2004 Annual Report 2004 ANNUAL REPORT SHENZHEN CHIWAN WHARF HOLDINGS LIMITED Important Note The Board of Directors of Shenzhen Chiwan Wharf Holdings Limited (“the Company”) individually and collectively accepts responsibility for the correctness, accuracy and completeness of the contents of this report and confirms that there are no material omissions nor errors which would render any statement misleading. Chairman of the Board Ms. Wang Fen, as well as Director of the Company Mr. Fan Zhaoping and Chief Financial Officer Mr. Zhang Jianguo hereby confirm that the Financial Statements in the Annual Report is true and complete. The Annual Report is written in both English and Chinese. In case of any conflict between the two versions, Chinese version prevails. 2004 Annual Report Table of Contents PART I Company Profile 1 PART II Financial and Business Highlights 2 A. Profit and Breakdown for 2004 ..............................................................................2 B. Financial Indicators..................................................................................................2 C. Changes in Shareholders' Equity in 2004 ................................................................3 PART III Changes in Share Capital and Shareholders 3 A. Changes in Shareholding Structure..........................................................................3 B. Shareholders............................................................................................................5 PART IV Directors, Supervisors, Senior Executives & Employees 6 A. General Information.................................................................................................6 B. Directors and Supervisors Taking Positions in CND.............................................10 C Other Positions.......................................................................................................10 D. Annual Salary ........................................................................................................12 E. Resignations and Appointments.............................................................................12 F. Work Force.............................................................................................................13 PART V Corporate Governance 13 A. Corporate Governance ...........................................................................................13 B. Performance of Independent Directors ..................................................................14 C. Independence from the Controlling Shareholders..................................................14 D. Performance Evaluation, Motivation and Binding Mechanism for Senior Management Staff.......................................................................................................15 PART VI Shareholders’ General Meeting 15 PART VII Report by the Board of Directors 17 A. Performance in 2004..............................................................................................17 B. Investments in 2004 ...............................................................................................20 C. Financial Status......................................................................................................21 D. Business Plan for 2005 ..........................................................................................22 E. Routine Work of the Board of Directors................................................................22 F. Profit distribution plan for 2004............................................................................24 G. Specific Explanation and Independent Opinions of Independent Directors..........25 PART VIII Report by the Supervisory Committee 26 PART IX Significant Events 27 PART X Financial Statements 31 PART XI Documents for Reference 31 2004 Annual Report PART I COMPANY PROFILE A. Company's Name in Chinese 深圳赤湾港航股份有限公司 Company's Name in English Shenzhen Chiwan Wharf Holdings Limited (CWH) B. Legal Representative Ms. Wang Fen, Chairman C. Company Secretary Ms. Pei Jiangyuan Authorized Representative Ms. Bu Dan and Ms. He Peng Address 11/F., Chiwan Petroleum Building Port of Chiwan, Shenzhen, PRC Tel +86 755 26694620 Fax +86 755 26684117 E-mail [email protected] D. Place of Registration Port of Chiwan, Shenzhen, PRC Offices 11-12/F., Chiwan Petroleum Building, Port of Chiwan, Shenzhen, PRC Postal Code 518068 E-mail [email protected] E. Newspaper for Information "Securities Daily" and "Ta Kung Pao” Disclosure Website for Annual Report http:\\www.cninfo.com.cn Annual Report Preparation Secretariat of the Board of Directors F. Stock Exchange Shenzhen Stock Exchange Stock Short Name Shen Chiwan A/Shen Chiwan B Stock Code 000022/200022 G. Other information Date of Original Registration 19 July 1990 Place of Registration Chiwan, Shenzhen Business Registration Number Qi-Gu-Yue-Shen-Zong-Zi No. 102793 Tax Registration Number Guo-Shui-Shen-Zi No. 440301618832968 Di-Shui-Deng-Zi No. 440305618832968 Accounting Firm (Domestic) PricewaterhouseCoopers Zhong Tian Certified Public Accountants Room 3706, Shun Hing Square, Di Wang Commercial Centre 5002 Shennan Road East Shenzhen, 518068, PRC Accounting Firm (Overseas) PricewaterhouseCoopers 22nd Floor, Prince's Building, Central Hong Kong 1 2004 Annual Report PART II FINANCIAL AND BUSINESS HIGHLIGHTS A. Profit and Breakdown for 2004 (RMB) Profit before tax 875,960,887 Net profit 530,006,581 Gross profit 1,000,461,512 Operating profit 914,333,045 Share of result of associates before tax -8,089,526 Net cash flow from operating activities 1,014,373,328 Increase/decrease in cash and cash equivalents 47,621,349 * Net profit for 2004 of Shenzhen Chiwan Wharf Holdings Limited ("the Company”) was calculated under Chinese Accounting Standards (CAS) as RMB535,628,927, while under International Accounting Standards (IAS) as RMB530,006,581. A discrepancy of RMB5,622,346 exists between the two calculation results due to the following two reasons. 1. Part of charges on capital utilization collected from associate companies which exceeds the one-year interest for bank deposits was taken as capital reserve under CAS , while as investment income under IAS. A discrepancy of RMB3,591,000 in net profit was thus brought on. 2. Preliminaries of associated companies which have not started formal operations was taken as investment loss under IAS, while was not taken as investment loss under CAS. A discrepancy of RMB9,213,346 in net profit was thus brought on. B. Financial Indicators Unit: RMB Y2004 Y2003 Y2002 Sales 1,499,660,007 1,012,014,118 714,755,787 Net profit 530,006,581 313,987,876 183,876,579 Total assets 4,248,212,559 3,214,527,760 2,331,823,016 Shareholders’ equity 1,843,123,509 1,501,391,931 1,298,098,489 (Minority interests excluded) Earnings per share 1.069 0.823 0.482 Net assets per share 3.716 3.935 3.402 Net cash flow per share from 2.045 1.509 0.761 operating activities Return on equity 28.76% 20.91% 14.17% 2 2004 Annual Report C. Changes in Shareholders' Equity in 2004 1. Changes of shareholders’ equity Unit: RMB Share Item Reserves Retained earnings Shareholders' equity Capital Initial amount 381,517,000 930,399,128 189,475,803 1,501,391,931 Increase 114,455,100 215,209,000 530,006,581 859,670,681 Decrease 114,455,100 403,484,003 517,939,103 Ending amount 495,972,100 1,031,153,028 315,998,381 1,843,123,509 2. Reason for the above changes Shareholders’ equity was increased due to the net profit realized in 2004. PART III CHANGES IN SHARE CAPITAL AND SHAREHOLDERS A. Changes in Share Capital 1. Changes in the stock of shares of the Company Changes in amount of shares (+,-) new Before the bonus reserves After the change rights shares to stocks issue others subtotal change 1. Non-circulating shares a. Promoter's shares among which shares held by the State shares held by domestic legal entity 224,470,000 +67,341,000 +67,341,000 291,811,000 shares held by overseas legal entity others b. Shares raised from legal entity c. Shares held by staff 93,500 +28,050 +28,050 121,550 d. Other shares held by senior executives 6,900 +2,070 +83,260 +85,330 92,230 Subtotal 224,570,400 +67,371,120 +83,260 +67,454,380 292,024,780 2. Circulating shares a. A shares 50,499,600 +15,149,880 +15,149,880 65,649,480 b. B shares 106,447,000 +31,934,100 -83,260 +31,850,840 138,297,840 c. Overseas listed shares d. others Subtotal 156,946,600 +47,083,980 -83,260 +47,000,720 203,947,100 3. Total shares 381,517,000 +114,455,100 0 +114,455,100 495,972,100 3 2004 Annual Report 2. Issuance and listing of shares a. The company was approved to issue 310,470,000 ordinary shares at a par value of RMB1.00 per share in February 1993, with 224,470,000 being the promoter's shares; 46,000,000 shares (the "A shares”) being issued to PRC investors (of which 6,000,000 shares were allotted to the employees of the Company), and 40,000,000 shares (the "B shares”) being issued to overseas investors. The A shares were issued at RMB3.10 per share and the B shares at RMB3.18 per share, which were payable at HKD2.83 per share. On 5 May 1993, the Company's A and B shares were listed and traded on the Shenzhen Stock Exchange. b. On June 1994, bonus shares were issued in a proportion of "one bonus share for every ten shares”. As a result, the total volume of the Company's shares rose to 341,517,000. On 16 June and 21 June 1994, respectively, 4,600,000 bonus A shares and 4,000,000 bonus B shares were listed and traded on the Shenzhen Stock Exchange. c. On 22 June 1995, the Company's promoter, China Nanshan Development (Group)