佛山照明(000541)粤照明Ｂ2005年年度报告摘要（英文）

Abbr. of shares: Foshan Electrical & Lighting (A Share) Yue Electrical & Lighting (B Share) Code of shares: 000541 (A Share) 200541 (B Share) Announcement No.: 2006-002 Summary of Annual Report of 2005 of Foshan Electrical & Lighting Company Limited §1. Important Hints 1.1 The Board of Directors, the Board of Supervisors of FSL and all its directors, supervisors and senior managers guarantee that there is no false account, misleading statement or significant omission existing in the information contained in this report, and that they shall bear the individual and joint liabilities for the truthfulness, accuracy and completeness of its content. To get the details, the investors shall read the full text of the annual report. The accounting data and financial report in this report have been audited by KPMG Peat Marwick in Hong Kong, and respectively made in Chinese and English. In case of any misunderstanding between the two versions, the Chinese text shall be prevailing. 1.2 All directors, supervisors and senior management personnel have made the guarantee for the truthfulness, accuracy and completeness of the content of this annual report, and raised no objection concerned. 1.3 Mr. Liang Weidong, the director of the company is unable to attend the board meeting on the business trip, and has authorized Mr. Zhong Xincai, the Chairman of the Board of Directors, to vote on his behalf. 1.4 Zhengzhong Zhujiang Certified Public Accountants, Guangdong and KPMG Certified Public Accountants in HK have issued the standard audit report without any reservation. 1.5 Mr. Zhong Xincai, the General Manager and the financial chief of the company and Ms. Wang Shuqiong, the Manager of the Financial Department declare to guarantee the truthfulness and completeness of the financial report in this annual report. 1 §2.General condition of the listed company 2.1 General condition Abbr. of shares Foshan Electrical & Lighting (A share) Yue Electrical & Lighting (B share) Code of shares 000541 (A share) 200541 (B share) Listing place Shenzhen Stock Exchange Registered and office address 15# Fenjiang North Road, Foshan, Guangdong Postal code 528000 Internet www.chinafsl.com E-mail gzfsligh@pub.foshan.gd.cn 2.2 Contact person and pattern. Secretary of Board of Directors Security Representative Name Lin Yihui Contact address #15 Fenjiang North Road, Foshan Tel (0757) 82966098,82810239 Fax (0757) 82816276 E-mail gzfsligh@pub.foshan.gd.cn 2 §3. Summary of Accounting data and business data 3.1 Main accounting data Unit: CNY 2005 (this year) 2004 (last year) Change with 2003 last year (%) Main business income 1,213,810,498 1,219,922,140 -0.50% 1,016,750,204 Total profits 259,507,052 290,379,761 -10.63% 279,547,095 Net profit 213,939,222 228,925,136 -6.55% 234,560,108 Net profit after deducting the nonrecurring gains and loss End of 2005 End of 2004 Change with 2003 (this year) (last year) last year (%) Total assets 2,574,971,613 2,541,097,893 1.13% 2,431,572,874 Shareholder equity (excluding the shareholder 2,313,771,048 2,271,886,990 1.84% 2,207,848,053 equity of minority shareholders) 3.2 Main financial targets. Unit: CNY 2005 2004 Change with 2003 last year (%) Proceeds per share 0.60 0.64 -6.25% 0.65 Return rate of net assets (%) 9.25 10.08 -8.23% 10.62 Net cash flow per share from business activities 0.74 0.65 13.85% 0.66 End of 2005 End of 2004 Change with 2003 last year (%) Net assets per share 6.45 6.34 1.74% 6.16 Net assets per share after adjustment 6.45 6.34 1.74% 6.12 3 3.3 Difference on domestic and foreign accounting standards. 9 Applicable □Inapplicable Unit: CNY Domestic accounting standard Foreign accounting standard Net profit 219,583,402.87 213,939,222.00 Notes for Net profits difference (Consolidated) As reported pursuant to IFRS 213,939,222 1. Transfer the amount of deferred tax into the current profit and loss as per the law for tax payable. -2,191,215 2. Investment held for sales adjusted from fair value to the cost and market price (which is lower) 9,069,778 3. Income from subsidy -1,000,000 4. Insolvent debt -234,382 As reported pursuant to the “Accounting System for Enterprises” of the PRC 219,583,403 §4. Change of Capital Stock and Shareholders 4.1 Change of capital stock Unit: share Item Before change Change (+, －) After change Numbers Ratio Subtotal Numbers Ratio I. Uncirculating shares 128,912,850 35.96% -- 128,912,850 35.96% 1. Founder’s share 88,397,100 24.66% -- 88,397,100 24.66% Including: National share 85,922,100 23.97% -- 85,922,100 23.97% Domestic corporate share 2,475,000 0.69% -- 2,475,000 0.69% Foreign corporate share -- -- -- -- -- Others -- -- -- 2. Raised corporate share 40,515,750 11.30% -- 40,515,750 11.30% 3. Internal staff share -- -- -- -- -- 4. Preferred share or others -- -- -- -- -- II. Circulating shares listed 229,535,409 64.04% -- 229,535,409 64.04% 1. Ordinary shares in CNY 147,035,409 41.02% -- 147,035,409 41.02% 2. Foreign share listed at home 82,500,000 23.02% -- 82,500,000 23.02% 3. Foreign share listed abroad -- -- -- -- -- 4. Others -- -- -- -- -- III. Total shares 358,448,259 100% -- 358,448,259 100% 4 4.2 Shares held by top ten shareholders and Circulating shares held by top ten shareholders Total number of shareholders at the end of report 45080 period Shares held by top ten shareholders Names of shareholders Nature of Holding Total Uncirculated Shares shareholder ratio (%) shares held shares held pledged or frozen State-owned Assets Supversivion & Management Committee of Foshan State-owned 85,922,100 None 23.97% 85,922,100 City SYWG BNP PARIBAS Shengli Choice Securities Investment Funds Others 2.47% 8,870,700 None Unknown Desheng Small Choice Securities Investment Funds of Guotai Junan Others None Unknown 2.31% 8,287,784 Allianz Fund Management Co 102 Combination of National Social Insurance Funds Others 2.08% 7,472,582 None Unknown Youchang Lighting Equipment Trading Co., Ltd. ,Guangzhou Others 1.95% 7,002,641 7,002,641 Unknown Fortis Haitong Income Growth Securities Investment Funds Others 1.67% 6,000,000 None Unknown 108 Combination of National Social Insurance Funds Others 1.62% 5,813,134 None Unknown Yuyuan Securities Investment Funds Others 1.20% 4,290,000 None Unknown HTHK-VALUE PARTNERS INTELLIGENT FD-CHIAN B SHS FD Foreign 1.08% 3,882,449 None Unknown EAST ASIA SECURITIES COMPANY LIMITED Foreign 0.97% 2,489,773 None Unknown Circulating shares held by top 10 shareholders Names of shareholders Circulating shares held (share) Type SYWG BNP PARIBAS Shengli Choice Securities Investment Funds 8,870,700 Common stock in CNY Desheng Small Choice Securities Investment Funds of Guotai Junan 8,287,784 Common stock in CNY Allianz Fund Management Co 102 Combination of National Social Insurance Funds 7,472,582 Common stock in CNY Fortis Haitong Income Growth Securities Investment Funds 6,000,000 Common stock in CNY 108 Combination of National Social Insurance Funds 5,813,134 Common stock in CNY Yuyuan Securities Investment Funds 4,290,000 Common stock in CNY HTHK-VALUE PARTNERS INTELLIGENT FD-CHINA B SHS FD 3,882,449 Foreign stock listed at home EAST ASIA SECURITIES COMPANY LIMITED 3,489,773 Foreign stock listed at home VALUE PARTNERS CLASSIC FUND 3,090,854 Foreign stock listed at home HTHK-EK HONG KONG AND CHAINA FUND 2,999,935 Foreign stock listed at home 5 Note on relationship or concerted Among the top ten shareholders of the company, the State-owned Assets Supervision & Management Committee of action of the top ten shareholder Foshan City, the shareholder for state-owned shares has neither relationship with Youchang Lighting Equipment Trading Co., Ltd., Guangzhou, nor relationship with any other shareholder, nor the shareholder of concerted action set forth in the “Regulatory Method for Disclosure of Information on Change of the Shares of the Listed Company”. The 108 combination of national social insurance funds, Yuyuan securities investment funds and 102 combination of national social insurance funds are all controlled by Boshi Funds Management Company. It is unclear whether there is any relationship between other shareholders, or if there is any shareholder of concerted action set forth in the “Regulatory Method for Disclosure of Information on Change of the Shares of the Listed Company”. 4.3. Brief of controlling shareholder and actual controller 4.3.1 Change of controlling shareholder and actual controller □Applicable 9Inapplicable 4.3.2 Details of controlling shareholder and other actual controller The first major shareholder of the company: the State-owned Assets Supervision & Management Committee of Foshan City. The State-owned Assets Supervision & Management Committee of Foshan City, as a governmental authority, carries out no business operation. FSL have the right to independent and complete operation in personnel, assets, business, finance and organizational structure separated from the first shareholder. 4.3.3 Block diagram on property right and controlling relationship between the company and the actual controller State-Owned Assets Supervision & Management Committee of the People’s Government of Foshan City ↓ 23.97% FSL 6 §5. Directors, supervisors and senior management personnel 5.1 Change of shares held by directors, supervisors and senior management personnel, and their remunerations Name Post Sex Age Term of offices Shares held (numbers) Reason of Total remuneration Remuneration Year start Year end change received from this received from company in this shareholder report period (CNY or affiliated 10,000) unit Zhong Xincai Chairman of the Board of M 63 Jun. 2004 – Jun., 2007 Purchased by 41 No 184,250 242,650 Directors incentive funds Alfred K. N. Chong Vice Chairman of the Board M 54 Jun. 2004 – Jun., 2007 2,415,500 2,415,500 Yes of Directors （B share） （B share） Liu Xingming Managing director, General M 44 Jun. 2004 – Jun., 2007 Purchased by 22 No 74,800 104,300 Manager incentive funds Liang Weidong Director M 44 Jun. 2004 – Jun., 2007 — — — No Chen Guanbiao Director M 57 Jun. 2004 – Jun., 2007 — — — Yes Ye Zaiyou Director M 50 Jun. 2004 – Jun., 2007 — — — Yes Liang Zhen Independent Director M 68 Jun. 2004 – Jun., 2007 — — — No Wu Jianhong Independent Director F 60 Jun. 2004 – Jun., 2007 — — — No Chen Ziyun Independent Director F 42 Jun. 2004 – Jun., 2007 — — — No Huang Guanxiong Chairman of the Board of M 55 Jun. 2004 – Jun., 2007 Purchased by 13 No Supervisors 23,400 38,600 incentive funds Chairman of the Labor Union Mei Feixing Supervisor M 35 Jun. 2004 – Jun., 2007 Purchased by 11.7 No 12,300 18,600 incentive funds Li Jianwu Supervisor M 35 Jun. 2004 – Jun., 2007 Purchased by 8.7 No 14,400 20,700 incentive funds Zhang Chaoyang Supervisor M 41 Jun. 2004 – Jun., 2007 — — — No Shen Weiqiang Supervisor M 55 Jun. 2004 – Jun., 2007 — — — Yes Ou Muben Vice General Manager M 57 Jun. 2004 – Jun., 2007 Purchased by 20 No 70,800 90,800 incentive funds Guo Jieming Vice General Manager M 57 Jun. 2004 – Jun., 2007 Purchased by 20 No 37,936 58,636 incentive funds Liang Weiqiang GM assistant M 48 Jun. 2004 – Jun., 2007 Purchased by 15 No 32,300 49,800 incentive funds Lin Yihui Secretary of the Board of M 52 Jun. 2004 – Jun., 2007 Purchased by 13 No 23,100 38,200 Directors incentive funds Wang Shuqiong Financial manager F 44 Jun. 2004 – Jun., 2007 Purchased by 12.2 No 25,760 43,360 incentive funds Total 2,914,546 3,121,146 176.6 7 §6. Report of the Board of Directors 6.1 Discussion and analysis for overall business operation during the report period. (I) Production and business operation 1. Look back on the business operation of the company during the report period (1) Overall business operation during the report period Facing the increasingly violent competition on the electro-optical markets both at home and abroad, as well as the rise in price of various raw materials, the Board of Direcotrs of FSL focused on the long-term development of the enterprise and the interests of all shareholders, gave full play to its advantages, and carried out a series of powerful measures including the strengthened management, expanded production scale, reformed marketing concept and perfected layout of the industrial base to guarantee the constant fast development of the production and business operation of the company, to further improve its market competitive force, and to achieve the considerable economic benefits. In 2005, the company has made 977 million bulbs in total, increasing by 1.0% than that of last year. The main business income has reached RMB 1214 million, basically same with that of last year, and the sales from export has been USD 48 million. Moreover, the company has realized the total profits of RMB 267 million, 8.08% less than that of last year, the net profits of RMB 220 million, dropping by 5.14%, and the income per share after tax of RMB 0.61. The drop of profits during the report period is largely due to the rise in price of raw materials and fuels and the revaluation of CNY. (2) Existing advantages and difficulties, and the stable profit-earning ability a. Advantages As the leading enterprise in the domestic electro-optical industry, FSL has the outstanding comprehensive advantages especially in funds, personnel, management and technology, as well as the strong key competitive force. By enlarging its investment on the production base in 2005, the company has not only improved its production ability, but also created the conditions for its strategic target of redoubling its production and sales within five years. b. Difficulties Because of the influence to the export in the electro-optical industry by the international environmental restrictions and the revaluation of CNY, the disorderly competition on the domestic market has become more and more violent, thus lowering the profit rate of the electro-optical products. The rise in price of raw materials and fuels and the increase of labor costs have also brought pressure to the main business costs of the enterprise. 8 c. Despite of the above pressures, the electro-optical industry, as the everyday consumables, is still of huge potentiality in its development based on the progress of economic society in China, the improvement of people’s living standard and the support of the national policies. Therefore, there will be the broad space and stability for the business and profit-earning ability of the enterprise in the future. (3) Main suppliers and clients: The purchase amount of the company from the top five suppliers is RMB 133 million, making up 21.81% of the total purchase amount, and the sales amount to the top five clients is RMB 164 million, making up 13.96% of the total sales. (4) There is no significant change on the assets composition of the company during the report period compared with that of last year. (5) There is no significant change on the main financial data of the company during the report period compared with that of last year. (6) There is no significant change on the cash flow composition of the company during the report period compared with that of last year, nor significant difference of net profits during the report period. (7) Business operation and results of main holding and equity-participating enterprises Business operation and results of main holding and equity-participating enterprises: QL Lamps and Components Limited, Foshan is a Sino-foreign joint venture held by FSL, in which FSL holds 40% of its shares. The joint venture, with the registered capital of USD 1.8 million, mainly produces special optical sources such as bromine-tungsten lamps and lighting accessories. FSL Modern Lighting Co., Ltd. was established in the last half of 2004 with the registered capital of RMB 5 million, including RMB 4.5 million invested by FSL, making up 90% of the total capital stock. It mainly produces and sells lighting products and accessories. Chansheng Electronic Ballasts Co., Ltd., Foshan, a Sino-foreign joint venture established in 2003 with the registered capital of RMB 1 million, including 75% of capital stock from FSL, mainly produces and sells electronic ballasts and electronic transformers. Foshan QL Electrical (Gaoming) Co., Ltd. is a Sino-foreign joint venture founded in Oct., 2005 with the registered capital of RMB 60 million, including 70% contributed by FSL, which mainly produces and sells electro-optical products, lamps and related spare parts. All these four enterprises are under normal production, standard operation and with fine results. 9 Besides, the company has also made investments in China Everbright Bank, Bank of Communications, Fochen Highway in Foshan, Liangke Investment Co., Ltd., Shenzhen and Zhujiang Property Management Company in Guangzhou with minority shares. All these enterprises are of standard management, fast business development and fine benefits, and have given the considerable investment return to the company based on their actual operations. 2. Prospect for the future (1) Possible influence by the industrial development trend and the coming market competition pattern. a. The increasingly violent competition in the domestic electro-optical industry nowadays has increased the business expenses of the electro-optical enterprises to a great extent, and thus gradually lowered the average industrial profit rate. However, it is still of huge potentiality in its development based on the progress of economic society in China, the improvement of people’s living standard and the support of the national policies. Therefore, there will be the broad space and stability for the business and profit-earning ability of the enterprise in the future. Therefore, FSL will make use of leading position in this industry and its brand superiority as the “Lamp King in China”, integrate its industrial resources, expand the main industry, carry out the large-scale production, strengthen the internal management, reduce the costs and improve its profit-earning ability. b. Seizing the golden opportunity when the environmental restriction on the export market and the revaluation of CNY are pounding at the small and medium-size enterprises, FSL will give full play to its superiorities as a large enterprise of great advantages, take an active part in the competition on the international market, establish the well-known national brand, attempt to expand its shares on the export market without loosing the existing foundation, and propel the enterprise forward to a broader development space. (2) Work scheme of 2006 The company will keep on the fast development in 2006, realize its strategic target steadily by strengthening its internal management, rationalizing its strategic layout and fully improving its key competitive force, and further expand its export sales while solidifying its leading position in the domestic elector-optical industry. The work program of the company in 2006: a. Greatly promote the precision management, solidify the management foundation, continuously improve the management level of the enterprise, and promote its overall operating efficiency. b. Construct the production base in Gaoming, implement its strategic balance, expand the production capacity, speed up the market response and enlarge the market occupation of its products. 10 c. Maintain the large-scale production of the enterprise and give it full play, integrate the internal resources of the enterprise, focus on the sharing of resources, reduce the operating costs and improve its profit-earning ability. d. Further regulate the product structure, greatly develop and make the product of high added value, and improve the profit-earning ability of such products. e. Establish the brand superiority, strengthen the brand construction, enlarge its influence and recognition, and promote the fast and health development of the company. f. Continuously tap the market potentialities, and open up the sales space. g. Continue to perfect the corporate administrative structure, standardize the operation, constantly improve the management level, and give the reliable guarantee for the interests of the masses of investors and other interested parties. (3) Risks with disadvantageous influences on the future development strategy and business target of the company, and the corresponding measures: We assumed that there would be neither significant change on the state laws and regulations and the relevant industrial policies, nor significant change on the macro environment for the steady development of the national economy, or major change on the electro-optical industrial market environment, nor force majeure event or unforeseeable factor that may adversely and significantly affect the business result of the company and cause the serious losses when making the future prospect and new-year business plan of the company. The main risks confronted by the company in the future shall include: a. Market risk The increasingly violent competition on the domestic electro-optical industry certainly will force up the business expenses of such enterprises and lower their average profit rate. For this reason, the company will further strengthen its internal management, reduce the costs, expand the major industry and carry out the large-scale production, and try its best to open up the Level-II and Level-III markets, so as to relieve the enterprise from the risk, and expand the space for its existence and development. b. Investment risk As the company will keep on a considerably fast development in 2006, it is important to increase more capital investment. Therefore, the company will further control the decision -making process for investment, set up the alarm system for risks, carry out the advance investigation, in-process supervision and post evaluation, relieve the enterprise from the investment risk, and guarantee the legal rights and interests of the shareholders. 11 c. Product quality risk The company uses the leading technologies and equipment both from home and abroad, and possesses the matured technology and proper process. It always pays major attention to the product quality, and executes the quality standard complying with or even superior to the national or international standards. However, as the low-price consumption goods, the electro –optical products are controlled under the strict environmental requirements. Thus, the company will persist in the strict quality management, perfect its quality control system to guarantee its compliance, and maintain the high prestige of the company on the market. 6.2 Industries and products of main business operation. Product Main business income Main business cost Gross profit Change of main Change of main Change of gross rate (%) business income business cost with profit rate with with last year (%) last year (%) last year (%) Electro-optical product 1213810497.83 855762365.96 29.50 -0.50 3.11 7.70 Including: joint transaction 66,466,969.09 46859213.21 29.50 37.15 42.07 7.70 6.3 Distribution of main business. Region Main business income ± of main business compared with last year (%) Domestic 817,299,749.45 4.76 Foreign 396,210,748.38 -9.84 6.4 Use of funds raised. 9 Applicable □Inapplicable 12 Total funds raised 66,691 Total funds raised and used this year 3,247 Accumulative total funds already used 66,691 Committed project Planned Project Actual Proceeds Planned schedule/estimated investment changed/no investment proceeds met/not t T8 19,500 N 22,618 6,946 Y T5 19,200 N 14,544 676 Y Double loop 2,940 N 2,700 — Y Test center 2,962 N 3,314 — Y Three kilns 2,920 N 3,332 — Y Tube-pulling production line 2,944 N 2,345 — Y Filament and lead 2,950 N 4,806 — Y Power facilities 2,900 N 2880 — Y Environment & fire fight facilities 2,800 N 2,863 — Y Current funds 7,575 N 7,289 — Y Total 66,691 ---- 66,691 7,622 Reason for failing to meet the planning schedule and proceeds (item by item) Change of project. □Applicable 9Inapplicable 6.5 Project by funds not raised. 9 Applicable □Inapplicable Name of project Amount of project Progress of project Proceeds of project Golden halogen lamps 585 Under construction Ordinary bulbs 2,913 Under construction Miniature automotive lamps 71 Under construction Fluorescent lamps 5,214 Under construction Auxiliary facilities and gas stations 3,520 Under construction Luminaire and spare parts 758 Under construction Energy-saving lamps 59 Under construction Total 13,120 13 6.6 Notes of the Board of Directors to the “Non-standard Opinion” of the certified public accountants’ office. □Applicable 9 Inapplicable 6.7 Draft plan for profit distribution and share transfer from capital surplus of the Board of Directors of this period 9 Applicable □Inapplicable The net profit of FSL audited by KPMG Peat Marwick in Hong Kong (which is lower than that audited by Zhengzhong Zhujiang Certified Public Accountants, Guangdong) in 2005 is taken as the standard. The minimum net profit realized by the company in 2005 is RMB 213,939,222.00, and the profits available for distribution to shareholders this year after deducting 10% of public welfare funds and 5% of arbitrary earned surplus is RMB 265,377,521.29 (including RMB 78,731,628.85 as the undistributed profits of last year) Based on 358,448,259 shares of capital stock at the end of 2005, the Board of Directors of the company will distribute RMB 4.90 (including the tax. Dividends for B share shall be paid after being converted into HK dollar) as the cash dividend for every 10 shares to all shareholders of A and B shares. The total dividend actually paid is RMB 175,639,646.91, and the remaining RMB 89,737,874.38 will be carried forward to the next year for distribution. There is no increase of capital stock by surplus in 2005. The cash dividend paid to shareholders of B share shall be converted into HK dollars by the middle rate between RMB and HKD declared by the Bank of China on the first business day after the resolution of the Shareholders’ General Meeting. The above draft distribution plan shall be implemented so long as it is examined and passed in the Shareholders’ General Meeting. During this report period, the company has earned the profits but has no draft distribution plan for cash profits. □Applicable 9 Inapplicable §7. Significant events. 7.1 Purchase of assets. □Applicable 9 Inapplicable 14 7.2 Sales of assets. □Applicable 9 Inapplicable 7.3 Significant security □Applicable 9 Inapplicable 7.4 Significant joint transaction. 7.4.1 Joint transactions related to daily operations 9 Applicable □Inapplicable Related party Sell products and provide labor to related party Purchase products & get labor from related party Transaction amount % of amount in same Transaction amount % of amount in transaction same transaction Prosperity Lamps 29,874,637.26 2.46% 15,075,605.03 2.48% Hangzhou Prosperity 1,923,551.33 0.16% -- -- Hangzhou Times 680.00 0.02% Prosperity Electrical 3,119,398.23 0.26% 437,037.94 0.07% Nanjing Prosperity 217,954.72 0.02% 2,053,141.03 0.58% Osram 31,330,747.55 2.58% -- -- Prosperity Xinxiang -- -- 116,300.00 0.09% Prosperity Foshan -- -- 220,000.00 0.17% Total 66,466,969.09 5.49% 17,902,084.00 3.39% • The company has paid RMB 1,468,222.33 to Prosperity Lamps as the service charge for the importation of equipment, making up 3% of the price of such equipment. • The above transactions are all priced based on the market price, which is fair and just. • The joint transactions are necessary for the normal business operation of the company, which is benefit to the long-term development of the company. • No joint transaction would adversely affect the independence of the company. 15 7.4.2 Joint creditor’s rights and liabilities 9 Applicable □Inapplicable Related party Funds provided to related party Funds from related party to listed company Incurrence of amount Balance Incurrence of amount Balance Prosperity Xinxiang 12,500,000.00 0 -- -- Hangzhou 10,000,000.00 0 -- -- Prosperity For the need of business development, Prosperity Xinxiang and Hangzhou Prosperity have made loans from Chanchang whose 40% of shares are held by FSL during the report period. All funds and interests accrued have been repaid in full. Including: RMB 0.00 as the incurrence of amount provided by the listed company to its big shareholders and subsidiaries, and RMB 0.00 as the balance. Use of funds and pay-off scheme □Applicable 9 Inapplicable Whether the pay-off scheme can guarantee to solve the problem on use of funds thoroughly before the end of 2006 □Yes □No 9 Inapplicable 7.5 Trust of assets □Applicable 9 Inapplicable 7.6 Performance of committed events. 7.6.1 Commitment on share transformation 1. Content of committed event; 2. Performance of committed event; 3. Default of committed event □Applicable 9 Inapplicable 7.6.2 Other commitment □Applicable 9 Inapplicable 7.7 Significant suit or arbitration. □Applicable 9 Inapplicable 16 §8. Report of the Board of Supervisors 9 Applicable □Inapplicable The Board of Supervisors thinks that the company has carried out the production and business operation strictly in accordance with the relevant laws and regulations, and that there is no problem on the financial situation, the use of funds, the purchase and sales transactions and the joint transactions of the company. §9. Financial Report 9.1 Audit opinion By auditing the financial report of 2005 of the company, Zhengzhong Zhujiang Certified Public Accountants, Guangdong and KPMG Certified Public Accountants in HK have issued the standard audit report without any reservation signed by their certified public accountants. 9.2 Balance sheet, income statement and cash flow statement (attached) of the company. 9.3 No change on the accounting policy, accounting estimation and auditing method compared with the last annual report. 9.4. Compared with the last annual report, Foshan QL Electrical (Gaoming) Co., Ltd. has been included in the consolidation scope as the subsidiary. Foshan Electrical and Lighting Co. Ltd. Board of Directors Mar. 23, 2006 17 Consolidated statement of income for the year ended 31 December 2005 (Expressed in Renminbi Yuan) Note 2005 2004 Rmb Rmb Revenue 2 1,213,810,498 1,219,922,140 Cost of sales (856,341,553) (830,229,143) Gross profit 357,468,945 389,692,997 Other operating income 4 10,152,352 9,776,840 Distribution expenses (40,520,915) (44,827,482) Administrative expenses (70,535,759) (64,977,399) Other operating expenses 5 (1,343,273) (7,807,142) Operating profit before financing costs 255,221,350 281,857,814 Financial income 7 15,310,663 14,982,067 Financial expenses 8 (11,024,961) (6,078,110) Net financing costs 4,285,702 8,903,957 Share of loss of an associate - (382,010) Profit before tax 259,507,052 290,379,761 Income tax expense 9(a) (44,341,981) (60,560,601) Profit for the year 215,165,071 229,819,160 =========== =========== Attributable to: Equity shareholders of the company 20 213,939,222 228,925,136 Minority interest 1,225,849 894,024 Profit for the year 215,165,071 229,819,160 =========== =========== Basic earnings per share 24 0.60 0.64 =========== =========== The notes on pages 8 to 36 form part of these consolidated financial statements. 18 Consolidated balance sheet at 31 December 2005 (Expressed in Renminbi Yuan) Note 2005 2004 Rmb Rmb Assets Property, plant and equipment 10 672,839,154 663,275,937 Lease prepayments 11 178,758,716 166,722,508 Construction in progress 12 138,918,777 118,662,455 Investments 13 138,449,248 114,313,326 Deferred tax assets 14 10,835,320 8,644,105 Total non-current assets 1,139,801,215 1,071,618,331 ------------------- ------------------- Investments 13 27,785,300 117,217,865 Inventories 15 198,537,535 162,368,390 Trade receivables 16 252,284,621 227,104,336 Deposits, prepayments and other receivables 17 28,462,279 59,582,402 Cash and cash equivalents 18 928,100,663 903,206,569 Total current assets 1,435,170,398 1,469,479,562 ------------------- ------------------- Total assets 2,574,971,613 2,541,097,893 =========== =========== The notes on pages 8 to 36 form part of these consolidated financial statements. 19 Consolidated balance sheet at 31 December 2005 (continued) (Expressed in Renminbi Yuan) Note 2005 2004 Rmb Rmb Equity Share capital 19 358,448,259 358,448,259 Share premium 1,186,000,059 1,186,000,059 Other reserves 20 769,322,730 727,438,672 Total equity attributable to equity shareholders of the company 2,313,771,048 2,271,886,990 Minority interest 25,682,953 6,830,075 Total equity 2,339,454,001 2,278,717,065 ------------------- ------------------- Liabilities Trade payables 86,375,850 107,977,494 Taxation 9(c) 10,480,433 18,511,550 Accruals and other payables 21 92,306,180 78,844,550 Salaries, bonus and staff welfare payables 46,355,149 57,047,234 Total current liabilities 235,517,612 262,380,828 ------------------- ------------------- Total equity and liabilities 2,574,971,613 2,541,097,893 =========== =========== Approved and authorised for issue by the board of directors on 21 March 2006. ) ) ) Directors ) ) The notes on pages 8 to 36 form part of these consolidated financial statements. Consolidated statement of cash flows 20 for the year ended 31 December 2005 (Expressed in Renminbi Yuan) Note 2005 2004 Rmb Rmb Operating activities Profit before tax 259,507,052 290,379,761 Adjustments for: - Depreciation and amortisation 119,373,610 116,122,632 - Interest income (11,310,663) (11,584,297) - Net loss on disposal of property, plant and equipment 534,766 4,862,782 - Dividend income - (2,705,303) - Loss / (gain) on revaluation of investments held for trading to fair value 1,926,252 (310,457) - (Reversal) / provision for impairment of unlisted equity securities investments (4,000,000) 1,710,000 - Net loss on disposal of investment in an associate and other investments 4,869,348 1,967,096 - Reversal of provision for inventory (179,485) - - Provision for bad and doubtful debts 1,148,861 3,942,751 - Share of loss of an associate - 382,010 Cash flows from operating activities before changes in working capital 371,869,741 404,766,975 Increase in inventories (35,989,660) (44,838,886) Increase in trade receivables (25,827,112) (74,620,810) Decrease / (increase) in deposits, prepayments and other receivables 31,053,089 (37,997,017) (Decrease) / increased in trade payables (21,601,644) 18,439,366 Increase in accruals and other payables 11,809,218 7,199,714 (Decrease) / increase in salaries, bonus and staff welfare payables (10,692,085) 6,260,077 Cash generated from operations 320,621,547 279,209,419 PRC income tax paid (54,564,313) (46,445,095) Cash flows from operating activities 266,057,234 232,764,324 ------------------- ---------------- The notes on pages 8 to 36 form part of these consolidated financial statements. 21 Consolidated statement of cash flows for the year ended 31 December 2005 (continued) (Expressed in Renminbi Yuan) Note 2005 2004 Rmb’000 Rmb’000 Investing activities Interest received 11,310,663 11,584,297 Dividends received - 2,705,303 Payment for acquisitions of property, plant and equipment and construction in progress (146,516,476) (159,787,320) Increase in lease prepayment (14,420,761) (55,528,716) Purchase of investments (520,664,872) (104,262,100) Proceeds from disposal of investment in an associate and other investments 583,165,915 102,008,970 Proceeds from disposal of property, plant and equipment 390,526 4,880,507 Cash flows from investing activities (86,735,005) (198,399,059) ----------------- ----------------- Financing activities Capital injection from minority shareholders 18,000,000 700,000 Dividends paid (172,055,164) (164,886,199) Dividends paid to minority shareholders (372,971) - Cash flows from financing activities (154,428,135) (164,186,199) ----------------- ----------------- Net increase / (decrease) in cash and cash equivalents 24,894,094 (129,820,934) Cash and cash equivalents at 1 January 903,206,569 1,033,027,503 Cash and cash equivalents at 31 December 18 928,100,663 903,206,569 ========== ========== The notes on pages 8 to 36 form part of these consolidated financial statements. 22 Net impact of IFRS adjustments on the consolidated results and shareholders’ equity prepared under PRC accounting regulations Consolidated financial statements for the year ended 31 December 2005 (Expressed in Renminbi Yuan) Profit for the year attributable to equity shareholders of the Equity attributable to equity Company shareholders of the Company 2005 2004 2005 2004 As reported in statutory financial statements prepared under PRC accounting regulations 219,583,403 231,479,787 2,304,699,123 2,255,936,502 Adjustments to align with IFRS (i) Deferred taxation 2,191,215 (2,122,605) 10,835,320 8,644,105 (ii) Net unrealised (loss)/gain of investments held for trading carried at fair value (9,069,778) (535,771) - 9,069,778 (iii) Government grants 1,000,000 - - - (iv) Write off debts forgiven 234,382 103,725 - - (v) Others - - (1,763,395) (1,763,395) As reported pursuant to IFRS 213,939,222 228,925,136 2,313,771,048 2,271,886,990 ========== ========== =========== =========== 23