深华发Ａ(000020)ST华发Ｂ2004年年度报告摘要（英文版）

SHENZHEN HUAFA ELECTRONICS CO., LTD. SUMMARY OF ANNUAL REPORT 2004 (Overseas Version) §1. Important Notice 1.1 The Board of Directors of Shenzhen Huafa Electronics Co., Ltd. (hereinafter referred to as the Company) and its directors individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions nor errors which would render any statement misleading. The summary of annual report 2004 is abstracted from the annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 No director stated that they couldn’t ensure the correctness, accuracy and completeness of the contents of the Annual Report or have objection for this report. 1.3 All directors attended the Board meeting. 1.4 Shenzhen Nanfang Minhe Certified Public Accountants and Ho and Ho & Company Certified Public Accountants audited the 2004 financial report of the Company and issued the unq ualified Auditors’Report respectively. 1.5 Chairman of the Board of the Company Mr. Wu Dehua, General Manager Mr. Hu Jianping and Head of Financial Department Mr. Wang Yiqing hereby confirm that the Financial Report of the Annual Report 2004 is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock ST HUAFA-A, ST HUAFA-B Stock code 000020, 200020 Listed stock exchange Shenzhen Stock Exchange Registered address and office Registered address: 411 Bldg., Huafa North Road, Futian address District, Shenzhen Office address: 411 Bldg., Huafa North Road, Futian District, Shenzhen Postcode Postcode of registered address: 518031 Postcode of office address: 518031 Internet web site of the Company http://www.hwafa.com E-mail of the Company sz000020@163.net 2.2 Contact person and method Secretary of the Board of Representative in charge of Directors Securities Affairs Name Hu Jianping Liu Yang th Contact address 6 Floor, 411 Bldg., Huafa North Road, Futian District, Shenzhen Telephone (86) 755-83352207 Fax (86) 755-83323169 E-mail sz000020@163.net 1 §3. Summary of Accounting Data and Financial Indexes 3.1 Main Accounting Highlights Unit: RMB’000 Increase/decrease 2004 2003 over last year（％） Operating income 158,648 151,392 4.79% Gross profit 11,780 26,018 -54.72% Income from other operating 1,598 96 1,564.58% Net cash arising from operating 6,215 822 656.08% activities At the end of At the end of Increase/decrease 2004 2003 over last year (%) Total assets 429,708 476,381 -9.80% Shareholders’equity 232,237 276,579 -16.03% 3.2 Financial Indexes: Unit: RMB Increase/decrease 2004 2003 over last year (%) Loss per share -0.16 -0.03 -433.33% Return on equity -19.09% -2.80% -16.29% Net cash per share arising from operating 0.02 0.003 566.67% activities Increase/decrease At the end of 2004 At the end of 2003 over last year (%) Net assets per share 0.82 0.98 -16.33% 3.3 Difference of the CAS and IAS √Applicable □Inapplicable Unit: RMB’000 CAS IAS Net profit -44,342 -44,342 The Company is a listed company of both A-share and B-share. The Company’ s Explanation on net profit as calculated according to CAS and IAS and relevant system was no difference difference. §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital (Unit: share) Increase/decrease of this Before the change After the change time (+, - ) 2 Subtotal Ｉ． Unlisted shares 1. Promoters’shares 124,925,828 0 124,925,828 Including: State-owned shares 0 0 0 Domestic legal person’s shares 124,925,828 0 124,925,828 Foreign legal person’s shares 0 0 0 Other 0 0 0 2. Raised legal person’s shares 0 0 0 3. Inner employees’shares 0 0 0 4. Preference shares or others 0 0 0 Total unlisted circulating shares 124,925,828 0 124,925,828 II. Listed shares 1. RMB ordinary shares 56,239,563 0 56,239,563 2. Domestically listed foreign 101,995,836 0 101,995,836 shares 3. Foreign listed foreign shares 0 0 0 4. Others 0 0 0 Total listed circulating shares 158,235,399 0 158,235,399 ＩＩＩ. Total shares 283,161,227 0 283,161,227 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 Statement of shares held by the top ten circulating shareholders Total number of shareholders at the end of report year 28,089 Particulars about shares held by the top ten shareholders Number of Increase / Holding Type of shares share decrease in shares at Proportion Nature of Full name of Shareholders (Circulating/No pledged/ the report the year-end (%) shareholders n-circulating) frozen year (share) (share) (share) SHENZHEN SEG GROUP CO., LTD. 0 62,462,914 22.06% Non-circulating 62,462,914 Other CHINA ZHENHUA ELECTRONICS 0 62,462,914 22.06% Non-circulating Other INDUSTRIAL CO. SEG (HONG KONG) CO., LTD. 0 16,569,560 5.85% Circulating Other GOOD HOPE CORNET INVESTMENTS 0 13,900,000 4.91% Circulating Other LTD ADVANCE FUTURE GROUP LIMITED 0 3,674,410 1.30% Circulating Other YIN GANG 225,000 945,145 0.33% Circulating Other BINGHUA LIU 876,013 876,013 0.31% Circulating Other DBS VICKERS (HONG KONG) LTD A/C 100,000 648,262 0.23% Circulating Other CLIENTS 3 GUOTAI JUNAN SECURIES HONG 549,230 549,230 0.19% Circulating Other KONG LIMITED CHINA MERCHANTS SECURITIES 520,000 520,000 0.18% Circulating Other (HONG KONG) CO., LTD. Particulars about shares held by the top ten shareholders of circulation share Shareholders’name (full name) Number of circulation shares held Type (A-share, B-share, at the year-end H-share and other) SEG (HONG KONG) CO., LTD. 16,569,560 B-share GOOD HOPE CORNER INVESTMENTS LTD 13,900,000 B-share ADVANCE FUTURE GROUP LIMITED 3,674,410 B-share YIN GANG 945,145 B-share BINGHUA LIU 876,013 B-share DBS VICKERS (HONG KONG) LTD A/C CLIENTS 648,262 B-share GUOTAI JUNAN SECURIES HONG KONG 549,230 B-share LIMITED CHINA MERCHANTS SECURITIES (HONG 520,000 B-share KONG) CO., LTD. MA JIN HUI 503,507 B-share BOHAI SECURITIES CO., LTD. 486,099 A-share Explanation on associated relationship SEG (Hong Kong) Co., Ltd. is overseas wholly-owned subsidiary of Shenzhen among the top ten shareholders or SEG Group Co., Ltd.. The Company was unknown whether there exists associated consistent action relationship or belongs to consistent action person regulated by the Management Regulation of Information Disclosure on Change of Share Holding for Listed Companies among the other shareholders. 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 to especial situation for the controlling shareholder and other actual controller Name of the controlling shareholder: Shenzhen SEG Group Co., Ltd. Legal representative: Sun Yulin Date of foundation: Aug. 23, 1984 Registered capital: RMB 1,355.42 million Business scope: Production and research of electronic products, electrical home appliances and electronic projects; undertake various electronic system project (Import and export business and exclusive commodities were conducted according to regulations); raise development funds and invest credit; technology development and information service and maintenance; high- floor sightseeing, supporting food and drink, marketplace and exhibition of SEG Plaza. State-owned Assets Supervision and Administration Commission of Shenzhen Municipal People’s Government is the first largest shareholder of Shenzhen SEG Group Co., Ltd., who holds 46.52% equity of Shenzhen SEG Group Co., Ltd.. 4 4.3.3 Property right and controlling relationship between the actual controller of the Company and the Company is as follows: State-owned Assets Supervision and Administration Commission of Shenzhen Municipal People’ s Government 46.52% Shenzhen SEG Group Co., Ltd. 100% 22.06% SEG (Hong Kong) Co., Ltd. 5.85% Shenzhen Huafa Electronics Co., Ltd. §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Number of holding shares (share) Name Title Sex Age Office term At the At the year-begin year-end Wu Dehua Chairman of the Board Male 59 Sep. 2004-Sep. 2007 0 0 Feng Quanbao Vice Chairman of the Board Male 59 Sep. 2004-Sep. 2007 0 0 Zhang Director, General Manager Male 53 Sep. 2004-Mar. 2005 0 0 Yongcheng Che Wenshen Director Male 56 Sep. 2004-Sep. 2007 0 0 Zhou Daozhi Independent Director Male 56 Sep. 2004-Sep. 2007 0 0 Zhao Junrong Independent Director Male 41 Sep. 2004-Sep. 2007 0 0 He Xiaoming Independent Director Male 34 Sep. 2004-Sep. 2007 Chairman of the Supervisory Ye Daming Male 59 Sep. 2004-Sep. 2007 30,433 30,433 Committee Liu Jingju Supervisor Female 50 Sep. 2004-Sep. 2007 0 0 Li Liangzhen Supervisor Male 40 Sep. 2004-Sep. 2007 0 0 Deputy General Manager, Hu Jianping Chief Accountant, Secretary of Male 43 Sep. 2004-Mar. 2005 0 0 Board Cai Guiyong Deputy General Manager Male 57 Sep. 2004-Sep. 2007 35,545 35,545 Sun Lei Deputy General Manager Male 40 Sep. 2004-Sep. 2007 0 0 Note: Post balance sheet event On Mar. 5, 2005, Mr. Zhang Yongcheng submitted a written application to resign from the posts of Director and General Manager of the Company to the Board of Directors due to his health. On Mar. 18, 2005, the 1st provisional meeting of the Board of Directors for 2005 accepted Zhang Yongcheng’ s resignation application, and engaged 5 Mr. Hu Jianping as General Manager of the Company, and nominated Hu Jianping as Director Candidate of the 5th Board of Directors, which was submitted to the 2004 Shareholders’General Meeting for election. 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) China Zhenhua Electronics Wu Dehua Group Co. Ltd. Shenzhen General Manager Apr. 2001 to now Yes Electronics Co., Ltd. Feng Quanbao Shenzhen SEG Group Co., Ltd. Deputy General Manager Jun. 1992 to now Yes China Zhenhua Electronics Chief Accountant Aug. 2000 to now Che Wenshen Yes Group Co., Ltd. Liu Jingju Shenzhen SEG Group Co., Ltd. Deputy Secretary May 1997 to now Yes 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 1,799,700 Total annual payment of the top three directors RMB 399,700 drawing the highest payment Total annual payment of the top three senior RMB 873,300 executives drawing the highest payment Allowance of independent director per person/ RMB 36,000 per person/year year Other treatment of independent directors No Name of directors and supervisors receiving no Wu Dehua, Feng Quanbao, Che Wenshen and Liu Jingju payment or allowance from the Company Payment Number of persons Under RMB 50,000 3 RMB 200,000 ～ RMB 300,000 5 Over RMB 300,000 1 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period 1. This year, the big increase in the price of raw materials directly resulted in the sharp increase in production cost of circuit boards, core business of the Company. In the report period, the sales cost level of circuit boards increased 38.92% over the same period of the previous year; the gross profit ratio decreased nearly dozen percents; the profitability of the core business of the Company remarkably declined. 2. This year, the property lease business went steadily, but the lease income decreased a bit and the lease profit decreased, mainly because directly effected by SARS, the 6 operation of the majority renters went down, and this year to support partial renters the Company debated partial rent adequately. 3. In this year, according to the accounting principles, accounting system and relevant resolutions of the Board, the Company appropriated provision for inventory’ s depreciation amounting to RMB 13,596,200 caused by derogation, price- falling and other factors, and impairment losses for fixed assets amounting to RMB 265,700, and bad debts reserve for accounts receivable amounting to RMB 8,374,500. The loss on inventory disposal of the Company was RMB 2,642,900 at the end of the year. 6.2 Statement of main operations classified according to products Unit: RMB’0000 Main operations classified according to industries Increase/decrease Income from Increase/decrease Increase/decrease Classified Cost of main Gross in income from main in cost of main in gross profit according to operations profit main operations operations operations over ratio over the last products (RMB’0000) ratio (%) over the last year (RMB’0000) the last year (%) year (%) (%) Manufacture of electronic 12,924.59 12,778.30 1.13% 9.05% 17.16% -6.85% products Including: related 0.00 0.00 transaction Main operations classified according to products Circuit Board 9,809.96 9,735.59 0.76% 24.97% 38.92% -9.96% Color TV 1,697.35 1,914.78 -12.81% -39.95% -34.56% -9.31% Plastic injection 1,417.28 1,127.93 20.42% 20.58% 16.01% 3.14% hardware Including: related 0.00 0.00 transaction Pricing rules for related Naught transactions Necessity and durative of Naught related transactions Including: In the report period, the Company did not sell products or provide labor service to the controlling shareholder and its subsidiaries. 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Income from main Increase/decrease in income from main Area operations operations over the last year (%) 7 Domestic 11,163.07 13.33% Overseas 1,761.52 -9.07% The products sale of the Company’ s main operations is mainly in the South China. 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase Proportion in the total 3,080.45 38.47% of the top five suppliers amount of purchase Total amount of sales of Proportion in the total 8,220.59 63.60% the 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 than that in the last year √Applicable □Inapplicable In 2004, the big increase in the price of raw materials directly resulted in the sharp increase in production cost of circuit boards, thus, the profitability capability of the Company’ s core operations observably declined. 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year √Applicable □Inapplicable Net profit decreased by 473.31% year-on-year, which was mainly due to the drop of profit from main operations by a large margin, decrease of the profit from properties lease and the reserve for assets appropriated. Analysis to reasons of material changes in the whole financial position than that in the last year □Applicable √Inapplicable 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment, macro-policies and regulations on the Company’ s financial position and operating results □Applicable √Inapplicable 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds □Applicable √Inapplicable 8 Particulars about the changed projects □Applicable √Inapplicable 6.13 Application of the proceeds not 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 6.15 Business plan as of the next year of the Board of Directors √Applicable □Inapplicable In 2005, the Company turned losses into profits with all efforts: 1. To promote production technology of circuit board and improve product qualities; 2. To solidify and keep enlarging output of plastic injection hardware; 3. To stop production and operation of TV sets; 4. To keep stabilizing property leasing business; 5. To strengthen operating management of the Company and implement all-around budget management. Profit estimation of the new report year □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors √Applicable □Inapplicable In 2004, the Company suffered losses and didn’t distribute profit and convert capital public reserve into share capital for 2004. The Company did not appropriate share distribution preplan though the Company achieved the profit in the report period □Applicable √Inapplicable §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable 7.3 Important guarantee □Applicable √Inapplicable 7.4 Significant related transactions 7.4.1 Related purchase and sale □Applicable √Inapplicable 7.4.2 Current related credits and liabilities □Applicable √Inapplicable 9 7.5 Entrusted assets □Applicable √Inapplicable 7.6 Implementation of commitment items □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 of Presence Entrusted Absence Notes Independent attending the in person presence (Times) Directors Board meeting (times) Zhou Daozhi 6 5 1 0 Zhao Junrong 6 6 0 0 He Xiaoming 4 4 0 0 Particulars about the independent directors proposed different opinions about the relevant matters of the Company □Applicable √Inapplicable Other relevant information According to relevant regulations of Company Law, Administration Rules for Listed Company, Articles of Association of the Company and Independent Director System, Independent Director, Mr. Zhou Daozhi, Mr. Zhao Junrong and Mr. He Xiaoming performed their duties in a patient and responsible, prudential and diligent way, attended every meeting of the Board on time and expressed professional opinion on the proposals of the meetings; examined the financial statement of the Company each month and mastered the operation situation and financial status of the Company in time; expressed the independent opinion on change of directors, supervisors and senior executives, related transaction, external guarantee and other events, and played a positive functions in scientific decision- making of the Board and the standardization administration of the Company. §8. Report of the Supervisory Committee The Supervisory Committee believed, the Company operated by law, and financial situation, usage of raised proceeds, purchase and sale of assets transactions, and related transactions of the Company didn’t exist problems. §9. Financial Report 9.1 Auditors’opinion Auditors’opinion: standard unqualified auditor’s opinion 9.2 Financial statements Consolidated balance sheet As at 31st December 2004 (Amount expressed in thousands of RMB) 2004 2003 10 RMB’000 RMB’000 Assets Non-current assets Property, plant and equipment 273,095 290,183 Construction in progress 2,102 469 Other investments - - Total non-current assets 275,197 290,652 Current assets Inventories 38,188 45,192 Bill receivables 3,010 4,042 Trade receivables 60,574 63,870 Prepaid expenses and other current assets 17,337 25,355 Cash and cash equivalents 35,402 47,270 Total current assets 154,511 185,729 Total assets 429,708 476,381 Equity and liabilities Capital and reserves Share capital 283,161 283,161 Share premium 98,461 98,461 Property revaluation reserve 3,033 3,033 Surplus reserves 77,391 77,391 Accumulated losses (229,809) (185,467) 232,237 276,579 Current liabilities Trade payables 46,517 42,720 Accrued expenses and other current liabilities 25,954 23,082 Bank loans –repayable within one year 125,000 134,000 Total current liabilities 197,471 199,802 Total equity and liabilities 429,708 476,381 Consolidated income statement For the year ended 31st December 2004 (Amount expressed in thousands of Renminbi (“RMB”)) 2004 2003 RMB’000 RMB’000 Revenue 158,648 151,392 Cost of sales (146,868) (125,374) Gross profit 11,780 26,018 Other operating income 1,598 96 Selling expenses (3,871) (3,335) Administrative expenses (43,936) (23,001) Other operating expenses (2,707) (750) 11 Loss from operations (37,136) (972) Finance costs, net (7,206) (6,762) Loss before taxation (44,342) (7,734) Income taxation - - Loss attributable to shareholders (44,342) (7,734) Loss per share –basic (RMB0.1566) (RMB0.0273) Consolidated cash flow statement For the year ended 31st December 2004 (Amount expressed in thousands of RMB) 2004 2003 RMB’000 RMB’000 Operating activities Loss before taxation (44,342) (7,734) Adjustments for: Bank interest income (323) (293) Bank interest expenses 7,261 7,131 Depreciation on property, plant and equipment 24,003 22,702 Impairment loss on property, plant and equipment 266 - Loss (gain) on disposal of property, plant and equipment 488 (10) Construction in progress written off 104 19 Provision for doubtful receivables 8,375 584 Provision for obsolesce inventories 13,596 3,666 Operating cash flow before movements in working capital 9,428 26,065 Increase in inventories (6,592) (3,719) Decrease (increase) in trade and other receivables 3,970 (19,164) Increase in trade and other payables 6,670 4,771 Cash from operations 13,476 7,953 Bank interest paid (7,261) (7,131) Net cash from operating activities 6,215 822 Investing activities Interest received 323 293 Acquisitions of property, plant and equipment (5,593) (2,985) Increase in construction in progress (4,090) (6,779) Proceeds from disposal of property, plant and equipment 277 45 Net cash used in investing activities (9,083) (9,426) Financing activities New bank loans granted 130,000 172,000 Repayment of bank loans (139,000) (162,000) Net cash (used in) from financing activities (9,000) 10,000 12 (Decrease) increase in cash and cash equivalents (11,868) 1,396 Cash and cash equivalents at beginning of year 47,270 45,874 Cash and cash equivalents at end of year, analysis as: Cash and bank balances 35,402 47,270 9.3 Explanation on changes of accounting policy, accounting estimation and settlement compared with the latest annual report □Applicable √Inapplicable 9.4 Contents, correct amount, reason and its influence of significant accounting errors □Applicable √Inapplicable 9.5 Explanation on change of consolidated scope compared with the latest annual report □Applicable √Inapplicable Board of Directors of Shenzhen Huafa Electronics Co., Ltd. Apr. 28, 2005 13