall be transferred from the statutory public welfare fund to discretionary surplus reserve. Prior to making up the Company’ s loss and the relevant appropriations to the statutory surplus reserve and the statutory public welfare fund, no dividend shall be payable. - 18 - Shenzhen China Bicycle Company (Holdings) Limited Consolidated cash flow statement for the year ended December 31, 2004 2004 2003 RMB’000 RMB’000 ‘restated Cash flow from operating activities Operating profit/(loss) before taxation ( 16,416 ) 340,579 Adjustment items : Interest income ( 79 ) ( 38 ) Interest expense 3,539 3,906 Depreciation 16,036 16,102 Debt restructuring income - ( 374,993 ) Waiver of liabilities ( 691 ) - Provision for loss from guarantees 519 - Share of loss from associates 1,525 1,679 Profit on disposal of property, plant and equipment ( 63 ) ( 10,773 ) Provision for impairment loss of construction in progress ‘ reversed - ( 2,320 ) Loss on disposal of other investments 944 - Provision for impairment loss of other investments - 1,700 Provision for impairment loss of obsolete inventories ‘ made/(reversed) ( 5,429 ) 3,909 Provision for doubtful debts 4,311 9,518 Provision for loss on minority interests 16 55 Net operating cash inflow/(outflow) before movement in ‘ working capital 4,212 ( 10,676 ) Decrease in inventories 2,313 650 (Increase)/decrease in accounts receivable ( 7,151 ) 4,452 Increase in others receivable and prepayments ( 680 ) ( 18,820 ) (Increase)/decrease in amounts due from related companies 1,078 ( 281 ) Increase in bills receivable ( 917 ) ( 125 ) Increase in accounts payable 2,200 2,241 Increase in bills payable 703 716 Increase/(decrease) in others payable and ‘ receipts in advance ( 1,397 ) 12,684 Decrease in accruals ( 4,100 ) ( 1,116 ) Net cash outflow from operating activities before ‘ interest and income tax payments ( 3,739 ) ( 10,275 ) Interest paid ( 426 ) ( 178 ) Income taxes recovered/(paid) 13 ( 42 ) Net cash outflow from operating activities c/f ( 4,152 ) ( 10,495 ) - 19 - Shenzhen China Bicycle Company (Holdings) Limited Consolidated cash flow statement for the year ended December 31, 2004 (cont’d) 2004 2003 RMB’000 RMB’000 ‘restated Net cash outflow from operating activities b/f ( 4,152 ) ( 10,495 ) Investing activities Interest received 79 38 Proceeds from disposal of property, plant and equipment 63 1,516 Payment for acquisition of property, plant and equipment ( 1,169 ) ( 594 ) Proceeds from construction in progress - 2,320 Proceeds from disposal of other investments 3,159 - Net cash inflow from investing activities 2,132 3,280 Net cash outflow before financing activities ( 2,020 ) ( 7,215 ) Financing activities (*) Increase in long-term loans due to related companies 3,387 6,000 Decrease in long-term borrowings ( 171 ) - Net cash inflow from financing activities 3,216 6,000 Increase/(decrease) in cash and cash equivalents 1,196 ( 1,215 ) Cash and cash equivalents as at be ginning of the year 5,585 6,800 Cash and cash equivalents as at end of the year 6,781 5,585 (*) Cash flow from financing Long-term loans due Long-term to related companies borrowings RMB’000 RMB’000 Balance as at beginning of the year 951,063 532,975 Loan obtained during the year 3,387 - Change of exchange rate - ( 171 ) Balance as at end of the year 954,450 532,804 - 20 -