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Rego Interactive Co., Ltd Earnings Release 2003

Feb 13, 2004

50588_rns_2004-02-13_161038df-1c1e-4fc8-aec6-940d6aae0d49.pdf

Earnings Release

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==> picture [50 x 50] intentionally omitted <==

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2003

1 IMPORTANT

  • 1.1 The Board of Directors and the Directors of the Company confirmed that the information in this announcement does not contain any false information, misleading statements or material omissions, and accept joint and several responsibility for the truthfulness, accuracy and completeness of the content. This final results announcement has been prepared in accordance with the information of the annual report 2003 of the Company. For detailed information, please refer to the annual report 2003.

  • 1.2 Ms. Ma Baiyu, the chairman, Mr. An Pindong, the financial controller, and Ms. Shi Zhenjuan, the manager of the finance department, have declared that they are responsible for the truthfulness and completeness of the financial statements in the annual report 2003.

2 COMPANY INFORMATION

2.1 Basic information

Short form of the Short form of the Tianjin Capital Tianjin Capital Tianjin Capital Tianjin Capital
Company’s listed shares
Stock code 600874 1065
Place for listing of the A Shares — Shanghai H Shares — The Stock
Shares Securities Exchange (the Exchange of Hong Kong
“SSE”) Limited (the “Hong Kong
Stock Exchange”)
Registered address No. 45 Guizhou Road, Heping District, Tianjin, The
People’s Republic of China (the “PRC”)
Principal office address No. 45 Guizhou Road, Heping District, Tianjin, the PRC
Postal Code 300051
Website www.tjcep.com
E-mail address [email protected]

— 1 —

2.2 Contact person and method

2.2
**Contact person **		 and method and method
Secretary to the
Company’s Board of Company Secretary
Directors (PRC) in Hong Kong
Name Fu Yana Ip Pui Sum
E-mail address [email protected] [email protected]
Securities Affairs
Representative (PRC)
Name Gu Wenhui
E-mail address [email protected]
Correspondence address No. 45 Guizhou Road Flat A, E, F, 16/F
Heping District Yardley Commercial
Tianjin Building
the PRC 3 Connaught Road West
Sheung Wan
Hong Kong
Postal Code 300051
Telephone number 86-22-2352 3036 852-2803 2373
Facsimile number 86-22-2352 3100 852-2540 6365
  • 3 ACCOUNTING DATA AND BUSINESS STATISTICS HIGHLIGHTS (For each of the three years ended 31st December 2003 as prepared in accordance with the Accounting Standards and the Accounting Regulations for Business Enterprises of the PRC (collectively the “PRC GAAP”))

3.1 Principal accounting data

Unit: Rmb

Percentage Percentage Percentage
(%)
2003 2002 Increase (+) 2001
Year ended 31st December (Audited) (Audited) Decrease (-) (Audited)
Principal operating income 629,696,771 670,749,218 -6.12 595,986,000
Total profit 412,938,053 428,535,981 -3.64 399,345,000
Net profit 276,891,531 287,236,650 -3.60 267,634,000
Net profit after extraordinary 278,004,439 288,378,448 -3.60 267,551,000
items
Percentage
(%)
2003 2002 Increase (+) 2001
As at 31st December (Audited) (Audited) Decrease (-) (Audited)
Total assets 3,186,946,280 2,757,008,082 +15.59 1,926,984,000
Shareholder’s equity (Note 1) 2,018,965,688 1,855,124,157 +8.83 1,674,288,000
(after minority interest)
Net cash flow from operating 280,325,149 359,348,176 -21.71 186,351,000
activities

— 2 —

  • Note 1: Effective from 1st July 2003, the group adopted the revised “Accounting Standards for Business Enterprises — Events Occurring After the Balance Sheet Date”. The distribution of dividends is recognised as a transfer from shareholders’ equity to liability in the period when the profit appropriation plan is approved by the shareholders at the general meeting of shareholders. As a result of the adoption of the revised standard, the accounts have been adjusted retrospectively to reflect the change in accounting policy, resulting in an increase in undistributed profits as at 31st December 2002 and 2001 by Rmb 113,050,000 and 106,400,000, respectively.

3.2 Financial indicators

Percentage Percentage
(%)
2003 2002 Increase (+) 2001
Year ended 31st December (Audited) (Audited) Decrease (-) (Audited)
Earnings per share (Rmb) 0.21 0.22 -4.5 0.20
Earnings per share (Rmb) (Note 1) 0.21 0.22 -4.5 0.20
Return on net assets (fully diluted) (%) 13.71 15.48 -11.43 15.98
Return on net assets after extraordinary item
13.77		 15.54 -11.39 15.98
(%)
Net cash flow from operating activities per 0.21 0.27 -22.22 0.14
share (Rmb)
Percentage
(%)
2003 2002 Increase (+) 2001
As at 31st December (Audited) (Audited) Decrease (-) (Audited)
Net asset value per share (Rmb) 1.52 1.39 +9.35 1.26
Adjusted net asset value per share (Rmb) 1.52 1.39 +9.35 1.26

Note 1: There is no change in the number of shares of the Company throughout the year. As a result, the weighted average earnings per share is equal to fully diluted earnings per share.

  • 3.3 Significant differences between accounts prepared under PRC GAAP and the Accounting Principles Generally Accepted in Hong Kong (the “HK GAAP”)

  • applicable � Not applicable

Unit: Rmb

PRC GAAP
HK GAAP
Net profit
276,891,531
276,891,531
Explanation
No difference

— 3 —

4 CHANGES IN SHARE CAPITAL AND SHAREHOLDERS

4.1 Table of changes in share capital

During the reporting period, there is no change in the structure of the Company’s share capital and the number of shares of the Company.

Beginning of
the year
(Shares)
Increase/(Decrease) during the year		 Beginning of
the year
(Shares)
Increase/(Decrease) during the year
Share
placement
(Shares)
Bonus issue
(Shares)
Transfer
of surplus
to share
capital
(Shares)
Share issue
(Shares)
Others
(Shares)
Sub-total
(Shares)
A. Unlisted shares
1.
Promoter shares
comprising:
State shares
Domestic persons
shares
Sub-total
B. Listed shares
1.
Rmb ordinary shares
2.
Non-domestic listed
foreign currency
shares
Sub-total		 839,020,000
—
—
—
—
—
—
38,485,000
—
—
—
—
—
—
877,505,000
—
—
—
—
—
—
112,495,000
—
—
—
—
—
—
340,000,000
—
—
—
—
—
—
452,495,000
—
—
—
—
—
—		 839,020,000
38,485,000
877,505,000
112,495,000
340,000,000
452,495,000
C. Total 1,330,000,000
—
—
—
—
—
—

— 4 —

4.2 Table of the top ten shareholders of the Company

Number of shareholders at the end of the reporting period Number of shareholders at the end of the reporting period Number of shareholders at the end of the reporting period Number of shareholders at the end of the reporting period Number of shareholders at the end of the reporting period Number of shareholders at the end of the reporting period Number of shareholders at the end of the reporting period Number of shareholders at the end of the reporting period 27,873 27,873
**The ** top ten shareholders of the Company were as follows:
Increase(+)/ **Number ** of Percentage Class Number of
Decrease (-) shares held to total (circulating/ shares
during the at the end share non- pledged or Type of
**No. ** Name of shareholders year of the year capital (%) circulating) frozen shareholders
1 Tianjin Municipal Nil 839,020,000 63.080 Non- 0 State shares
Investment Company circulating
Limited
2 HKSCC Nominees +1,050,000 335,435,000 25.221 Circulating Unknown Foreign
Limited shares
3 Bohai Securities Co., Public shares 10,307,005 0.775 Public Unknown Public shares
Ltd. +4,886,626 (including shares- and legal
10,207,005 circulating/ person
public shares legal person shares
and 100,000 shares-non-
legal person circulating
shares)
4 Shen Tie Jing Fa Nil 3,500,000 0.263 Non- Unknown Legal person
circulating shares
5 China Southern Nil 2,725,000 0.200 Non- Note 1 Legal person
Securities Co., Ltd. circulating shares
6 China Galaxy Securities Nil 1,500,000 0.113 Non- Unknown Legal person
Co., Ltd. circulating shares
7 Shanxi Tongce Unknown 1,097,905 0.083 Circulating Unknown Public shares
Investment Co., Ltd.
8 Shanghai Baoshan Iron Unknown 1,065,232 0.080 Circulating Unknown Public shares
& Steel Plant Equipment
Inspection Co.
9 Liaoning Shennong Nil 1,000,000 0.075 Non- Unknown Legal person
circulating shares
10 Guotai Tian Zheng Nil 1,000,000 0.075 Non- Unknown Legal person
circulating shares
Note 1:
The securities of		 China Southern Securities Co., Ltd. have been withheld as collateral by China
Securities Depository and Clearing Corporation Limited because of insufficient funds due for settlement.
Description of There is no relationship and no parties acting in concert between the first largest
relationship of the top shareholder and the 2nd to 10th largest shareholders. However, it is not certain whether
ten there are any such relationships among the 2nd to 10th largest shareholders.
shareholders of the
Company or parties
acting in concert

— 5 —

The top ten shareholders of the Company’s circulating shares were as follows: Company’s circulating shares were as follows: Company’s circulating shares were as follows: Company’s circulating shares were as follows: Company’s circulating shares were as follows:
Number of
circulating
shares held
at the
end of the Type of
No. Name of shareholders year shares
1
HKSCC Nominees Limited		 335,435,000 H shares
2
Bohai Securities Co., Ltd.		 10,207,005 A shares
3
Shanxi Tongce Investment Co., Ltd.		 1,097,905 A shares
Shanghai Baoshan Iron & Steel Plant Equipment
4
Inspection Co.		 1,065,232 A shares
5
Ma Qiubo		 869,600 A shares
6
Shanghai Capital Investment Co., Ltd.		 757,155 A shares
7
HSBC Nominees (HK) Limited		 656,000 H shares
8
Chen Guangshen		 655,000 A shares
9
Bank of Communication —		 Hunan Finance and
Hefeng Value Enhancing Industry Fund 598,900 A shares
10 Liu Zijie 576,256 A shares
Description of relationship of the top ten shareholders of It is not certain whether
the Company’s circulating shares there are any relationships
between the 1st to 10th
largest shareholders of
circulating shares

4.3 Information of the controlling shareholder and ultimate shareholder of the Company

  • 4.3.1 Change in the controlling shareholder and ultimate shareholder of the Company

  • applicable � not applicable

  • 4.3.2 Details of the controlling shareholder and other ultimate shareholders of the Company

Name: Tianjin Municipal Investment Company Limited (“TMICL”) Legal representative: Mr. Sun Zengyin Date of incorporation: 20th January 1998 Registered Capital: Rmb 1,724,278,000 Type: State wholly-owned enterprise Structure of The Urban Construction Bureau of the Tianjin shareholding: Municipality owns 100% equity interest in TMICL

— 6 —

Scope of operation:

The development, construction and management of city infrastructure projects and auxiliary services, development and operation of city infrastructure, import of technology and equipment for city construction works, promotion for capital investment and project development and construction management (in accordance with the State regulations for specific projects and operations) in city road infrastructure

During the reporting period, there was no change in the controlling shareholder of the Company.

  • 5 DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND STAFF

  • 5.1 Changes in shareholdings of Directors, Supervisors and Senior Management of the Company

Shareholding Shareholding
at the Shareholding
beginning at the end
Name GenderPosition Age Term of the year of the year
Ma Baiyu F Chairman 42 2003.12.20- 0 0
2006.12.19
An Pindong M Director and 36 2003.12.20- 0 0
Financial 2006.12.19
Controller
Gu Qifeng M Director and 38 2003.12.20- 0 0
General Manager 2006.12.19
Wang Zhanying
M		 Director 49 2003.12.20- 5,000 5,000
2006.12.19
Wang Yueqing
M		 Director 60 2000.12.20- 0 0
2003.12.19
Zhu Min M Director 50 2000.12.20- 0 0
2003.12.19
Zhang Wenhui
M		 Director 49 2000.12.20- 0 0
2003.12.19
Tan Zhaofu M Director 49 2003.12.20- 0 0
2006.12.19
Fu Yana F Director, Deputy 33 2003.12.20- 0 0
General Manager 2006.12.19
and Company
Secretary
Wang Xiangfei
M		 Independent 53 2002.04.16- 0 0
Director 2005.04.15
Gao Zongze M Independent 65 2002.04.16- 0 0
Director 2005.04.15

— 7 —

Shareholding
at the Shareholding
beginning **at the ** end
Name GenderPosition Age Term of the year of the year
Chan Boon Teong M Independent 62 2000.12.20- 0 0
Director 2003.12.19
Ko Po Ming M Independent 46 2003.12.20- 0 0
Director 2006.12.19
Zhang Wenhui M Chairman of 49 2003.12.20- 0 0
Supervisory 2006.12.19
Committee
Yu Ruihua F Chairman of 58 2000.12.20- 0 0
Supervisory 2003.12.19
Committee
Chen Baosen M Supervisor 52 2000.12.20- 0 0
2003.12.19
Shi Chunhua M Supervisor 40 2000.12.20- 0 0
2003.12.19
Wang Zhanying M Supervisor 49 2000.12.20- 5,000 5,000
2003.12.19
Zhang Mingqi M Supervisor 47 2001.09.19- 0 0
2004.09.18
Nie Youzhuang M Supervisor 35 2003.12.20- 700 700
2006.12.19
Wen Qiuli M Supervisor 37 2003.12.20- 0 0
2006.12.19
Hou Xiaojian F Supervisor 39 2003.12.20- 0 0
2006.12.19
Wang Hui M Supervisor 36 2002.10.16- 0 0
2005.10.15
Luo Lianfang M Deputy General 56 2003.12.20- 0 0
Manager 2006.12.19
Lin Wenbo M Deputy General 47 2003.12.20- 0 0
Manager 2006.12.19
Zhu Yanbo M Deputy General 56 2003.12.20- 0 0
Manager 2006.12.19
Liu Wenya M Deputy General 46 2003.12.20- 0 0
Manager 2006.12.19
Wang Hong Ren M Deputy General 59 2003.12.20- 0 0
Manager 2006.12.19
Deng Biao M Chief Engineer 38 2003.12.20- 0 0
2006.12.19
Ip Pui Sum M Company Secretary 45 2003.12.20- 0 0
in Hong Kong 2006.12.19

— 8 —

  • 5.2 The positions of the Directors and Supervisors in the Company’s shareholders

� applicable � not applicable

Positions in Positions in Any Any
Name of the the remuneration,
Company’s Company’s allowance (Yes
Name shareholders shareholders Term or No)
Ma Baiyu TMICL Director 2002.11.20 - No
2004.1.20
Zhang Wenhui TMICL Party Start from No
Committee 2003.10.22
Assistant
Secretary

5.3 Remunerations of Directors, Supervisors and Senior Management

During the reporting period, the Company held an extraordinary general meeting on 20th December 2003, to elect the members of the Board of Director and Supervisory Committee for the next term. The first Meeting of the Third Board of Directors was also held on the same day to elect the members of the senior management for next term. The following table discloses the aggregate amount of annual remuneration received by the Directors, Supervisors and the senior management officers for the second term.

The Directors, Supervisors and senior management officers for the new term started to receive their remunerations on 1st January 2004.

Total remuneration for the year Total remuneration for the year Total remuneration for the year Rmb 4,185,000
Total remuneration paid to the 3 Rmb 1,000,000
highest paid directors
Total remuneration paid to the 3 Rmb 1,000,000
highest paid senior management
officers
Allowances paid to the independent HKD 650,000
directors
Other benefits provided to the Reimbursement of travelling and accommodation
independent directors expenses for attending the board meeting and the
annual general meeting of the Company
Name of the directors and supervisors whose remuneration were not paid No
by the Company
Remuneration paid to directors, supervisors and senior management in Number
officers the following bands (Rmb):
Over 300,000 4
200,000 - 300,000 9
Below 200,000 9

— 9 —

5.4 Number of Staff

As at the end of 2003, the number of staff of the Company was 447 which did not include any staff resigned or retired.

6 BOARD OF DIRECTORS’ REPORT

6.1 Management discussion and analysis on the major operating results of the Group

During the reporting period, capitalizing on the momentum of sound development, the Company has devoted a lot of effort in establishing the brand name of “TJCEP” and fulfilled its mission of becoming the leader in the industry. In 2003, the Company was awarded the Quality Certification on the Operating Assets of Environmental Protection Facilities as reviewed by the National Environmental Protection Bureau. As a result, our competitiveness was further enhanced. By establishing Guizhou Capital Water Co., Ltd. and acquiring Guiyang Xiaohe Sewage Water Treatment Plant, the scale of operation will be further expanded.

6.1.1 Operations of sewage water processing and construction of sewage water treatment plants

During the reporting period, the Company provided sewage water treatment services through Jizhuangzi Sewage Water Treatment Plant and Dongjiao Sewage Water Treatment Plant. Income for sewage water processing was derived from the “Sewage Water Processing Agreement” entered into between the Company and Tianjin Sewage Company. During the reporting period, the two sewage water treatment plants processed 218,160,000 cubic meters in total of sewage water, representing an increase of 8,910,000 cubic meters or 4.1% as compared with 209,250,000 cubic meters last year. During the reporting period, income from sewage water treatment business was Rmb 421,048,000, representing an increase of 5.35% as compared to last year. The increase in the volume of sewage water processed was mainly attributable to the modification work on Dongjiao Sewage Water Treatment Plant by shifting from river canal to pipe for inflow of water, and increased the volume of sewage water inflow to Dongjiao Sewage Water Treatment Plant. The increase in income from sewage water treatment business did not have any substantial effect on the profit of the Company during the period.

Currently, the construction-in-progress of Beicang Sewage Water Treatment Plant, Xianyanglu Sewage Water Treatment Plant and the expansion project of the Jizhuangzi Sewage Water Treatment Plant were underway. Income from construction of sewage water treatment plants has been based on the “Sewage Water Treatment Plant Construction-in-Progress Fee Agreement” entered into on 24th September 2001. During the reporting period, the Company tried to alleviate the effect of SARS on the construction work and ensured the smooth operation of civil construction projects. However, the outbreak of SARS resulted in postponement on tendering of equipment for the construction-in-progress project. The expansion project of Jizhuangzi Sewage Water Treatment Plant was originally

— 10 —

scheduled to be completed by the end of 2003. However, its equipment installation, adjustment and testing have not been not finished during the period. During the reporting period, construction work completed amounted to Rmb 287,539,000. In accordance with the progress of the construction project, the Company recognised construction fees of Rmb 143,982,000.

6.1.2 Operations of toll business

From 1st January 2003 to 31st December 2003, toll business of the Company recorded an income of Rmb 64,666,000. From 1st January 2003 to 31st May 2003, toll income was directly collected by the toll collectors at the toll stations. An income of Rmb 30,690,000 was recognised. In accordance with the Proposal for the Reform of Toll Collection Administration on Roads Constructed with Loans in Tianjin, the Company’s former toll stations ceased operation from 31st May 2003 and were demolished. Based on the level of income from toll business of the Company for the same period in 2002, Tianjin Municipal Engineering Bureau (“TMEB”) of the Tianjin Municipality has provided a one-off compensation of Rmb 8,000,000 in cash to the Company for toll income for the period from 31st May 2003 to 30th June 2003.

In July 2003, in accordance with the “Instructions on Concession of the Southeastern Half Ring of the Middle Ring Road (amended)” as promulgated by the TMEB since 1st July 2003, the Company was granted the toll collection rights for six new toll stations, namely the toll station south to Jizhou Bridge of Jinwei Highway, the toll station east to Jizhou Bridge of Jingha Highway, Jinglai toll station of Jinwen Highway, Dongmajuan toll station of Jingfu Highway, Maying toll station of Yangyu Highway and Gaozhuang toll station of Hannan Highway (collectively refered to as “Current Toll Stations”) as the operating income from the Southeastern Half Ring Road of the Middle Ring of Tianjin until the expiry of operating period on 1st March 2029.

In July 2003, the Company entered into the “Toll Collection Subcontracting Agreement” with the Toll Collection Office for Roads Constructed with Loans in Tianjin, pursuant to which the Company agreed to engage the Toll Collection Office to collect tolls on its behalf and to take charge of the operation, management, repair and maintenance of the Current Toll Stations.

As a result, the Company’s toll collection arrangement has changed from direct toll collection at toll stations to subcontracting toll collection since 1st July 2003.

TMEB has provided a one-off cash compensation to the Company for demolishing the former toll stations which was equivalent to the net book value of the former toll stations as at 30th June 2003 of approximately Rmb32,563,000.

The Company has engaged Scott Wilson Consultancy Group, a professional consulting engineer, to assess the traffic volume, toll fee, operation, management and maintenance costs of the former toll stations and the Current Toll Stations and issued separate assessment reports in respect thereof.

— 11 —

The change in the operation model for toll collection did not have any material effect on the operating results and the net asset value of the Company’s toll collection business.

6.2 Principal operating income and segmental information

Unit: Rmb’000

Unit: Rmb’000 Unit: Rmb’000
Percentage
Percentage
(%) of
(%) of
principal
principal
Gross
operating
operating
profit
income
costs
margin (%)
Gross Increase
Increase
Increase
Principal
Principal		 profit (+)
(+)
(+)
operating
operating		 margin /decrease
/decrease
/decrease
Business income
costs		 (%) (-)
(-)
(-)
Sewage water processing and 565,030
107,377		 75.49 -3.12
-4.25
+0.22
construction of sewage water
treatment plants
Road and toll stations 64,666
21,231		 61.02 -21.84
-35.48
+6.30
Including: Connected 565,030
107,377		 75.49 -3.12
-4.25
+0.22
transactions
Principles for determining With respect to the income from the businesses of sewage water processing
prices to be charged on and construction of sewage water processing plants, fees charged will be
connected transactions determined in accordance with the agreement governing the transactions.
Description on the necessity 1. The Company’s connected transactions are conducted according to the
and continuity of connected nature of the sewage water processing business. As public utility
transactions services, the purchasers of sewage water processing services in Tianjin
will only be companies under the Tianjin Municipal Government. At
present, Tianjin Sewage Company is the entity performing this function;
2. The connected transactions referred to above constitute major sources of
income for the Company. In the event that there is no change to the
principal operations of the Company, such connected transactions will
continue.
6.3
**Analysis of the **		 **geographical segments ** **for the ** principal operations
During the reporting period, the present principal operations of the Company is located
in Tianjin. Income generated in Tianjin area accounted for 100% of the income from the
principal operations of the Company.
6.4
Suppliers and customers of the Company
Purchases from the top five suppliers
Rmb		 Percentage to
54.58%
154,810,000 total
purchases
Sales to the top five customers
Rmb		 Percentage to
89.86%
573,030,000 total sales

  • 6.5 Operations of the investee companies (applicable to those which investment gains accounted for more than 10% of the net profit)

  • applicable � not applicable

— 12 —

  • 6.6 Reasons for material changes incurred on the principal operations and its structure

  • applicable � not applicable

  • 6.7 Reasons for material changes incurred on the profitability (gross profit margin) of the principal operations compared with that of last year

  • applicable � not applicable

  • 6.8 Analysis of the reasons for material changes incurred in the operating results and contribution to profit compared with that of last year

  • applicable � not applicable

  • 6.9 Analysis of the reasons for material changes incurred on the overall financial condition compared with that of last year

  • applicable � not applicable

  • 6.10 Effect incurred, being incurred or will be incurred in the financial condition and operating results of the Company by material changes in the operating environment as well as macro-economic policies, laws and regulations

  • applicable � not applicable

  • 6.11 The extent to which the profit forecast is fulfilled

� applicable � not applicable

  • 6.12 The extent to which the operation plans is achieved

� applicable � not applicable

In 2003, being affected by SARS, the expansion project of Jizuangzi Sewage Water Treatment Plant and the invitation of tenders from overseas for the construction project of Xianyanglu Sewage Water Treatment Plant were affected.

Although the Company implemented proactive measures, the expansion project of Jizhuangzi Sewage Water Treatment Plant was originally schedule to be completed by the end of 2003, but the Company had to postpone the completion to 2004 because of the delay in the installation of equipment.

6.13 Use of proceeds from subscription

  • applicable � not applicable

6.14 Changes in projects

  • applicable � not applicable

— 13 —

6.15 Major investments made out of funds other than proceeds from subscription

  • applicable � not applicable

During the reporting period, the funds other than proceeds from subscription were mainly used in the expansion project of the Jizhuangzi Sewage Water Treatment Plant, the construction-in-progress of Xianyanglu Sewage Water Treatment Plant and Beicang Sewage Water Treatment Plant. During the reporting period, the construction work completed amounted to Rmb 287,539,000. In accordance with the progress of the construction, the Company recognised sales of Rmb 143,982,000. As at 31st December 2003, the stage of completion of the three constructions in-progress was:

  1. Expansion of Jizhuangzi Sewage Water Treatment Plant: 53.9%

  2. Construction of Xianyanglu Sewage Water Treatment Plant: 31.3%

  3. Construction of Beicang Sewage Water Treatment Plant: 23.9%

During the reporting period, the Company invested Rmb 9,000,000 to Tianjin Capital New Materials Company Limited. Its registered capital amounted to Rmb 20,000,000, of which 45% was contributed by the Company. It is principally engaged in the manufacturing and sales of fabric wrapped - reinforced plastic mortar pipe, PVC, UPVC and other piping materials.

During the reporting period, the Company invested Rmb 44,000,000 in Guizhou Capital Water Co., Ltd. The registered capital of that company was Rmb 100,000,000, of which 70% was contributed by the Company. It is principally engaged in the development, construction, operation and management of urban sewage water treatment plants, drinking water treatment plants and solid waste treatment facilities, research, development and marketing of environmental conservation technology, and provides consultancy services of water treatment facilities, environmental conservation project, municipal construction projects, toll road construction projects and traffic construction projects.

  • 6.16 The statement from the Board of Directors concerning the qualified opinion issued by the auditors

  • applicable � not applicable

  • 6.17 The operation plan for the forthcoming year prepared by the Board of Directors

  • applicable � not applicable

— 14 —

  1. The Company will ensure Dongjiao Sewage Water Treatment Plant, Jizhuangzi Sewage Water Treatment Plant are operated safely and efficiently and to ensure the completion of expansion of Jizhuangzi Sewage Water Treatment Plant and new construction of Xianyanglu Sewage Water Treatment Plant.

  2. The Company will continue to explore new methods for capital operation of the Company. The Company will continue to compile information necessary for the issue of A Shares Convertible Bonds and seek to complete the issue of convertible bonds as soon as practicable. Meanwhile, the Company will proactively seek other financing sources so as to establish a comprehensive network of channel for raising capital.

  3. The Company will continue to expand its efforts in marketing development and to capture the sewage water markets nationwide as well as in the surrounding areas of Tianjin in a flexible manner such as BOT and TOT through bidding and negotiation.

  4. The Company will put more efforts on staff training and recruitment, and establish a human resources management system which attracts and retain talents and makes good use of talents by improving the performance evaluation and compensation incentive system.

  5. The Company will apply for establishment of a post-doctoral scientific research workshop based on the R&D center to accommodate the need of the Company.

  6. The Company will increase the growth of the Company’s profit by exploring the development and operation of environmental-friendly technology and environmentalfriendly products as well as environmental-friendly facilities, and developing technical consultation and technical services for sewage water treatment.

6.18 Profit forecast for the forthcoming year

  • applicable � not applicable

  • 6.19 The Board of Directors’ proposal on the profit appropriation or transfer of capital reserve fund

  • applicable � not applicable

— 15 —

As audited by PricewaterhouseCoopers Zhong Tian Certified Public Accountants Co., Ltd., the PRC and PricewaterhouseCoopers, Certified Public Accountants, Hong Kong respectively, the consolidated net profit of the Company amounted to Rmb 276,892,000 in 2003. Taking into account of transferring 10% thereof to the statutory common reserve Rmb 27,689,000 and 5% thereof to the statutory provident fund Rmb 13,845,000 in accordance with the relevant requirements of Company Law of the PRC and the Articles of Association of the Company as well as the retained profit Rmb 371,500,000 at the beginning of the year and the distribution in 2003 of cash dividend Rmb 113,050,000 for 2002, the actual profit distributable to shareholders amounted to Rmb 493,808,000 for the year. Based on the total capital of 1,330,000,000 Shares as at 2003, it is intended to make a dividend payment of Rmb 0.80 (including tax) in cash per ten shares. The distribution proposal shall be submitted to the general meeting for approval.

No transfer from the capital reserve fund to share capital was made in 2003.

6.20 Analysis of financial position

The financial conditions of the Company can be analysed in detail as follows:

  • (1) As at 31st December 2003, the liability to asset ratio (Total liabilities � Total assets) was 36.61%. The amount of the liabilities was reasonable and the ratio represented a reasonable, stable and healthy financial condition.

  • (2) As at 31st December 2003, the total assets of the Group amounted to Rmb 3,186,946,000, representing an increase by 15.59% as compared with the total assets of Rmb 2,757,008,000 last year. The increase was mainly due to new construct projects.

  • (3) As at 31st December 2003, the long-term liabilities of the Group amounted to Rmb 721,652,000, representing an increase by Rmb 154,976,000 as compared with the long-term liabilities of Rmb 566,676,000 last year. The increase was mainly attributable to the loans borrowed for the new construction projects.

  • (4) As at 31st December 2003, the shareholders’ equity of the Group amounted to Rmb 2,018,966,000 representing an increase by 8.83% as compared with the shareholders’ equity of Rmb 1,855,124,000 last year. The increase was mainly attributable to the Company’s profits for the year.

  • (5) Total profit before taxation of the Group for the year was Rmb 412,938,000, representing a decrease by 3.64% as compared with the total profits of Rmb 428,536,000 last year. The decrease was mainly due to the decrease of profits from the construction of sewage water treatment plants.

  • (6) Net profit for the year was Rmb 276,892,000, representing a decrease by 3.60% as compared with the net profit of Rmb 287,236,000 last year. The decrease was mainly due to the decrease of profit from the construction of sewage water treatment plants.

— 16 —

  • (7) The cash flows derived from operating activities of the Group per share for the year was Rmb 0.21, representing a decrease by Rmb 0.06 as compared with Rmb 0.27 of last year. The decrease was mainly due to the decrease of revenue from operations of the construction of sewage water treatment plants and toll fares.

7 SIGNIFICANT EVENTS

7.1 Acquisition of assets

  • applicable � not applicable

During the reporting period, the Company established a 70% subsidiary- “Guizhou Capital Water Co., Ltd. in October 2003 and entered into the “Asset Transfer Agreement of Guiyang Xiaohe Sewage Water Treatment Plant” with Guiyang State-owned Asset Management Company on 10th December 2003. At present, the transition of work of the sewage treatment plant has been completed. The relevant transfer of accounts was underway. The Xiaohe Sewage Water Treatment Plant commenced trial operation on 1st January 2004.

7.2 Disposal of assets

  • applicable � not applicable

7.3 Material guarantees

  • applicable � not applicable

7.4 Connected debts and liabilities

  • applicable � not applicable

Unit: Rmb’000

Unit: Rmb’000
Connected parties Funds provided to the
connected parties
Funds provided by the
connected parties to the
listed company
Initial
amount
Balance
Initial
amount
Balance
193,536
12,314
0
0
193,536
12,314
0
0
Initial
amount
Balance
Initial
amount
Balance
Tianjin Sewage
Company		 193,536
12,314
0
0
Total

7.5 Asset management on trust

  • applicable � not applicable

7.6 Implementation of undertakings

  • applicable � not applicable

— 17 —

7.7 Material litigation and arbitration

  • applicable � not applicable

7.8 Performance of responsibilities by the independent directors

The Company established the system of independent directors in accordance with “The Rules Governing the Independent Directors of the Listed Company” issued by the China Securities Regulatory Commission and the Listing Rules issued by the Hong Kong Stock Exchange in 2002. The Board of Directors comprises three independent directors, representing one-third of all the members of the Board. The term of Mr. Chan Boon Teong expired on 19th December 2003. At the extraordinary general meeting of the Company held on 20th December 2003, Mr. Ko Po Ming was elected as an independent non-executive director of the Company. Each of the independent directors is familiar with the conditions of the business and operations of the Company. They have attended meetings of the Board and the shareholders’ general meetings in a serious and responsible manner, and have given independent and professional opinions. They have participated in relevant training proactively so as to understand the rights, duties and responsibilities of an independent director. In addition, due to the changes of independent directors, a resolution was considered and passed at the first meeting of the third Board convened on 20th December 2003, pursuant to which a new audit committee and a remuneration and appraisal committee of the Company comprising the independent directors of Mr. Gao Zongze, Mr. Wang Xiangfei and Mr. Ko Po Ming, were formed.

8 REPORT OF THE SUPERVISORY COMMITTEE

The Supervisory Committee of the Company conducted a serious and detailed examination on the financial systems and conditions of the Company. The Supervisory Committee is of the view that the financial statements of the Company for the year ended 31st December 2003 objectively and accurately reflect the financial conditions and operating results of the Company. During the reporting period, the connected transactions carried out by the Company were fair and reasonable and did not infringe the interests of the minority shareholders.

9 FINANCIAL INFORMATION

9.1 Audit opinion

The Company’s financial statements for year 2003 have been audited by PricewaterhouseCoopers Zhong Tian Certified Public Accountants Co., Ltd., the PRC and PricewaterhouseCoopers, Certified Public Accountants, Hong Kong. The PRC certified public accountants, Tu Yi and Wang Xiao, have issued an auditors’ report (PwC Shen Zi (2004) No. 698) with unqualified opinion.

— 18 —

9.2 Prepared in accordance with HK GAAP Consolidated Profit and Loss Account (Audited) For the year ended 31st December 2003

Note
Turnover
1
Cost of sales
Gross profit
Other revenues
Administrative expenses
Other operating
expenses, net
Operating profit
Finance costs
2
Profit before taxation
Taxation
3
Profit after taxation
Minority interests
Profit attributable to shareholders
Dividend
4
Earnings per shares
5		 2003
Rmb’000
594,645
(128,608)		 2002
Rmb’000
633,858
(146,136
466,037
6,531
(39,881)
(407)
432,280
(19,342)
412,938
(136,379)
276,559
333		 487,722
2,158
(46,047
(726
443,107
(14,571
428,536
(141,475
287,061
175
276,892
106,400
Rmb
0.21		 287,236
113,050
Rmb
0.22
  • 1 TURNOVER AND SEGMENT INFORMATION

The Group is currently engaged in sewage water processing, sewage water processing plants construction and road and toll stations operations.

(a) Analysis of the Group’s turnover

2003 2002
Rmb’000 Rmb’000
Revenue from Sewage water processing 397,890 377,684
Revenue from construction of sewage water processing
plants 136,063 173,442
533,953 551,126
Toll fee income 60,692 78,185
Haihe Bridge project management fees — 4,547
594,645 633,858

— 19 —

Pursuant to the PRC tax rules, the business of the Group is subject to PRC business tax levied at 5% of the operating revenue and government surcharges levied at 10% of the amount of business tax. The business tax and government surcharges related to revenue derived from the business of the Group during the year ended 31st December 2003 amounted to Rmb 35,051,000 (2002: Rmb 36,891,000), and has been deducted from the operating revenue to arrive at the turnover of the Group.

(b) Business segment analysis

Sewage water
processing and
construction of
sewage water
processing
plants
Road
and toll
stations
2003
2003
Rmb’000
Rmb’000
Turnover
533,953
60,692
Segment results
372,287
40,651
Taxation
Profit after taxation
Minority interests
Profit attributable to shareholders
Depreciation and amortisation
42,774
9,845		 Group
2003
Rmb’000
594,645
412,938
(136,379)
276,559
333
276,892
52,619
Sewage water
processing and
construction of
sewage water
processing
plants
Road
and toll
stations
Haihe Bridge
construction
management
2002
2002
2002
Rmb’000
Rmb’000
Rmb’000
Turnover
551,126
78,185
4,547
Segment results
386,480
38,585
3,471
Taxation
Profit after taxation
Minority interests
Profit attributable to
shareholders
Depreciation and
amortisation
40,094
10,780
—		 Group
2002
Rmb’000
633,858
428,536
(141,475)
287,061
175
287,236
50,874

— 20 —

On 24th September 2001, the Company entered into the Haihe Bridge Project Management Agreement with Tianjin Municipal Investment Company Limited (“TMICL”), the controlling shareholder of the Company and owner of the Haihe Bridge Construction Project. According to the agreement, the Company provides project management services to TMICL for the construction of Haihe Bridge and is entitled to a total sum of project management fee amounting to Rmb 10,650,000, of which Rmb 7,542,000 has been recognised in the Company’s accounts up to 31st December 2002. On 29th April 2003, the Company and TMICL agreed to terminate the project management agreement with effect from 1st January 2003 as the construction of Haihe Bridge project has been suspended since that date. The termination of the Haihe Bridge project management business does not have a material impact to the financial position of the Group.

No geographical segment analysis is presented since all of the Group’s operations are in the PRC.

2 FINANCE COSTS

2003 2002
Rmb’000 Rmb’000
Interest on bank loans 32,450 20,899
Less: Interest capitalised to construction-in-progress (13,108) (6,328)
19,342 14,571

3 TAXATION

No Hong Kong profits tax has been provided as the Group has no taxable profits in Hong Kong (2002: nil). PRC income tax has been charged at 33% on the assessable profits of the Group.

There is no unprovided deferred taxation of the Group for the year ended 31st December 2003 (2002: nil).

4 DIVIDEND

2003 2002
Rmb’000 Rmb’000
Final, proposed of Rmb 0.8 (2002: Rmb 0.85) per ten
shares 106,400 113,050

Pursuant to the Board of Directors meeting held on 12th February 2004, the Board of Directors proposed to distribute a final dividend of Rmb 0.8 per every ten shares held by the shareholders, totalling Rmb 106,400,000 (2002: final dividend of Rmb 0.85 per every ten shares held by the shareholders totalling Rmb 113,050,000), based on the total number of shares of 1,330,000,000 as at 31st December 2003. The proposed dividend is not reflected as a dividend payable in these accounts but will be reflected as an appropriation of retained earnings for the year ending 31st December 2004.

— 21 —

5 EARNINGS PER SHARE

The calculation of earnings per share is based on the profit attributable to shareholders of Rmb 276,892,000 (2002: Rmb 287,236,000) and 1,330,000,000 shares (2002:1,330,000,000 shares) in issue during the year.

9.3 Prepared in accordance with PRC GAAP

Balance Sheets (Audited)

As at 31st December 2003

Group Group Company Company
31st 31st 31st 31st
December December December December
2003 2002 2003 2002
Rmb’000 Rmb’000 Rmb’000 Rmb’000
ASSETS
CURRENT ASSETS
Cash and bank balances 450,074 537,929 400,063 515,507
Accounts receivable 107,737 28,704 107,737 28,232
Other receivables 2,854 1,419 5,401 1,078
Prepayments to suppliers 84,295 1,871 82,932 253
Inventories 2,123 2,440 2,123 2,440
Total current assets 647,083 572,363 598,256 547,510
LONG-TERM INVESTMENTS
Long-term equity investments 13,000 4,000 69,443 19,439
FIXED ASSETS AND CONSTRUCTION
IN PROGRESS
Fixed assets — cost 1,840,791 1,757,717 1,727,959 1,755,436
Less: Accumulated depreciation (534,553) (493,021) (553,963) (492,771)
Fixed assets — net book value 1,306,238 1,264,696 1,193,996 1,262,665
Construction in progress 1,220,625 915,949 1,113,164 825,625
Total fixed assets and construction in
Progress 2,526,863 2,180,645 2,307,160 2,088,290
TOTAL ASSETS 3,186,946 2,757,008 2,974,859 2,655,239
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES
Short-term loan 45,000 30,000 45,000 —
Accounts payable 5,779 1,862 4,116 414
Advances from customers 75,577 89,597 75,199 89,597
Welfare payable 6,834 5,753 6,505 5,733
Dividend payable 1,647 2,218 1,647 2,218
Taxes payable 45,608 21,196 45,599 21,191
Other accruals 711 482 702 465
Other payables 207,543 176,523 140,879 174,635
Accrued expenses 6,246 5,861 6,246 5,862

— 22 —

Group Group Group Company Company Company
31st 31st 31st 31st
December December December December
2003 2002 2003 2002
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Long-term liabilities payable within one
year 50,000 — 50,000 —
Total current liabilities 444,945 333,492 375,893 300,115
LONG-TERM LIABILITIES
Long-term loan 640,000 500,000 580,000 500,000
Specific payables 81,652 66,676 — —
Total long-term liabilities 721,652 566,676 580,000 500,000
TOTAL LIABILITIES 1,166,597 900,168 955,893 800,115
MINORITY INTERESTS 1,383 1,716 — —
SHAREHOLDERS’ EQUITY
Share capital 1,330,000 1,330,000 1,330,000 1,330,000
Capital reserve fund 69,289 69,289 69,289 69,289
General reserves 125,869 84,335 125,869 84,335
Including:
Statutory common reserve 83,912 56,223 83,912 56,223
Statutory provident fund 41,957 28,112 41,957 28,112
Undistributed profits 493,808 371,500 493,808 371,500
Total shareholders’ equity 2,018,966 1,855,124 2,018,966 1,855,124
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY 3,186,946 2,757,008 2,974,859 2,655,239

Profit and Loss Accounts (Audited)

For the year ended 31st December 2003

Income from principal operations
Less: Costs for principal operations
Business tax and surcharges
Profit from principal operations
Add:
Profit from other operations
Less: Administrative expenses
Net financial expense
Operating profit
Less: Investment loss
Add:
Non-operating income
Less: Non-operating expenses
Total profit
Less: Income tax
Minority interests
Net profit		 Group
2003
2002
Rmb’000
Rmb’000
629,696
670,749
(128,608)
(146,136)
(35,051)
(36,891)
466,037
487,722
6,388
514
(39,881)
(46,047)
(18,493)
(12,511)
414,051
429,678
—
—
302
42
(1,415)
(1,184)
412,938
428,536
(136,379)
(141,475)
333
175
276,892
287,236		 Group
2003
2002
Rmb’000
Rmb’000
629,696
670,749
(128,608)
(146,136)
(35,051)
(36,891)
466,037
487,722
6,388
514
(39,881)
(46,047)
(18,493)
(12,511)
414,051
429,678
—
—
302
42
(1,415)
(1,184)
412,938
428,536
(136,379)
(141,475)
333
175
276,892
287,236		 Company
2003
2002
Rmb’000
Rmb’000
629,696
670,749
(128,608)
(146,136)
(35,051)
(36,891)
466,037
487,722
5,602
10
(36,604)
(43,705)
(18,554)
(12,595)
416,481
431,432
(2,996)
(1,579)
302
42
(516)
(1,184)
413,271
428,711
(136,379)
(141,475)
—
—
276,892
287,236		 Company
2003
2002
Rmb’000
Rmb’000
629,696
670,749
(128,608)
(146,136)
(35,051)
(36,891)
466,037
487,722
5,602
10
(36,604)
(43,705)
(18,554)
(12,595)
416,481
431,432
(2,996)
(1,579)
302
42
(516)
(1,184)
413,271
428,711
(136,379)
(141,475)
—
—
276,892
287,236
487,722
514
(46,047)
(12,511)
429,678
—
42
(1,184)
428,536
(141,475)
175		 466,037
5,602
(36,604)
(18,554)
416,481
(2,996)
302
(516)
413,271
(136,379)
—		 487,722
10
(43,705
(12,595
431,432
(1,579
42
(1,184
428,711
(141,475
—
287,236 276,892

— 23 —

Profit Appropriation Statements (Audited)

For the year ended 31st December 2003

Group
2003
2002
Rmb’000
Rmb’000
Net profit
276,892
287,236
Add:
Undistributed profits at
beginning of the year
371,500
233,749
Profits available for appropriation
648,392
520,986
Less:
Transfer to statutory
common reserve
(27,689)
(28,723)
Transfer to statutory
provident fund
(13,845)
(14,362)
Profit attributable to shareholders
606,858
477,900
Less:
Dividend paid
(113,050)
(106,400)
Undistributed profits at the end of the
year
493,808
371,500
Cash Flow Statements (Audited)
For the year ended 31st December 2003
Items
Cash flows from operating activities
Cash inflows:
Cash received from rendering of services
Other cash received relating to operating activities
Sub-total of cash inflows
Cash outflows:
Cash paid for goods and services
Cash paid to and on behalf of employees
Taxes paid
Other cash paid relating to operating activities
Sub-total of cash outflows
Net cash flows from operating activities
Cash flows from investing activities
Cash inflows:
Cash received from disposal fo fixed assets, intangible assets
and other long-term assets
Other cash received from investing activities
Sub-total of cash inflows
Cash outflows:
Cash paid to acquire fixed assets, intangible assets and other
long-term assets		 Group
2003
2002
Rmb’000
Rmb’000
276,892
287,236
371,500
233,749		 Group
2003
2002
Rmb’000
Rmb’000
276,892
287,236
371,500
233,749		 Company
2003
2002
Rmb’000
Rmb’000
276,892
287,236
371,500
233,749
648,392
520,985
(27,689)
(28,723)
(13,845)
(14,362)
606,858
477,900
(113,050)
(106,400)
493,808
371,500
Group
Company
2003
2003
Rmb’000
Rmb’000
536,645
535,794
9,087
8,285
545,732
544,079
(61,945)
(61,520)
(33,855)
(32,009)
(147,572)
(147,569)
(22,035)
(23,769)
(265,407)
(264,867)
280,325
279,212
32,309
32,309
993
930
33,302
33,239
(466,412)
(406,512)		 Company
2003
2002
Rmb’000
Rmb’000
276,892
287,236
371,500
233,749
648,392
520,985
(27,689)
(28,723)
(13,845)
(14,362)
606,858
477,900
(113,050)
(106,400)
493,808
371,500
Group
Company
2003
2003
Rmb’000
Rmb’000
536,645
535,794
9,087
8,285
545,732
544,079
(61,945)
(61,520)
(33,855)
(32,009)
(147,572)
(147,569)
(22,035)
(23,769)
(265,407)
(264,867)
280,325
279,212
32,309
32,309
993
930
33,302
33,239
(466,412)
(406,512)		 Company
2003
2002
Rmb’000
Rmb’000
276,892
287,236
371,500
233,749
648,392
520,985
(27,689)
(28,723)
(13,845)
(14,362)
606,858
477,900
(113,050)
(106,400)
493,808
371,500
Group
Company
2003
2003
Rmb’000
Rmb’000
536,645
535,794
9,087
8,285
545,732
544,079
(61,945)
(61,520)
(33,855)
(32,009)
(147,572)
(147,569)
(22,035)
(23,769)
(265,407)
(264,867)
280,325
279,212
32,309
32,309
993
930
33,302
33,239
(466,412)
(406,512)
648,392
(27,689)
(13,845)
606,858
(113,050)		 520,986
(28,723)
(14,362)
477,900
(106,400)		 648,392
(27,689)
(13,845)
606,858
(113,050)		 520,985
(28,723
(14,362
477,900
(106,400
545,732
(61,945)
(33,855)
(147,572)
(22,035)
(265,407)
280,325
32,309
993
33,302		 544,079
(61,520
(32,009
(147,569
(23,769
(264,867
279,212
32,309
930
33,239
(466,412)

— 24 —

Items
Cash paid to acquire long-term equity investments except for
subsidiary companies
Cash paid to invest in a subsidiary company
Sub-total of cash outflows
Net cash flows from investing activities
Cash flows from financing activities
Cash inflows:
Cash received from borrowings
Cash outflows:
Cash repayment of amount borrowed
Cash payments for distribution of dividends or profits
Cash payments for interest expenses
Sub-total of cash outflows
Net cash flows from financing activities
Net decrease in cash
Supplementary Information		 Group
Company
2003
2003
Rmb’000
Rmb’000
(9,000)
(9,000)
—
(44,000)
(475,412)
(459,512)
(442,110)
(426,273)
250,000
175,000
(30,000)
—
(113,620)
(113,620)
(32,450)
(29,763)
(176,070)
(143,383)
73,930
31,617
(87,855)
(115,444)		 Group
Company
2003
2003
Rmb’000
Rmb’000
(9,000)
(9,000)
—
(44,000)
(475,412)
(459,512)
(442,110)
(426,273)
250,000
175,000
(30,000)
—
(113,620)
(113,620)
(32,450)
(29,763)
(176,070)
(143,383)
73,930
31,617
(87,855)
(115,444)
(475,412)
(442,110)
250,000
(30,000)
(113,620)
(32,450)
(176,070)
73,930		 (459,512
(426,273
175,000
—
(113,620
(29,763
(143,383
31,617
(87,855)
(i)
Reconciliation of net profit to net cash flows from operating
activities
Net profit
Add/(Less):
Minority interests
Depreciation and amortisation of fixed assets
Losses on disposal of fixed assets
Net interest expense
Loss on investments
Decrease in inventories
Increase in operating receivables
Increase in operating payables
Net cash flows from operating activities
(ii)
Net decrease in cash
Cash at end of the year
Less: Cash at beginning of the year
Net decrease in cash		 Group
Company
2003
2003
Rmb’000
Rmb’000
276,892
276,892
(333)
—
52,619
52,279
498
498
19,342
19,342
—
2,996
317
317
(82,671)
(85,968)
13,661
12,856
280,325
279,212
450,074
400,063
(537,929)
(515,507)
(87,855)
(115,444)		 Group
Company
2003
2003
Rmb’000
Rmb’000
276,892
276,892
(333)
—
52,619
52,279
498
498
19,342
19,342
—
2,996
317
317
(82,671)
(85,968)
13,661
12,856
280,325
279,212
450,074
400,063
(537,929)
(515,507)
(87,855)
(115,444)
450,074
(537,929)		 400,063
(515,507
(87,855)

— 25 —

9.4 Significant differences between PRC GAAP and HK GAAP

The differences between the accounts prepared under PRC GAAP and HK GAAP for the year ended 31st December 2003 are as follows:

Profit attributable
to shareholders
Group
Company
Rmb’000
Rmb’000
As reported under PRC GAAP
276,892
276,892
Reversal of equity accounting of the loss
of a subsidiary
—
2,996
As reported under HK GAAP
276,892
279,888		 Net asset value
Group
Company
Rmb’000
Rmb’000
2,018,966
2,018,966
—
5,557
2,018,966
2,024,523		 Net asset value
Group
Company
Rmb’000
Rmb’000
2,018,966
2,018,966
—
5,557
2,018,966
2,024,523
2,024,523

10 SALE AND PURCHASE OR REPURCHASE OF SHARES OF THE COMPANY

During the year under review, the Company and its subsidiaries did not purchase, sell or repurchase any shares of the Company.

11 CODE OF BEST PRACTICE

None of the Directors is aware of any information that would reasonably indicate that the Company is not or was not, for any part of the year, in compliance with the Code of Best Practice.

12 PUBLICATION OF FINANCIAL INFORMATION

The Company’s 2003 annual report which sets out all the information required by paragraphs 45(1) to 45(3) of Appendix 16 of the Listing Rules will be available for publication on the website of The Stock Exchange of Hong Kong Limited (http://www.hkex.com.hk) as soon as possible.

By Order of the Board Ma Baiyu Chairman

Tianjin, the PRC 12th February 2004

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the twelfth Annual General Meeting (“AGM”) of members of Tianjin Capital Environmental Protection Company Limited (the “Company”) will be held at 4/F., Conference Room, the Company, 45 Guizhou Road, Heping District, Tianjin, the People’s Republic of China (the “PRC”) on 30th March 2004 at 10:30 a.m. for the purpose of considering and passing the resolutions as listed below:

  • I. As ordinary resolutions:

  • To consider and approve the Annual Report of the Company for the year 2003;

  • To consider and approve the Accounts of the Company for the year 2003, audited by the domestic and international certified public accountants;

  • To consider and approve the Report of the Directors of the Company for the year 2003;

  • To consider and approve the Financial Report of the Company for the year 2003 and Financial Budget for the year 2004;

  • To consider and approve the proposal in respect of the Profit Appropriation Plan of the Company for the year 2003;

  • To consider and approve the proposals relating to the re-appointment of PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd. and PricewaterhouseCoopers Hong Kong as the domestic and international auditors of the Company;

  • To consider and approve the operating and development plans of the Company for 2004;

  • To consider and approve the Report of the Supervisory Committee for the year 2003;

  • To consider and approve the proposal relating to the extension of the validity period to one more year for the issue of the A Shares Convertible Bonds of the Company;

The major terms in respect of the proposal on the issue of A Shares Convertible Bonds include the following:-

  • (a) the issue size of the issue of A Shares Convertible Bonds;

  • (b) the issue price of the issue of A Shares Convertible Bonds;

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  • (c) the maturity period of the issue of A Shares Convertible Bonds;

  • (d) the rate and interest of the issue of A Shares Convertible Bonds;

  • (e) the date of repayment of the issue of A Shares Convertible Bonds;

  • (f) the conversion price and the adjustment principle of the issue of A Shares Convertible Bonds;

  • (g) the conversion period of the issue of A Shares Convertible Bonds;

  • (h) the re-purchase term of the issue of A Shares Convertible Bonds;

  • (i) the amendment to the conversion price of the issue of A Shares Convertible Bonds;

  • (j) the redemption term of the issue of A Shares Convertible Bonds;

  • (k) the entitlement of dividend during the conversion year of the issue of A Shares Convertible Bonds;

  • (l) the arrangement for placing of the issue of A Shares Convertible Bonds to the Company’s existing shareholders;

  • (m) the use of proceeds of the issue of A Shares Convertible Bonds;

  • (n) the feasibility study in respect of the use of proceeds from the issue of A Shares Convertible Bonds;

  • (o) the report from the board of directors on the use of proceeds from the previous fund raising exercise;

  • (p) the authorisation to the board of directors of the Company with full power to issue the A Shares Convertible Bonds and to implement all related matters in respect thereof; and

  • (q) the validity period for the issue of A Shares Convertible Bonds.

The above resolutions conformed with the content of the announcement on the resolutions passed in the Annual General Meeting held on 17th April 2003. Please refer to the relevant announcements published on Shanghai Securities and Hong Kong Wen Wei Po.

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  • II. As special resolutions:

  • To consider and approve the proposal to change the registered address of the Company;

  • To consider and approve the proposal on the grant of mandate to the Board for the allotment and issue of new shares (H Shares) and reduction in the holding of State-owned Shares:

    • a) Subject to paragraphs c) and d), and pursuant to the Rules Governing the Listing of Securities of The Stock Exchange of Hong Kong Limited (as amended from time to time) and the Company Law of the People’s Republic of China (“PRC”), the Directors of the Company are generally and unconditionally authorized to exercise all the rights of the Company, to allot and issue new shares individually and collectively during the Relevant Period and the terms and conditions for the Directors to exercise their authority to determine the allotment and issue of new shares include, inter alia:

      • (1) the number of new shares to be issued;

      • (2) the issue price of the new shares;

      • (3) the date for the commencement and closing of the issue;

      • (4) the number of new shares to be issued to the existing shareholders; and

      • (5) to make or grant offer proposals, agreements and options as may be necessary in the exercise of such powers.

  • b) To make or grant offer proposals, agreements and options to the Directors of the Company as required or may be required in the exercise of such powers during the Relevant Period as referred to in paragraph a) or after the expiry of the Relevant Period.

  • c) The total nominal amount of overseas listed foreign shares (other than those issued under the PRC Company Law and the Articles of Association of the Company (the “Articles of Association”) by the capitalisation of the statutory capital reserve fund) agreed to allot or conditionally or unconditionally agreed to allot by the Directors of the Company pursuant to paragraph a) (whether pursuant to the exercise of options or otherwise) shall not exceed 20% of the overseas listed foreign shares of the Company existing in issue.

  • d) Upon the exercise of the powers pursuant to paragraph a) above, the Directors of the Company shall

    • (1) comply with the PRC Company Law and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (as amended from time to time); and

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  • (2) obtain the approval from the China Securities Regulatory Commission.

  • e) For the purpose of this resolution:

“Relevant Period” refers to the period from the date of the passing of this resolution to the earliest of following three:

  • (1) twelve months after the passing of this resolution;

  • (2) conclusion of the forthcoming annual general meeting of the Company; and

  • (3) the date of the passing of a special resolution to revoke or amend the mandate as referred to in this resolution by shareholders in shareholders’ general meeting.

  • f) Subject to the approval by the relevant authorities of the PRC and pursuant to the PRC Company Law, when exercising the powers under paragraph a) above, the Directors of the Company is authorized

  • (1) To increase the registered capital of the Company to the required amount respectively.

  • (2) To exercise the right to reduce the holding in State-owned shares for contribution to the social security funds. In accordance with the “Interim measures on the Administration of Reduction in Holding of State-owned Shares for Contribution to the Social Security Funds” issued by the State Council on 6th June 2001.

  • (3) Subject to the approval by the relevant authorities of the PRC, the Board of Directors is authorized to make appropriate and necessary amendments to the Articles of Association, so as to reflect the changes in the capital of the Company that may have arisen under this mandate.

III. Other business:

Please refer to the announcements of the 2003 Annual Report published on the website of Shanghai Securities Exchange (www.sse.com.cn) and The Stock Exchange of Hong Kong Limited (www.hkex.com.hk) and , the resolutions of the 3rd Meeting of the third Board and the 2nd Meeting of the third Supervisory Committee published on Shanghai Securities and Hong Kong Wen Wei Po on 13th February 2004 for the above details.

Tianjin, the PRC 12th February 2004

By order of the Board Fu Yana Ip Pui Sum Company Secretaries

Notes:

  1. The register of members of the Company’s H Shares will be closed from 1st March 2004 to 30th March 2004, both days inclusive, for the purpose of determining a Shareholder’s List for the AGM. The last

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lodgement for share transfer must be made on 27th February 2004 at Hong Kong Registrars Limited by or before 4:00 pm. The book closing date of the register of members of the Company’s H Shares for the purpose of determining a Shareholder’s List for the distribution of final dividend will be announced after the AGM.

  1. Each Shareholder having the rights to attend and vote at the AGM is entitled to appoint one or more proxies (whether a Shareholder or not) to attend and vote on his behalf. Should more than one proxy be appointed by one Shareholder, such proxy shall only exercise his voting rights on a poll.

  2. Shareholders can appoint a proxy by an instrument in writing (i.e. by using the enclosed Proxy Form). The Proxy Form shall be signed by the person appointing the proxy or an attorney authorised by such person in writing. If the Proxy Form is signed by an attorney, the power of attorney or other documents of authorisation shall be notarially certified. To be valid, the Proxy Form and the notarially certified power of attorney or other documents of authorisation must be delivered to the above legal address of the Company in not less than 24 hours before the time scheduled for the holding of the AGM.

  3. Shareholders or proxies who intend to attend the AGM are asked to send the reply slip for attendance duly completed and signed to the Secretarial Office on or before 10th March 2004 in person, by post or by fax. Please use the Proxy Form or its duplicate in writing.

  4. Shareholders or their proxies shall present proofs of their identities upon attending the AGM. Should a proxy be appointed, the proxy shall also present the Proxy Form.

  5. The AGM is expected to last for about half a day. The shareholders and proxies attending the AGM shall be responsible for their own travelling and accommodation expenses.

Principal office address of the Company: No. 45 Guizhou Road, Heping District, Tianjin, the PRC

Postal Code: 300051

Telephone: (8622)-23523036

Facsimile: (8622)-23523100

Encl. Reply slip of the 2003 Annual General Meeting and the 12th Shareholders’ General Meeting of Tianjin Capital Environmental Protection Company Limited.

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

Annual General Meeting

REPLY SLIP

To: Tianjin Capital Environmental Protection Company Limited (the “Company”)

I/We[(1)]

of

(as shown in the register of members) being the registered holder(s) of[(2)] H shares of Rmb 1.00 each in the capital of the Company, hereby inform the Company that I/We intend to attend (in person or by proxy) the Annual General Meeting of the Company to be held at 4/F., Conference Room, Tianjin Capital Environmental Protection Company Limited, 45 Guizhou Road, Heping District, Tianjin, the People’s Republic of China (the “PRC”) on 30th March 2004 at 10:30 a.m.

Date:

2004 Signature(s):

Note:

  1. Please insert full name(s) and address(es) (as shown in the register of members) in block capital(s).

  2. Please insert the number and class of shares registered in your name(s).

  3. In order to be valid, this completed and signed reply slip shall be delivered to the Company of legal address at No. 45 Guizhou Road, Heping District, Tianjin, the PRC on or before 10th March 2004. This reply slip may be delivered to the Company by hand, by post, by cable or by facsimile.

Please also refer to the published version of this announcement in The Standard.

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