*ST古井B(200596)2005年年度报告摘要（英文版）

Securities code: 000596 200596 Short form of Stock Name: *ST Gujing A、*ST Gujing B Notice No.: 2006-003 Anhui Gujing Distillery Company Limited 2005 Annual Report Summary (B Share) I. Important Notices 1.1 Board of Directors, Board of Supervisors and directors, supervisors, and senior managers of the company ensure that there is neither untrue presentation, seriously misleading statements, nor omission of material facts contained in the information herein and shall severally and jointly bear responsibility for the authenticity, accuracy and completeness of the information contained in this annual report. The Report is compiled in Chinese and English. Should any different comprehension on the two languages occur, the Chinese text shall prevail. The summary is extracted from 2005 Annual Report of Anhui Gujing Distillery Company Limited. For detailed information, please read the Annual Report. 1.2 All directors, supervisors, and senior executives ensure the correctness and completeness of the accounting report in this Annual Report. 1.3 List of absent directors Name of absent directors Absence reason Trustee’s name Li Hao Occupied by business Zhuo Wenyan Zhu Renwang Occupied by business Wang Dejie Liu Junde Occupied by business Wang Feng 1.4 Reanda Certified Public Accountants showed us standard and unconditional auditing report for our Company. 1.5 Board Chairman Mr. Wang Feng, General Accountant Mr. Li Bin and Principal of the Accounting Department (Accounting Supervisor), Xu Peng ensure the correctness and completeness of the accounting report in this Annual Report. II. Basic Information of Company 2.1 Basic Information Short form of Stock *ST Gujing A、*STGujingB Name Securities Code 000596、200596 Place where the company shares are Shenzhen Securities Exchange listed Registered address and Registered address: Gujing Town, Bozhou City, Anhui Province office address Office address: Gujing Town, Bozhou City, Anhui Province Post code of registered address：236820 Post code Post code of office address：236820 Website HTTP：//WWW.GUJING.COM E-mail GUJING@MAIL.AHBBPTT.COM.CN 2.2 Contact us Authorized representative for Secretary of Board securities Name Li Bin Ma Junwei Contact Gujing Town, Bozhou City, Anhui Gujing Town, Bozhou City, Anhui Province address Province Telephone （0558）5710057 （0558）5317057 Fax （0558）5317706 （0558）5317706 E-mail GUJINGZQB@GUJING.COM.CN JWMA@GUJING.COM.CN III. Summary of Accounting and Operational Data 3.1 Major accounting data 3.1.1 Accounting data of 2005 Unit: RMB thousand Yuan Items Amount Total profit 16,707 Net profit 5,219 Profit from main business 145,983 Operating profits 23,210 Investment gains 1,448 Subsidy incomes 5,000 Net cash flow from operating activities 30,295 Increase or Decrease of cash and cash equivalents (19,159) 3.1.2 The differences in net profits and net assets calculated in accordance with Chinese accounting standards and international accounting standards Unit: RMB thousand Yuan Net profit of the report Net assets at end of this period report period Amount calculated in accordance 5,088 808,121 with Chinese accounting standard Items & amount adjustment in accordance with international 131 131 accounting standards Amortization of Long-term equity investment balance in accordance 218 218 with Chinese accounting standard Depreciable balance in accordance with (72) (72) fair value Accrued intangible assets (15) (15) amortization balance in accordance with fair value Amount calculated in accordance with international accounting 5,219 808,252 standards 3.2 Main financial indexes Unit: RMB thousand Yuan Items 2005 2004 2003 Income from main business 653,662 601,746 504,825 Net profit 5,219 (255,927) (62,489) Total assets 1,335,857 1,349,385 1,518,954 Shareholders’ equity 808,252 803,033 1,058,960 Earnings per share 0.02 (1.09) (0.26) Net assets per share 3.44 3.42 4.51 Net assets per share after adjustment 3.44 3.42 4.51 Net cash flows per share from operating activities 0.129 0.04 0.309 3.3 The differences in net profits and net assets calculated in accordance with Chinese accounting standards and international accounting standards √Applicable □ Not applicable Chinese accounting standards International accounting standards Net profit 5,088,349.68 5,219,403.32 Amortization of Long-term equity investment balance in accordance with Chinese accounting standard: 218,153.64Yuan； Explanation for Depreciable balance in accordance with fair value: -72,100.00Yuan； the difference Accrued intangible assets amortization balance in accordance with fair value -15,000.00Yuan. IV. Particulars about the Changes of Share Capital & Shareholders 4.1 Table of Shares Change Unit: share Increase or decrease of After this change Before this change this change（+、-） Proportio Amount Others Subtotal Amount Proportion n A. Nonnegotiable shares 155,024,500 65.97% -2,500 -2,500 155,022,000 65.97% 1. Founder’s shares 155,000,000 65.96% 0 0 155,000,000 65.96% Among: State-owned 155,000,000 65.96% 0 0 155,000,000 65.96% shares Domestic corporate shares 0 0.00% 0 0 0 0.00% Overseas corporate shares 0 0.00% 0 0 0 0.00% Others 0 0.00% 0 0 0 0.00% 2. Raised corporate shares 0 0.00% 0 0 0 0.00% 3. Internal employees’ shares 24,500 0.01% -2,500 -2,500 22,000 0.01% 4. Preferred shares or others 0 0.00% 0 0 0 0.00% B. Listed and negotiable 79,975,500 34.03% 2,500 2,500 79,978,000 34.03% shares 1. RMB ordinary shares 19,975,500 8.50% 2,500 2,500 19,978,000 8.50% 2. Foreign capital shares listed 60,000,000 25.53% 0 0 60,000,000 25.53% locally 3. Foreign capital shares listed 0 0.00% 0 0 0 0.00% overseas 4. Others 0 0.00% 0 0 0 0.00% C. Total shares 235,000,000 100.00% 0 0 235,000,000 100.00% 4.2 Table of ten top shareholders and ten top shareholders of negotiable shares of the Company The Company has 19637 shareholders, including 1 holder of state-owned corporate share, 3 holders who are directors, supervisors Total number of shareholders and senior executives of the Company, 10,175 shareholders who hold locally-listed foreign-capital shares and 9,462 public shareholders. Particulars about the shares held by top ten shareholders Total number Numbers of Shares y Names of Nature of equity Proportion of shares nonnegotiable under pledge h h ld shareholders shares or freezing ANHUI GUJING State-owned GROUP 65.96% 155,000,000 155,000,000 0 corporate shares COMPANY LIMITED Huang Yingbin B shares 1.76% 4,138,144 0 Unknown He Bin B shares 0.73% 1,727,152 0 Unknown Cai Yingying B shares 0.32% 743,740 0 Unknown Wang 0 B shares 0.26% 610,491 Unknown Chuncheng GSI S/A 0 GOLDEN B shares 0.25% 586,756 Unknown CHINA MASTER FUND Xiao Juanyun B shares 0.22% 516,300 0 Unknown Huang Peiling B shares 0.19% 441,602 0 Unknown Zhao Zhanyue B shares 0.17% 397,000 0 Unknown Zhou 0 B shares 0.16% 376,200 Unknown Zhengzhong Particulars about ten top shareholders of negotiable shares of the Company Name of shareholders Numbers of negotiable Category of equity shares Huang Yingbin 4,138,144 B shares He Bin 1,727,152 B shares Cai Yingying 743,740 B shares Wang Chuncheng 610,491 B shares GSI S/A GOLDEN CHINA 586,756 B shares MASTER FUND Xiao Juanyun 516,300 B shares Huang Peiling 441,602 B shares Zhao Zhanyue 397,000 B shares Zhou Zhengzhong 376,200 B shares CHEN KAM TONG 364,400 B shares Explanation on the association There is no any association between the first shareholder and other and concerted action of the shareholders， and they do not belong to the concerted actors specified in above shareholders the Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies 4.3 Introduction to the biggest shareholder and practical controllers of the Company 4.3.1 Changes of the biggest shareholder and practical controllers □ Applicable √ Not applicable 4.3.2 Particulars about the biggest shareholder of the company The biggest shareholder of the Company is ANHUI GUJING GROUP COMPANY LIMITED which is the state-owned sole proprietorship established on Jan. 16, 1995, with the registered capital Rmb353,380,000; its legal representative is Mr. Wang Xiaojin. Its business scope: beverage, construction materials, plastic products, shareholding and operation of state-owned assets in the authorized scope by the State. There is no any change in controlling shareholders in the report period. Property right relationship and control relationship between the company and actual controller. 4.3.3 Block diagram of the relationship between the Company and the practical controller: The People’s Government of Bozhou 100% ANHUI GUJING GROUP COMPANY 65.96% This Company V. Directors, supervisors, and senior executives 5.1 Particulars about the changes of share held by directors, supervisors, and senior executives and remuneration Remuneration Does he amount receive any Shares held Shares held received from remuneration Name Position Gender Age Duty term at year at year end the company from beginning during the shareholding report period company or (in ten other thousand associated Yuan) companies? Board 2005.7.1 No Wang Feng M 41 0 0 15.00 Chairman -2008.5.18 2005.7.1 Yes Wang Xiaojin Director M 57 3,500 3,500 0.00 -2008.5.18 2005.7.1 Yes Liu Junde Director M 43 0 0 0.00 -2008.5.18 2005.7.1 Yes Li Peihui Director M 33 0 0 0.00 -2008.5.18 2005.7.1 No Wang Dejie Director M 44 0 0 12.00 -2008.5.18 2005.7.1 No Zhu Renwang Director M 40 0 0 10.00 -2008.5.18 Independent 2005.7.1 No Liu Youpeng M 52 0 0 5.00 director -2008.5.18 Independent 2005.7.1 No Zhuo Wenyan M 68 0 0 5.00 director -2008.5.18 Independent 2005.7.1 No Li Hao M 55 0 0 5.00 director -2008.5.18 Yuan Chief 2005.7.1 Yes F 58 1,500 1,500 0.00 Qinghua supervisor -2008.5.18 Zhang 2005.7.1 No Supervisor M 52 0 0 6.00 Jialiang -2008.5.18 2005.7.1 No Liang Jinghui Supervisor M 42 0 0 8.00 -2008.5.18 Vice No 2005.7.1 Lu Jianchun General M 44 0 0 9.00 -2008.5.18 Manager Vice No 2005.7.1 Zhang Jianlin General M 43 0 0 9.00 -2008.5.18 Manager 2005.7.1 No Li Bin CFO M 30 0 0 9.00 -2008.5.18 Total 5000 5000 93.00 VI. Report of Board of Directors 6.1 Discussion and analysis by management In 2005, there are lots of troubles for the Company. Facing the disadvantages and serious market competition, our company with all staff’s efforts actively overcame all difficulties with confidence, as a result, we get rid of troubles, come out of the red, clear up stock risk of our company. During the report period, the major business income reaches up 653 million Yuan, increasing by 8.6% than that of the same period of the last year, and our net profit is up 5.22 million Yuan. During the report period, our company adopts the following operation measures to realize our target: Further adjust product structure to make our production line clearer. To supply a gap of super high pricing wine, the company makes full use of its four glorifications honor to have brought forth Honorable Spirit significant to distilled spirit field, forming Gujinggong Honorable Spirit, Gujinggong Long-term Storage Spirit, Refined Gujinggong Spirit, and Longyun Gujinggong Spirit series. Strictly carry out our quality policy, put more attention to processing quality control, deepen technology revolution, try to dissolve practical problem and improve quality management to ensure our product’s quality. Emphasize overall budget management and budget consciousness. With research on basic budget, we will strengthen process management and research communication, and regularly check and analyze the budget executions of all departments of the company, forming regular follow-up supervision system and feedback system, strengthening all staff’s budget management consciousness and promoting budget management. Emphasize economic action to accelerate our low-cost operation and work out and strictly carry out 2005 Economy Performance Opinion of Anhui Gujing Distillery Co., Ltd., organize different departments to enact economy performance planning, and continually correct deflective operations by follow-up survey and achieve good results. Fames gained in 2005: Safe and creditable brand on wine product quality for Gujinggong ten-year long-term spirit by China Brewing Industry Association Safe and creditable recommended brand on wine product quality for Longyun Gujinggong spirit by China Brewing Industry Association National Three Greens Project Best-selling Brand for 2005 on Gujinggong spirit by Office of National Three Greens Project Marker Plate of Grain Solid State fermentation Spirit by Liquor Committee of China Food Industry Association Gujingong brand was honored as “ Top 100 Most Valuable Famous Brands” ranking 30th , and the first among the brands from Anhui province. 6.2 Table of Sub-industries and sub-products of main business. Unit: RMB ten thousand Yuan Sub-industries of Main Business Increase or Increase or Increase or Decrease of Decrease of Decrease of Major Major Profit rate Sub-industry or Main Business Main Business Main business business of major Sub-products Income over the cost over the business income cost business previous year previous year profits over (%) (%) the previous year (%) Alcohol and beverage 58,944.67 33,568.99 43.05% 8.22% 9.01% -0.41% wine manufacture Other industries 6,421.59 5,178.41 19.36% 12.47% 4.31% 6.31% Sub-products of Main Business High grade 38,919.89 18,167.25 53.32% -4.74% -9.81% 2.62% wine/spirit Medium grade 16,531.71 11,715.88 29.37% 42.12% 74.37% -0.65% wine/spirit Low grade wine/spirit 3,493.07 3,725.87 -6.66% -15.60% -5.84% -8.69% 6.3 Sub-districts of main business Unit: RMB ten thousand Yuan Increase/decrease of main business income Sub-district Main business income over the previous year (%) North China 13,545.92 7.29% South China 10,637.04 -8.44% Central China 34,761.71 15.02% 6.4 Raised funds application □ applicable √ Not applicable Particulars of changed items applicable √ Not applicable 6.5 Particulars of non-raised funds project □applicable √ Not applicable Project name Project amount Project’s progress Project income Wheat deep-processing 8,627.9781% — project Total 8,627.97 - - 6.6 Board’s explanation for the “Non-standard Opinion” provided by CPA office □ applicable √ Not applicable 6.7 Profit Distribution Plan or Plan for Transfer of Capital Reserve to Increase Capitalization by Board of Directors √applicable □ Not applicable Profit in the report period without suggested cash profit distribution plan applicable √ Not applicable Reasons for profit in the report period without Purpose and plan for the undistributed profit suggested cash profit distribution plan Serious losses in the previous year Used to make up the losses of the previous year VII. Substantial Matters 7.1 Purchasing assets □ applicable √ Not applicable 7.2 Selling assets □ applicable √ Not applicable 7.3 Important guarantee □ applicable √ Not applicable 7.4 Important associated transaction □ applicable √ Not applicable 7.4.1 Associated transaction relating to daily operation Unit: RMB ten thousand Yuan Sell products to and supply labor for the Purchase products and receive labor from associated company the associated company Associated Company Proportion among similar Transaction Proportion among similar Transaction amount transactions (%) amount transactions (%) Anhui Gujing Comprehensive 22.15 29.22% 0.00 0.00% Service Co., Ltd. Gujing Jiufang 53.66 70.78% 0.00 0.00% Medicine Co., Ltd. Anhui Gujing Group 0.00 0.00% 1,436.60 15.11% Co., Ltd. Anhui Gujing Comprehensive 0.00 0.00% 6,398.19 67.31% Service Co., Ltd. Gujing Tianshi 0.00 0.00% 9.18 0.10% Printing Co., Ltd. Bozhou Gujing 0.00 0.00% 1,661.70 17.48% Power Co., Ltd. Total 75.81 100.00% 9,505.67 100.00% Note: The amount, 758,100 Yuan comes from associated transaction that the list company sold products to and supplied labor for biggest shareholders and its subsidiary. 7.4.2 Associated credit business □ applicable √ Not applicable 7.5 Trust financing □ applicable √ Not applicable 7.6 Particulars about commitment performance 7.6.1 Schedule of share reform Expected reform time: May 2006 The Company will employ the reform procedure of stock equity distribution. Please refer to those notices relating to the reform of stock equity distribution. 7.6.2 Other commitments □ applicable √ Not applicable 7.7 Substantial lawsuits or arbitration matters √applicable □ Not applicable Bozhou Gujing Waste Reclamation Co., Ltd. (hereinafter referred to as “Gujing Reclamation”), which is the holding subsidiary company of this comany, utilized its own fund RMB50 million to purchase national debt via the securities sales department located in Caodong road, Shanghai, subordinate to Capital Bridge Securities Company Limited (hereinafter referred to as “Capital Bridge Securities”) on Oct. 21, 2003. On April 12, 2004, the Capital Bridge Securities paid Gujing Reclamation RMB10 million as the deposit of the national debt. Thereafter, Due to the internal cause of Capital Bridge Securities, Gujing Reclamation could not give its orders to operate RMB 40 million of deposit of the national debt in its account, therefore, Gujing Reclamation negotiated with Capital Bridge Securities for many times with a view of exercising the operation rights to the account of the deposit of the national debt and was refused by Capital Bridge Securities. On Jan. 20, 2005, Gujing Reclamation took action with Anhui Bozhou Intermediate People’s Court (hereinafter referred to as “Bozhou Intermediate Court” ) to request Capital Bridge Securities to refund RMB 40 million of deposit of the national debt and bear the legal cost of such case. On June 16, 2005, Bozhou Intermediate Court gave the (2005) BMECZ No.009 civil judgment which orders Capital Bridge Securities to refund RMB 40 million of deposit of the national debt to Gujing Reclamation and bear the acceptance fee RMB252,012 and the litigant preservation RMB200,520 within 5 days from the effective date of the judgment. For Capital Bridge Securities did not appeal in the time limit as stated by law after receiving (2005) BMECZ No.009 civil judgment, such civil judgment took effect. For Capital Bridge Securities did not perform its liabilities in the time limit as stated in the judgment, Gujing Reclamation made an application for compulsory execution with Bozhou Intermediate Court on July 28, 2005, and Bozhou Intermediate Court accepted such application. In the course of enforcement, both parties reached a compromise agreement, Capital Bridge Securities agrees to refund RMB24 million of national debt investment funds to Gujing Reclamation and bear RMB1 million of legal cost and convert the surplus of RMB16 million into the shares of Capital Bridge Securities. At present, Gujing Reclamation has received RMB24 million of national debt investment funds and the other compromise affairs are being carried out. The details of such lawsuit were disclosed in China Securities Daily, Shanghai Securities Daily and Hong Kong Wen Wei Po on February 25, Mar. 29, July 5 and Aug. 10, 2005. VIII. Report of Board of Supervisors √applicable □ Not applicable (I) Meetings and resolutions of the Board of Supervisors All members of the Board of Supervisors of Anhui Gujing Distillery strictly followed the Company Law of the People’s Republic of China, the regulations on IPO, the Articles of Association, the Procedural Rules of the Board of Supervisors, and executed its responsibilities as stated in the Articles of Association based on the principle of honest and credit to actively protect the interests of the company and all the shareholders. During the report period, the Board has held four meetings, and the meeting notices, convening and solutions comply with the legal procedures. The details are shown as below: (1) The 9th session of the 3rd Board of Supervisors Resolutions: Having approved the Company to withdraw the bad debts reserves from the total amount of the national debts investment with RMB90.53 million of book value in Minfa Securities Co., Ltd., Hengxin Securities Co., Ltd. and Capital Bridge Securities Co., Ltd. ended Dec. 31, 2004; Having approved Bozhou Gujing Sales Co., Ltd. as the holding subsidiary to make up income tax payable of RMB54,336,413.66 in 2004. Having approved the Company to withdraw a larger amount of depreciation reserves for the stock goods and packages. (2) The 10th session of the 3rd Board of Supervisors Meeting resolutions: 1. Having examined and adopted the report of the Board of Supervisors up to 2004; 2. Having examined and adopted the Annual Report and its Summary of 2004; 3. Having examined and adopted the planning of no annual profit distribution and conversion of surplus reserve into share capital in 2004; 4. Having examined and adopted the special notes of the Board of Supervisors concerning the audit report issued by the certified accountants showing their incapability of giving their opinions on the Annual Report of 2004; 5. Having examined and adopted the proposal concerning the election of the Board of Supervisors and the nomination of the candidates of the 4th Board of Supervisors. (3) The first session of the 4th Board of Supervisors Resolutions: Having examined and adopted the proposal of electing Ms. Yuan Qinghua as the supervisor general of the 4th Board of Supervisors. (4) The 2nd session of the 4th Board of Supervisors Resolutions: Having examined and adopted the proposal of tracing and adjustment of accounting errors of 2004; 2. Having examined and adopted the Annual Report and Half-year report summary for the year 2005. （II）Independent Opinions Expressed by the Board of Supervisors on Related Matters 1. Legal Management of the Company Except that the failure of punctual disclosure of the Annual Report of 2004 breaches the relevant laws and regulations, the Company is legally managed strictly in accordance with Company Law, Securities Law and Code of Corporate Governance for Listed Companies. The Company has legal internal decision-making procedures and has established more perfect internal control system. During the report period, the directors and senior managers of the Company earnestly performed their duties and neither did damage to the interests of the Company and shareholders nor breached the national laws and regulations and the Articles of Association. Audit of Financial Status of the Company In 2005, the standard Financial Audit Report 2005 of ANHUI GUJING DISTILLERY COMPANY LIMITED without any reserved opinions issued by Reanda Certified Public Accountants and BDO Renda Certified Public Accountants truly reflected the Company’s financial status ended Dec. 31, 2005 and business results of 2005, and the financial receipts and expenditure accounts are clear, and the accounting and accounts management is in accordance with the relevant regulations. 3. Audit of Utilization of Raised Fund The company did not raise any fund during the report period, all of the funds raised in the previous time have been used up in the previous fiscal year and there is no raised fund left over this period. 4. The acquisition and sales of assets During the report period, the pricing for acquisition and sales of assets are reasonable, no inside transaction or acts are found impairing the interests of the shareholders or causing the assets loss. (5) Associated transactions The associated transactions incurred in the Company are mostly the daily associated transactions between the Company and controlling shareholders and their subsidiaries, the pricing was fair and reasonable and is in conformity with related laws, regulations and Articles of Association of the Company The company performed the obligation in information disclosure according to the requirements of Shenzhen Stock Exchange and the Articles of Association of the Company. IX. Financial report 9.1 Audit opinion Audit opinion: standard and unconditional auditing opinion 9.2 Financial statements Income Statement 2005 Unit: thousand Yuan Footnote 2005 2004(Stated) Major business income 5 653,662 601,746 Major business tax & -120,205 -60,528 subcharge Major business cost -387,474 -357,599 Major business profit 145,983 183,619 Other business income 21,986 14,538 Operation cost -52,309 -80,446 Management cost -77,182 -140,032 Other business expense -16,716 -14,830 Investment profit (loss) 6 1,448 871 Investment reduction - -65,851 Investment depreciation hold at the end of the - -74,652 report period for distribution Operation profit 7 23,210 -176,783 Financial expense 8 -6,503 -5,588 Pretax profit (loss) 16,707 -182,371 Income tax cost 9 -11,572 -74,661 Net profit of this year 5,135 -257,032 Belong to: Parent company 5,219 -255,927 shareholders Minus shareholders -84 -1,105 Balance Sheet Up to December 31, 2005 Unit: thousand Yuan Footnote 2005 2004(Stated) Assets Non current assets Realty, plant, and equipment(fixed 11 474,577 423,220 assets) Land occupancy right 12 45,724 46,379 Credit standing - - Trademark and patent 13 1,878 5,633 Other investment 34,149 34,149 556,328 509,381 Current assets Inventories 16 560,201 577,630 Account receivable and other 116,540 109,951 receivables Associated party’s account receivable 26 120 6,596 Investment hold for distribution 17 500 24,500 Cash in bank and cash on hand 102,168 121,327 779,529 840,004 Total assets 1,335,857 1,349,385 Liabilities & Shareholders’ Equity Capital stock and reserve Capital stock 19 235,000 235,000 Reserve 20 573,252 568,033 Belong to parent company stockholder's 808,252 803,033 equity Minus stockholder's equity 2,217 2,301 Total stockholder's equity 810,469 805,334 Non current liabilities Bank loan due in one year 21 70,100 28,100 Current liabilities Accounts payable and other payables 194,861 229,407 Income tax liabilities 133,030 153,591 Taxes payable 23 81,183 45,655 Associated party’s account payable 26 3,214 1,398 Bank loan due within one year 21 43,000 85,900 Total liabilities 455,288 515,951 Total liabilities and shareholder’s equity 1,335,857 1,349,385 CASH FLOWS STATEMENT 2005 Unit: thousand Yuan 2005 2004(Stated) Operating activities Operation profit 23,210 -176,783 Adjustment item Provision for bed debt -2,063 6,033 Inventory depreciation 3,968 58,580 Interest received -1,448 -871 Fair value depreciation of investment hold for distribution - 65,851 Depreciation of investment hold for distribution - 74,652 Realty, plant, and equipment depreciation 45,858 42,057 Amortization of fixed assets 4,933 6,884 Realty, plant, and equipment disposal income -106 -421 Cash flow of operating activities before altering operating fund 74,352 75,982 Inventory increase 13,461 -52,287 Accounts receivable and other receivables decrease -51,723 33,103 (increase) Associated party’s receivable decrease (increase) 6,476 61 Accounts payable and other payables increase -51,723 33,103 Taxes payable decrease 35,528 -21,057 Associated party’s accounts payable decrease 1,816 -2,512 Cash from operating activities 68,931 36,490 Paid income tax -32,133 -21,825 Paid interests -6,503 -5,588 Net cash from operating activities 30,295 9,077 Investment activities Interest received 1,448 871 Purchasing realty, plant, and equipment -84,749 -74,100 Realty, plant, and equipment disposal income 4,295 1,931 Net cash inflow from disposing subsidiaries 6,452 12,285 Income from disposing investment hold for distribution 24,000 8,486 Net cash for investment activities -48,554 -50,527 Financing activities Dividend paid - - Payment of debts -95,900 -100,000 Newly financed bank loan 95,000 150,000 Minus equity investment of subsidiary received - 478 Net cash from (for) financing activities -900 50,478 Increase (decrease) of cash and cash equivalent -19,159 9,028 Cash and cash equivalent at the beginning of the year 121,327 112,299 Cash and cash equivalent at the end of the year - Cash in bank and cash on hand 102,168 121,327 9.3 Detailed explanation for Accounting Policy, Accounting Evaluation, Calculation Method √applicable □ Not applicable 9.4 Particulars about significant accounting errors √applicable □ Not applicable 1. In accordance with SZGJ ZI NO.[2005]1-02 document, which is issued by competent taxation authority, Bozhou Tax Bureau, on June 27, 2005, there is certain deviation in the calculation and payment methods of City Construction Tax and Educational Surtax of the previous year, resulting in more 4,289,618 Yuan is calculated and paid than the payable amount, so the “Backward adjustment” is adopted to correct the accounting mistake of 2004. 2. In view of certain carelessness in the accounting evaluation of the national debt investment depreciation to Capital-Bridge Securities Co., Ltd, that the national debt investment, 24 million Yuan, received by a subsidiary of the company, Bozhou Gujing Wastes Recovery Co., Ltd. isn’t reckoned in the profit of 2005, and that 500,000 Yuan is taken out from the left 16 million Yuan for provision of depreciation in accordance with the expected recoverable net value, shall be found out and adjusted as significant accounting mistakes. 3. In accordance with the 16th session of 3rd Board of Directors, the company has prepared for the serious depreciation of inventories and packages. Whereas, the company devoted a lot to cater for various taxation examinations in 2004, resulting in the work failed to be completed on time before publication. In this report period, the company investigated it again and the depreciation amount, 46,252, 547 Yuan, of the damaged products and those on the shelf is worked out. The losses occurred in the previous year, so the “Backward adjustment” is adopted to correct the accounting mistake. 4. The Auditing Dept of the company has adjusted the policy of shipped commodity income confirmation. In accordance with the adjusted policy of shipped commodity income confirmation, the company reduces 20,208,607Yuan from the undistributed profit based on the shipped commodity accounting policy of the previous year. 9.5 Comparing with the annual report of the previous year, detail explanation to the changes of merging scope. □ applicable√ Not applicable Anhui Gujing Distillery Co., Ltd.