1999年度报告正本.PDF

Transcription

1 1. SHANGHAI MATERIAL TRADING CENTRE CO., LTD. SMTC (86) (86) (86) (86) public1.sta.net.cn centre.com/ A B B

2 -8,335, , ,050, ,318, , ,775, , ,843, ,546, ,106, , ,052, ,952, , ,360, ( ) 1,097,755, ,052,107, ,052,107, ,852, ,852, ( ) -9,664, ,726, ,144, ,631, ,057, ( ) 757,933, ,719, ,862, ,879, ,893, ( ) 339,905, ,367, ,510, ,310, ,323, ( / ) ( / ) ( / ) / (%) = / = / = / 2

3 = / = / 100% 229,745,725 98,451, ,688, ,762, ,375, ,510, ,974,573 59, ,153, , ,664, ,522, ,974, , ,094, ,127, ,720,298 75,536, ,783, ,185, ,134, ,905, : (9,664) 339,905 (31,857) (1,077) (15,386) (19,666) (7,835) (37,067) 850 1,622 2,712 (8,655) B 243,082 (124,000) (50) (57,612) 393,265 3

4 ,255,725 13,125,573-15,000,000-1,874, ,381, ,890,000 2,589,000 15,000,000 17,589,000 28,479, ,145,725 15,714, ,714, ,860, ,100,100 1,210,000 1,210,000 13,310, ,500,000 6,050,000 6,050,000 66,550, ,600,000 7,260,000 7,260,000 79,860,000 * ,745,725 22,974,573 22,974, ,720, , , % 2 [1998] ,720,298 4

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10 (3) (4) % % % % % 10

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50 ,377, ,360, ,255, ,467, ,982, ,982, ,416, ,416, ,344, ,344, ,099, ,099, ,637, ,637, ,316, ,316, ,769, ,769, ,954, , , ,110, ,946, ,676, ,293, ,602, ,038, ,829, ,342, ,656, ,947, ,709, ,276, ,056, ,038, ,796, ,359, ,825, ,700, , ,588, ,506, ,306, ,473, ,152, , , , ,465, ,264, ,473, ,913, ,771, ,854, , , ,332, ,553, ,265,

51 39 388,773, ,715, ,383, ,827, ,582, ,448, ,594, ,764, ,582, ,448, ,594, ,764, ,413, ,413, ,413, ,413, ,168, ,034, ,180, ,351, ,108, ,108, ,031, ,487, ,756, ,413, ,200, ,976, ,447, ,516, ,830, ,511, ,309, ,896, ,322, ,322, ,507, ,507, , , , , ,155, ,835, ,864, ,451, ,238, ,238, ,852, ,872, ,859, ,385, ,477, ,904, ,177, ,498, ,953, : ,143, ,276, ,736, ,302, ,241, ,862, ,164, ,933,

52 61 213,400, ,400, ,070, ,070, ,000, ,472, ,000, ,695, ,972, ,523, ,431, ,932, ,185, ,744, ,902, ,823, ,144, ,144, , ,803, ,850, ,996, ,067, ,774, ,035, ,306, ,700, , , ,227, ,231, ,040, ,169, , , ,970, ,591, ,134, ,429, ,195, ,195, ,362, ,362,

53 84-435, , ,237, ,237, ,760, ,760, ,125, ,125, ,730, ,352, ,259, ,554, ,473, ,745, ,745, ,720, ,720, ,451, ,451, ,536, ,536, ,454, ,688, ,454, ,783, ,752, ,762, ,810, ,185, ,141, ,375, ,805, ,134, ,510, ,510, ,905, ,905, ,241, ,862, ,164, ,933,

54 ,402, ,052,107, , , ,399, ,052,104, ,980, ,003,385, ,564, ,626, ,853, ,092, ,240, ,286, , , ,750, ,344, ,381, ,660, ,395, ,587, ,476, ,256, ,579, ,390, ,764, ,810, , , , , ,144, ,125, , ,144, ,144, ,003, ,815,

55 ,141, ,329, ,141, ,329, , ,141, ,375,

56 1 191,862, ,097,755, ,862, ,097,755, ,612, ,052,931, ,651, ,505, ,597, ,318, , , , ,111, ,946, ,798, ,624, ,835, ,515, ,696, ,287, ,908, ,775, , , ,777, ,928, , , ,718, ,335, , , ,283, ,664, ,664, ,141, ,375,

57 36-14,805, ,039, , , ,805, ,134, ,805, ,134,

58 1 211,810, ,281,644, ,918, ,918, , ,421, ,003, ,806, ,120, ,302,789, ,246, ,290,003, , , ,502, ,767, , , , , ,364, ,383, ,401, ,881, ,010, ,329,336, ,110, ,546, ,794, ,794, ,609, ,609, , , , ,528, ,913, ,351, ,825,

59 41,966, ,532, ,438, ,381, ,400, ,400, ,400, ,400, ,530, ,530, , , ,864, ,777, , , ,215, ,149, ,815, ,250, , , ,878, ,106,

60 -9,664, ,664, ,283, ,406, ,232, ,213, ,107, ,233, ,909, , ,348, , , ,810, ,705, ,908, ,775, ,162, ,205, ,911, ,338, ,684, ,954, ,110, ,546,

61 32,255, ,467, ,377, ,360, ,878, ,106,

62 AUDITORS' REPORT TO THE SHAREHOLDERS OF SHANGHAI MATERIAL TRADING CENTRE CO., LTD. (a joint stock limited liability company incorporated in the People's Republic of China) We have audited the accompanying balance sheet of Shanghai Material Trading Centre Co., Ltd. as of 31 December 1999 and the related statements of income, changes in equity and cash flows 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. Except as disclosed in the following paragraph, 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. The evidence available to us was limited because we were unable to obtain sufficient financial information relating to a joint venture so as to assess whether any provision for diminution in value is required in respect of the Group's investment in that jointly controlled entity, amounting to RMB22 million as at 31 December There were no satisfactory alternative procedures that we could adopt to determine the recoverable amount of the Group's investment in the jointly controlled entity. The Group has not accounted for its share of the results of a jointly controlled entity in accordance with International Accounting Standard No. 31 "Financial Reporting of Interests in Joint Ventures" (IAS31). In our opinion, there is insufficient information concerning the jointly controlled entity in these financial statements to present fairly, in all material respects, the financial position of the Group as of 31 December 1999 and the results of its operations and its cash flows for the year then ended, in accordance with International Accounting Standards. It is not practicable to quantify the effects of the departure from this requirement. In our opinion, except for the effect of such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves regarding the recoverable amount of the Group's investment in the jointly controlled entity, and except for the failure to account for the jointly controlled entity in accordance with the requirements of IAS31, the financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 1999 and the results of its operations and its cash flows for the year then ended, in accordance with International Accounting Standards. In respect alone of the limitation on our work relating to the Group's investment in the joint venture, we have not obtained all the information and explanations that we considered necessary for the purpose of our audit. 28 April

63 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 1999 NOTES RMB'000 RMB'000 Revenue 6 1,110,045 1,079,986 Cost of sales (1,065,267) (1,035,116) Gross profit 44,778 44,870 Other operating income 2,665 5,421 Administrative expenses (93,840) (63,170) Loss from operations 8 (46,397) (12,879) Finance costs 9 (17,829) (15,379) Share of results of associates (528) (5,489) Income from other investments 10 6,686 13,655 Provision for diminution in value of long-term investment written back - 22,993 (Loss) profit before tax (58,068) 2,901 Income tax expense (Loss) profit after tax (58,032) 2,965 Minority interests 420 (114) Net (loss) profit for the year (57,612) 2,851 (Loss) earnings per share 13 (RMB0.23) RMB0.01 * CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 1999 * adjusted ASSETS NOTES RMB'000 RMB'000 Non-current assets Property, plant and equipment , ,826 Construction in progress 15 5,996 1,087 Payments/deposits for acquisition of assets 16 6, ,209 Intangible assets 17 8,501 4,098 Interests in associates 18 39,400 34,182 Other long-term investments 19 76,642 89, , ,917 Current assets Inventories 20 50,487 36,822 Trade and other receivables ,645 99,884 Amount due from ultimate holding company ,930 62,980 Amount due from associates 8,830 43,390 Value added taxes recoverable ,737 Income tax prepaid Short-term investments 24 7,333 8,501 Bank balances and cash 21 45,066 29, , ,081 Total assets 903, ,

64 CONSOLIDATED BALANCE SHEET - continued AS AT 31 DECEMBER 1999 EQUITY AND LIABILITIES NOTES RMB'000 RMB'000 Capital and reserves Share capital , ,746 Reserves , ,729 Accumulated losses (88,140) (30,598) 393, ,877 Minority interests 2, Non-current liabilities Long-term borrowings 27 16,449 15,511 Deferred income 28 1,056 1,320 Deferred tax liability , , , ,831 Current liabilities Bank overdraft Trade and other payables ,261 93,869 Amount due to associates 7,625 2,590 Income taxes payable Short-term borrowings , , , ,402 Total equity and liabilities 903, ,998 The financial statements on pages 2 to 33 were approved by the Board of Directors on 28 April 2000 and are signed on its behalf by: CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 1999 Statutory Properties Statutory Discretionary public Share Capital revaluation surplus surplus welfare Accumulated capital surplus reserve reserve reserve fund losses Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 1 January ,746 98, ,660 10,757 7,731 9,297 (31,616) 448,026 Transfers (671) - - Net profit for the year ,851 2,851 Appropriations (1,833) - 1 January ,746 98, ,660 11,068 9,145 9,405 (30,598) 450,877 Capitalisation issue 22,974 (22,974) Transfers (133) (59) Net loss for the year (57,612) (57,612) Appropriations (152) (265) December ,720 75, ,660 11,223 8,934 9,332 (88,140) 393,

65 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 1999 NOTES RMB'000 RMB'000 NET CASH FROM OPERATING ACTIVITIES 31 12,988 42,819 INVESTING ACTIVITIES Interest received ,247 Dividends received from associates 3, Dividends received from long term investments 3,386 2,963 Proceeds on disposal of property, plant and equipment Purchases of property, plant and equipment (8,032) (2,475) Capital return on investment in subsidiary Investments in associates (3,678) (46,501) Investments in long-term investments (1,096) (47,479) Proceeds on sale of long-term investments - 1,229 Additions to construction in progress (4,909) (4,120) Deferred expenditure incurred (1,266) (1,090) Deposits paid for acquisition of assets - (16,277) Acquisition of subsidiaries 33 (4,305) - NET CASH USED IN INVESTING ACTIVITIES (15,771) (101,868) FINANCING ACTIVITIES Dividends paid to minority shareholders (105) - Interest paid on short-term loans (17,427) (15,028) Interest paid on long-term loans (400) (351) Repayment of long-term liabilities (801) - New bank loans raised 34,014 47,656 NET CASH FROM FINANCING ACTIVITIES 15,281 32,277 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,498 (26,772) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 38,003 62,821 Effect of foreign exchange rate changes 1,837 1,954 CASH AND CASH EQUIVALENTS AT END OF YEAR 52,338 38,003 ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash 45,066 29,563 Bank overdraft (61) (61) Short-term listed investments 7,333 8,501 52,338 38,

66 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER CORPORATE INFORMATION Shanghai Material Trading Centre Co., Limited (the "Company") was established in the People's Republic of China as a joint stock company limited by shares. Its shares are listed on the Shanghai Stock Exchange. The Group is engaged in trading, hotel operations, taxi service, interior decoration, property letting and management. The principal activities of its subsidiaries and associates are set out in note ULTIMATE HOLDING COMPANY The directors consider Shanghai Material Group Company, a state-owned enterprise established in the PRC, to be the ultimate holding company ("Holding Company") of the Group. 3. PRESENTATION OF FINANCIAL STATEMENTS The Group maintains its accounting records and prepares its statutory financial statements in accordance with the accounting standards and regulations applicable to joint stock companies limited by shares of the People's Republic of China ("PRC GAAP"). These financial statements have been prepared in accordance with International Accounting Standards ("IAS"). The accounting policies and bases adopted in the preparation of the statutory financial statements differ in certain respects from IAS. The differences arising from the restatement of the results of operations and the net assets for compliance with IAS are adjusted in the consolidated financial statements but are not taken up in the accounting records of the Group. A reconciliation of the Group's results and net assets between PRC GAAP and IAS is set out in note ADOPTION OF INTERNATIONAL ACCOUNTING STANDARDS In the current year, the Group has adopted the following IAS for the first time: IAS 1 (Revised 1997) IAS 19 (Revised 1998) Presentation of Financial Statements Employee Benefits IAS 1 (Revised 1997) is concerned with the presentation and disclosure of financial information. The adopotion of IAS 1 has resulted in the modification of the presentation in the current year's financial statements. Comparative amounts have been restated in order to achieve a consistent presentation. In particular, additional analyses of income and expenditure have been presented and the description of various components in the financial statements and the terminology used has been updated to reflect the terminology of the new Standard. In prior years, pre-operating expenses were capitalised and amortised, on a straight-line basis, over a period of not more than five years from the date of commencement of commercial operation. The adoption of IAS 1 has led to a reassessment of this accounting policy. In particular, pre-operating expenses are not considered to give rise to an identifiable resource from which economic benefits are expected to flow to the Group. Accordingly, such expenditure is now recognised as an expense in the period in which it is incurred. Due to the immateriality of the amounts previously capitalised, they have been written off in full in the current year. This change in accounting policy has resulted in a decrease in the Group's net assets and net profit for the year by RMB1,180,000. IAS 19 (Revised 1998) specifies the accounting treatment for employee benefits, including retirement benefits plans. As the Group's accounting policy for its defined contribution retirement benefit plan was already in line with the requirements of the revised standard, the implementation does not have any effect on the results for the current or prior periods

67 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared under the historical cost convention. The financial statements have been prepared in accordance with IAS. The principal accounting policies adopted are set out below. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company, directly or indirectly, has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. On acquisition, the assets and liabilities of the relevant subsidiaries are measured at their fair values at the date of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All significant intercompany transactions and balances between group enterprises are eliminated on consolidation. Interests in associates An associate is an enterprise over which the Group is in a position to exercise significant influence, through participation in the financial and operating policy decisions of the investee. The results and assets and liabilities of associates are incorporated in these financial statemetns using the equity method of accounting. The carrying amount of such investments is reduced to recognise any decline, other than a temporary decline, in the value of individual investments. Where a group enterprise transacts with an associate of the Group, unrealised profits and losses are eliminated to the extent of the Group's interest in the relevant associate, except where unrealised losses provide evidence of an impairment of the asset transferred. Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary or associate at the date of acquisition. Goodwill is capitalised and amortised on a straight-line basis over its useful economic life, a period generally not exceeding ten years. Goodwill arising on the acquisition of an associate is included within the carrying value of the associate. Goodwill arising on the acquisition of subsidiaries is presented separately as an intangible asset. Negative goodwill, which represents the excess of the Group's interest in the fair value of the identifiable assets and liabilities acquired over the cost of acquisition, is eliminated proportionately against the fair values of the non-monetary assets acquired. Any amount in excess of the fair values of the non-monetary assets acquired is treated as deferred income and recognised as income on a straight-line basis over a period generally not exceeding ten years. On disposal of a subsidiary, the attributable amount of unamortised goodwill is included in the determination of the profit or loss on disposal of the subsidiary. Investment in jointly controlled entity A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity which is subject to joint control

68 Joint venture arrangements which involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Group's interests in jointly controlled entities are stated at cost less permanent diminution in value, if necessary. Other investments Investments held for long-term purposes are stated at cost less provision, if necessary, for any permanent diminution in value. Listed investments held for short term trading purposes are stated at year-end market value. Changes in the carrying value of the marketable securities are dealt with in the consolidated income statement. Property, plant and equipment As required by the relevant PRC rules and regulations, a valuation of the assets and liabilities injected into the Company was carried out as at 30 April 1993 by a PRC professional valuer and the injected assets and liabilities were reflected in the financial statements on this basis. This valuation established the deemed cost of the injected property, plant and equipment on the formation of the Company. At the time of floatation of the 'B' shares of the Group, in accordance with the regulations of the Shanghai Stock Exchange, a valuation of the hotel/commercial complex was carried out as at 28 February 1994 by an international valuer. The Group does not intend to revalue these assets in the future and they will continue to be carried at their 28 February 1994 valuation less subsequent depreciation. Property, plant and equipment are stated in the balance sheet at cost or valuation less accumulated depreciation. Depreciation is charged so as to write off the cost or valuation of assets, over their estimated useful lives and taking into account their respective residual values, using the straight-line method, on the following bases: Leasehold Land Buildings Plant and machinery Furniture, fixtures and equipment Motor vehicles Term of lease 30 years 5 to 15 years 3 to 10 years 5 to 10 years When the recoverable amount of an asset has declined below its carrying amount, the carrying amount is reduced to reflect the decline in value. In determining the recoverable amount of assets, expected cash flows are discounted to their present values. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in income. Construction in progress Construction in progress represents capital assets under construction or installation and is stated at cost, less any impairment loss. Cost includes construction cost and other direct costs incurred prior to the date of completion of construction. The cost of completed construction work is transferred to appropriate category of property, plant and equipment and depreciation commences when the assets are ready for their intended use. Intangible assets (i) Property occupancy rights Property occupancy rights represent the premium paid upfront for the right to use premises and are amortised over five years on a straight-line basis

69 5.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Intangible assets continued (ii) Taxi licences Inventories Taxi licences represent the premium paid for the acquisition of licences for the Group's taxi operations and are amortised over the terms of the licences on a straight-line basis. Inventories are stated at the lower of cost and net realisable value. Cost comprises the purchase price of inventories and is calculated on the first-in-first-out or weighted average method for different categories of inventories, where appropriate. Net realisable value represents the estimated selling price less all estimated costs to be incurred in selling. Revenue recognition Sales of goods are recognised when goods are delivered and title has passed. Rental income from office letting is recognised on a straight-line basis over the term of the relevant lease. Income from letting of hotel rooms and sales of food and beverages are recognised upon rendering of services to hotel guests or customers. Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable. Dividend income from investments is recognised when the shareholders' rights to receive payment have been established. Operating leases Rental income or expenses under operating leases are credited or charged respectively to the consolidated income statement on a straight line basis over the term of relevant lease. Retirement benefit costs In accordance with local government regulations, the Group is required to make contributions to a retirement insurance fund which is administrated by the local labour department. The amount of contributions is fixed at 25.5% of the basic salaries of the Group's local staff. Retirement benefits are paid directly from the fund and the Group has no further obligations beyond the annual contributions. The contributions payable to the scheme in respect of the year by the Group are charged as an expense as they fall due. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the costs of these assets. Capitalisation of such borrowing costs cease when the assets are substantially ready for their intended use or sale. All other borrowing costs are dealt with in income in the period in which they are incurred. Financial instruments (i) Financial assets The Group's principal financial assets are bank balances and cash, trade and other receivables, receivable from Holding Company and equity investments

70 Trade and other receivables and receivable from Holding Company are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Listed investments held for short-term purposes are carried at market value at the balance sheet date. Increases or decreases in the carrying amount of listed investments are recognised as income or expenses of the period. Long-term investments, where the Group is not in a position to exercise significant influence or joint control, are stated at cost less impairment losses recognised, where the investment's carrying amount exceeds its estimated recoverable amount. (ii) Financial liabilities and equity instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Significant financial liabilities include interest-bearing borrowings and trade and other payables. Taxation 6.REVENUE Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Trade and other payables are stated at their nominal values. The charge for current year's tax is based on the results for the year as adjusted for items which are nonassessable or disallowed. It is calculated using tax rates that have been enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Foreign currencies Transactions in currencies other than RMB are initially recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are re-translated at the rates ruling on the balance sheet date. Gains and losses arising on exchange are dealt with in the consolidated income statement. An analysis of the Group's revenue is as follows: RMB'000 RMB'000 Sales of goods Property letting and management 1,061,137 9,750 1,036,603 26,302 Hotel operations 39,158 17,081 1,110,045 1,079,

71 7.BUSINESS AND GEOGRAPHICAL SEGMENTS Business segments For management purposes, the Group is currently organised into three operating divisions - trading, property letting and management and hotel operations. These divisions are the basis on which the Group reports its primary segment information. Principal activities are as follows: Trading - domestic trading business Property letting and management - office leasing and building management Hotel operations - hotel rooms, food and beverage sales, taxi services and interior decoration Segment information about these businesses is presented below. Property letting and Hotel 1999 Trading management operations Consolidated RMB'000 RMB'000 RMB'000 RMB'000 REVENUE External sales 1,061,137 9,750 39,158 1,110,045 RESULT Segment result (35,892) (35,634) Unallocated corporate expenses (10,763) Loss from operations (46,397) Finance costs (17,829) Share of results of associates (528) (528) Income from investments 6,686 Loss before tax (58,068) Income taxes 36 Loss after tax (58,032) BALANCE SHEET ASSETS Segment assets 582,672 74, , ,730 Interests in associates 48,230 48,230 Unallocated corporate assets 9,799 Consolidated total assets 903,759 LIABILITIES Segment liabilities 137,093 39,423 94, ,792 Unallocated corporate liabilities 239,702 Consolidated total liabilities 510,

72 7. BUSINESS AND GEOGRAPHICAL SEGMENTS - continued Property letting and Hotel 1998 Trading management operations Consolidated RMB'000 RMB'000 RMB'000 RMB'000 REVENUE External sales 1,036,603 26,302 17,081 1,079,986 RESULT Segment result (8,466) 4,175 3,004 (1,287) Unallocated corporate expenses (11,592) Profit from operations (12,879) Finance costs (15,379) Share of results of associates (5,489) (5,489) Income from investments 36,648 Profit before tax 2,901 Income taxes 64 Profit after tax 2,965 BALANCE SHEET ASSETS Segment assets 112, , , ,540 Interests in associates 97,032 97,032 Unallocated corporate assets 440,836 Consolidated total assets 902,408 LIABILITIES Segment liabilities 86,898 76,797 55, ,864 Unallocated corporate liabilities 235,257 Consolidated total liabilities 454,121 GEOGRAPHICAL SEGMENTS All of the Group's operations and identifiable assets are located in the PRC. All of the revenue and consolidated net profit for the year are derived from the PRC. The average number of employees for the year for each of the Group's principal division was as follows: Trading Property letting and management Hotel operations

73 8. LOSS FROM OPERATIONS Loss from operations has been arrived at after charging : RMB'000 RMB'000 Net foreign exchange losses 1,885 1,793 Staff costs 7,680 7,440 Depreciation and amortisation 10,465 7, FINANCE COSTS RMB'000 RMB'000 Interest on borrowings 17,829 15, INCOME FROM OTHER INVESTMENTS RMB'000 RMB'000 Interest income ,247 Dividend and investment income 3,386 2,963 Profit (loss) on sale of listed investments 2,838 (439) Gain on sale of long term investments INCOME TAX EXPENSE 6,686 13, RMB'000 RMB'000 The charge comprises: Current year's provision Income tax refund (152) (331) Taxation attributable to the Company and its subsidiaries (46) (290) Share of taxation attributable to associates (36) (64) The Group is subject to PRC income tax, at an applicable rate of 15% on the assessable profit as computed in accordance with the accounting regulations applicable to joint stock limited company. Some of the subsidiaries and associates are still enjoying the tax holiday, thus income tax is exempted or reduced

74 The charge for the year can be reconciled to the (loss)profit per the consolidated income statement as follows: RMB'000 RMB'000 (Loss)profit before tax (89,248) 2,901 Tax at the PRC tax rate of 15% (1998: 15%) (13,387) 435 Tax effect on taxation loss, the utilisation of which is not certain Tax effect on income tax refund which is not 13,503 - taxable in determining the taxable profit (152) (331) Tax effect of (income) expenses that are not (assessable) deductible in determining taxable profit - (277) Effect of different tax rates of subsidiaries and associates Tax credit for the year (36) (64) 12. DIVIDEND The directors do not propose a payment of dividend in respect of the year ended 31 December 1999 (1998: Nil). 13. (LOSS)EARNINGS PER SHARE The calculation of the (loss) earnings per share is based on the Group's net loss for the year of approximatly RMB57,612,000. (1998: profit RMB2,851,000) and on 252,720,298 shares after adjusting for the bonus issue in PROPERTY, PLANT AND EQUIPMENT Furniture, Leashold fixtures Land and Plant and and Motor buildings machinery equipment vehicles Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 COST/VALUATION At 1 January ,332 23,424 18,703 7, ,673 Additions 12, ,948 14,478 Transfer from deposits for acquisition of assets ,746 1,746 Acquired on acquisition of subsidiaries Disposals - (224) (8,747) (948) (9,919) At 31 December ,511 23,261 10,495 10, ,895 DEPRECIATION At 1 January ,580 16,148 13,766 3,353 48,847 Charge for the year 2,928 1,890 1,435 1,075 7,328 Eliminated on disposals - (201) (8,055) (674) (8,930) At 31 December ,508 17,837 7,146 3,754 47,245 CARRYING AMOUNT At 31 December ,003 5,424 3,349 6, ,650 At 31 December ,752 7,276 4,937 3, ,

75 The Group's hotel/commercial complex at a carrying value of RMB335,383,000 is situated in Shanghai, the PRC, on land for which the Group has the land use rights for an indefinite period. The Group has pledged certain leasehold land and buildings as security for the Group's bank borrowings (see note 37). 15. CONSTRUCTION IN PROGRESS RMB'000 RMB'000 Balance at 1 January 1,087 - Additions 4,909 4,120 Transfers to fixed assets - (3,033) Balance at 31 December 5,996 1, PAYMENTS/DEPOSITS FOR ACQUISITION OF ASSETS RMB'000 RMB'000 Land for future development 6,210 12,286 Commercial and residential apartments - Properties under construction - 92,494 - Completed properties (note) - 5,409 Taxi fleet and licence rights - 8,020 6, ,209 Note: The properties will be reclassified as property, plant and equipment or property-for-sale when the directors determine the usage of these properties. 17. INTANGIBLE ASSETS Pre- Property operating occupancy Taxi expenses Goodwill rights Licences Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 COST At 1 January 3,204-3,057-6,261 Additions during the year - 2, ,966 Transfer from deposits for acquisition of assets ,274 6,274 Write-off during the year - (2,237) - - (2,237) At 31 December 3,204-3,786 6,274 13,264 AMORTISATION At 1 January 1, ,163 Amortisation during the year 1, ,600 At 31 December 3,204-1, ,763 CARRYING AMOUNT At 31 December ,697 5,804 8,501 At 31 December ,860-2,238-4,

76 18. INTERESTS IN ASSOCIATES RMB'000 RMB'000 Cost of investments 45,427 41,749 Share of post-acquisition results, net of dividends received (6,027) (7,567) Share of net assets 39,400 34,182 Particulars of associates are set out in note OTHER LONG-TERM INVESTMENTS RMB'000 RMB'000 At cost: Unlisted equity investments 56,563 87,717 Investment in jointly-controlled entity 22,050 - PRC Government bonds ,651 87,755 Amount due from investee enterprises - 3,724 Provision for diminution in value (2,009) (1,964) 20. INVENTORIES 76,642 89, RMB'000 RMB'000 Finished goods 49,292 35,515 Consumable stores 1,195 1,307 50,487 36,822 Included above are finished goods of approximately RMB1,217,000 (1998: NIL) which are carried at net realisable value. 21. OTHER FINANCIAL ASSETS The financial assets of the Group include trade and other receivables, receivable from Holding Company. The directors consider that the carrying amount of trade and other receivables, and receivable from Holding Company approximates to their fair value. Bank balances and cash comprise cash and short-term deposits held by the group treasury function. The carrying amount of these assets approximates to their fair value. Credit risk The Group's credit risk is primarily attributable to its trade and other receivables as well as the amount due from ultimate holding company. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and the current economic environment. The credit risk on bank deposits is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. Other than the amount due from ultimate holding company, the Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. In respect of the amount due

77 from holding company, it is secured by properties from the ultimate holding company. 22. AMOUNT DUE FROM ULTIMATE HOLDING COMPANY The amount due is interest-free and the repayment of which is secured by properties from the ultimate holding company. 23. VALUE-ADDED TAXES RECOVERABLE RMB'000 RMB'000 Balance at 1 January 1,737 2,787 Offset with output value-added tax liabilities (1,248) (1,050) Balance at 31 December 489 1,737 According to the relevant regulations of the valued-added tax ("VAT") reform, deemed input VAT paid totalled RMB8,195,000 has been extracted from the opening stock balance at 1 January 1994 and was treated as deferred VAT. With effect from 1 January 1994, subject to periodical review and year-end approval, the Group was authorised to use the deferred VAT to offset with the output VAT derived from daily sales at a ratio of 20% of the deemed amount per year. According to a notice issued by the Shanghai Municipal State Tax Bureau on 28 August 1998, enterprises were instructed to suspend the offset from 1 August 1998 to 31 December 1998 and to resume the offset on 1 January SHORT-TERM INVESTMENTS RMB'000 RMB'000 Share listed in the PRC 6,674 8,283 Cash deposited with securities companies ,333 8,501 Market value 6,674 8,283 Short-term investments represent investments in shares listed in the PRC which present the Group with opportunities for return through dividend income and trading gains. The market value of these securities approximates to their fair value. 25. SHARE CAPITAL RMB'000 RMB'000 Registered, issued and fully paid: 144,381,298 (1998: 131,255,725) State shares of RMB1 each 144, ,256 28,479,000 (1998: 25,890,000) Shares held by other legal persons and employees of RMB1 each 28,479 25,890 13,310,000 (1998: 12,100,000) 'A' shares of RMB1 each 13,310 12,100 66,550,000 (1998: 60,500,000) 'B' shares of RMB1 each 66,550 60, , ,746 'A' shares and 'B' shares rank pari passu in all respects. 'A' shares can only be held by PRC investors while 'B' shares can only be held by overseas investors. By an ordinary resolution passed on 25 May 1999, the issued share capital was increased by way of a bonus issue by applying RMB22,974,573 standing to the credit of the capital surplus account as payment in full at par

78 of 22,974,573 shares of RMB1 each on the basis of one new share for every ten shares held on 1 June 1999 for 'A' shares and 4 June 1999 for 'B' shares. These shares rank pari passu with the existing shares. 26. RESERVES According to the Company's Articles of Association and the PRC's relevant laws and policies, the Company is required to make a transfer at the rate of 10% from the profit after taxation, determined in accordance with the PRC GAAP, of the Company to the statutory surplus reserve account until the reserve balance has reached 50% of the registered capital of the Company. The Company is also required to transfer 5% to 10% from the profit after taxation to the statutory public welfare fund. The statutory surplus reserve and the capital surplus reserve may be applied only for the following purposes: i. the statutory surplus reserve may be used to make up losses; and ii a reserve 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 fund shall be no less than 25% of the new 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. The profit distributable to shareholders is calculated based on the lower of the aggregate of the current year's net profit after taxation (after transfers to statutory surplus reserve and statutory public welfare fund) and the retained profit brought forward, prepared under the PRC GAAP or IAS. Prior to making up the Company's losses and the relevant appropriations to the statutory surplus reserve and the statutory public welfare fund, no dividends may be paid. 27. BORROWINGS RMB'000 RMB'000 Bank loans 252, ,056 Others loans 17,363 16, , ,383 The bank loans at 31 December 1999 are with fixed interest rate at 5.00% % per annum. The unsecured other loans are with fixed interest rate at 2.5% per annum. The borrowings are repayable as follows: RMB'000 RMB'000 On demand or within one year 252, ,872 In second year In the third to fifth year inclusive 3,655 2,449 After five years 11,880 12, , ,383 Less: Amount due for settlement with 12 months shown under current liabilities 252, ,872 Amount due for settlement after 12 months 16,449 15,

79 27. BORROWINGS - Continued Analysis of borrowings by currency: 1999 RMB RMB'000 Japanese Yen RMB'000 Bank overdrafts 61 - Bank loans 252,070 - Long term borrowings - 17, ,131 17, RMB RMB'000 Japanese Yen RMB'000 Bank overdrafts 61 - Bank loans 215,056 - Long term borrowings - 16, DEFERRED INCOME 215,117 16,327 The deferred income arose from the acquisition of an associate in As the acquisition was completed on 31 October 1998, amortisation of deferred income as income has not been recognised in that year RMB'000 RMB'000 AT COST At 1 January 1,320 - Negative goodwill arising on acquisition in the period - 1,320 At 31 December 1,320 1,320 AMORTISATION At 1 January - - Release for the year At 31 December CARRYING AMOUNT At 31 December ,056 1,320 At 31 December , DEFERRED TAXATION The major component of deferred tax provision is analysed as follows: RMB'000 RMB'000 Effect of taxes on revaluation surplus 124, ,

80 No provision for other deferred taxation has been recognised in the financial statements as the amount involved is insignificant. At the balance sheet date, the major components of the unprovided deferred taxation assets are as follows: RMB'000 RMB'000 Unallowable provision for bad and doubtful debts 13,419 4,385 Unallowable provision for inventories 1, Unallowable provision for other investments There was no unprovided deferred taxation liabilities at the balance sheet date. 15,190 5,322 Deferred tax assets are not recognised in the financial statements, as it is not certain that future taxable profit will be available against which the unused tax credits can be utilised. The amount of the deferred tax credit (charge) for the year is as follows: RMB'000 RMB'000 Unallowable provision for bad and doubtful debts 9,034 1,255 Unallowable provision for inventories Unallowable provision for investments 49 (3,449) 30. OTHER FINANCIAL LIABILITIES 9,868 (1,552) Trade and other payables comprise amounts outstanding for trade purchase and ongoing costs. The directors consider that the carrying amount of trade and other payables approximates to their fair value. 31. RECONCILIATION OF (LOSS) PROFIT BEFORE TAX TO NET CASH FROM OPERATING ACTIVITIES RMB'000 RMB'000 (Loss) profit before taxation (58,068) 2,901 Adjustments for: Share of results of associates 528 5,489 Deferred income realized (264) - Interest expense 17,829 15,379 Interest income (462) (10,247) Dividend and investment income (3,386) (2,963) Gain on disposal of long term investment - (884) Goodwill written off 2,237 - Provision for diminution in value of deposits paid for land use right Provision for loss on long term investments (written back) 245 (22,993) Depreciation of property, plant and equipment 7,328 7,366 Amortisation of intangible assets 3, Loss on disposal of property, plant and equipment Operating cash outflow before movements in working capital (29,851) (4,923) Increase in inventories (8,181) (7,378) Decrease in receivables 56,652 20,188 (Decrease)/Increase in payables (5,609) 34,903 Cash generated by operations 13,011 42,790 Income taxes paid (175) (302) Income taxes refunded NET CASH INFLOW FROM OPERATING ACTIVITIES 12,988 42,