CHINA MERCHANTS SHEKOU HOLDINGS CO., LTD. SEMI-ANNUAL REPORT 2003 No.: [CMSH]

Transcription

1 CHINA MERCHANTS SHEKOU HOLDINGS CO., LTD. SEMI-ANNUAL REPORT 2003 No.: [CMSH] Section 1. Important Notice The Board of Directors of China Merchants Shekou Holdings Co., Ltd. (hereinafter referred to as the Company) and its directors individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions or errors, which would render any statement misleading. This semi-annual report was prepared in both Chinese and English. Should there be any difference in interpretation of the two versions, the Chinese version shall prevail. The summary of 2003 semi-annual report is abstracted from the semi-annual report. The investors are suggested to read the full text of semi-annual report to understand more details. Definition: Unless otherwise stated, the following words and expressions have the following meanings: 1. the Company : China Merchants Shekou Holdings Co., Ltd. 2. CMSIZ : China Merchants Shekou Industrial Zone Co., Ltd. 3. CMRE : Shenzhen China Merchants Real Estate Co., Ltd. 4. CMPS : Shenzhen China Merchants Power Supply Co., Ltd. 5. CMWS : Shenzhen China Merchants Water Supply Co., Ltd. 6. CMP : Shenzhen China Merchants Petrochemicals Co., Ltd. Note: The financial data and amount in this report are expressed in RMB (except for otherwise stated) Section 2. Company Profile (I) Company profile 1. Stock Exchange Listed with: Shenzhen Stock Exchange The 2 nd Stock Exchange Listed with: Singapore Stock Exchange Short Form of the Stock: CHINA MERCHANTS - A, CHINA MERCHANTS - B Stock Code: , Secretary of Board of Directors: Chen Yu Authorized Representative in Charge of Securities Affairs: Liu Ning Contact Address: 9/F, New Times Building, Shekou Industrial Zone, Nanshan District, Shenzhen Post Code: investor@cmre.com.cn Tel: (86) Fax: (86) Newspaper Chosen for Disclosing the Information of the Company:

2 Securities Times, China Securities and Ta Kung Pao Internet Web Site Designated by CSRC for Publishing the Semi-annual Report: The Place Where the Semi-annual Report is Prepared and Placed: Secretariat of Board of Directors of the Company (II) Major financial data and indexes Jun. 30, 2003 Dec. 31, 2002 Increase/decrease Current assets 3,214,555,271 3,247,790, % Current liabilities 2,259,099,504 2,352,881, % Total assets 5,236,299,800 5,268,964, % Shareholders equity (excluding minority 2,589,243,133 2,444,370, % interest) Net assets per share (RMB/share) % Net assets per share after adjustment (RMB/share) % Jan. 1, 2003 to Jan. 1, 2002 to Jun. 30, 2003 Jun. 30, 2002 Increase/decrease (%) Net profit 145,467, ,644, % Net profit after deducting non-recurring gains and 145,565, ,915, % losses Earnings per share (RMB/share) % Return on equity (weighted) 5.78% 4.50% 28.44% Net cash flow arising from operating activities -49,820, ,578, % [Note] In the report period, the total non-recurring gains and losses amounted to RMB 97,561, including net income/expenditure of non-operating of RMB 13,126 and impact on deducting income tax and minority interests amounting to RMB 110,687. [Note] In the report period, there was a big decrease in net cash flow arising from operating activities compared with the same period of the last year, because the funds of project paid have a big increased with the development and building of real estate; in addition, the short-term debts repaid have increased in this report period. Indexes calculated according to Regulations on the Information Disclosure of Companies Publicly Issuing Shares (No. 9): Return on equity (%) Earnings per share (RMB) Profit indexes Fully Weighted Fully Weighted diluted average diluted average Profit from core business 10.56% 10.86%

3 Operating profit 7.94% 8.17% Net profit 5.62% 5.78% Net profit after deducting non-recurring gains and losses 5.62% 5.78% Impact on net profit and net assets after adjustment under IAS (Unit: RMB 000) Net profit as of Jan. - Jun Net assets as of Jun. 30, 2003 As reported under CAS 145,468 2,589,243 Adjustment under IAS: Distribution of dividend 25,281 Adjustment of assets replacement 16,838 Adjustment of amortization of goodwill -2,679-71,977 Income from refunding taxes according to accrual basis 2,077 30,264 Adjustment of minority interest ,652 Adjustment of deferred taxes 1,084-26,475 Others 31-4,598 As calculated under IAS 146,630 2,537,924 Note: The main reason for the difference between the results under CAS and IAS is the different accounting policy was adopted in the treatment of subsidy income and balance of equity investment. Section 3 Changes in Share Capital and Particulars about Shareholders (I) The Company had no bonus share, public reserve transferring into share capital, additional issuance of new shares or transferring convertible bonds into shares in the report period, so the Company s total shares and its structure remained unchanged. (II) Ended June 30, 2003, the Company had totally 82,635 shareholders, including 63,800 shareholders of A-share and 18,835 shareholders of B-share. (III) Particulars about shares held by the top ten shareholders Unit: share Amount at Increase Amount at Shareholder s name the begin of /decrease in the end of Proportion Type the period this period the period 1. CMSIC 156,906, ,906, % Domestic promoter s legal person s share 2. Hong Kong Panorama Investment Ltd. 52,302, ,302, % Foreign promoter s legal person s share 3. Foxtrol International Ltd. 15,400, ,400, % Foreign public share 4. Orienture Investment Ltd. 14,779, ,779, % Foreign public share 5. Yangbang International Co., Ltd. 6,256, ,256, % Foreign public share 6. An Shun Securities Investment Fund 3,911,784 +1,193,952 5,105, % Domestic public share 7. CBNY S/A PNC/Skandia Select Fund/China Equity AC 2,498, ,410 2,666, % Foreign public share

4 8.Hai Tong Securities Co., Ltd. 0 +2,649,681 2,649, % Foreign public share 9. Hua an Innovation Securities Investment Fund 3,690,665-1,670,745 2,019, % Foreign public share 10.An Xin Securities Investment Fund 1,781, ,751 1,875, % Domestic public share Note: Hong Kong Panorama Investment Ltd., Foxtrol International Ltd., Orienture Investment Ltd. and Yangbang International Co., Ltd. all are wholly-owned subsidiary companies of Hong Kong China Merchants Holdings (International) Company Limited. Note: The first largest shareholder, CMSIZ is a wholly-owned subsidiary company of China Merchants Group Co., Ltd., which is the controlling shareholder of Hong Kong China Merchants Holdings (International) Company Limited. Note: An Shun Securities Investment Fund, Hua an Innovation Securities Investment Fund and An Xin Securities Investment Fund belong to Hua an Fund Management Co., Ltd. and are supervised by it. Note: The Company s controlling shareholder remained unchanged in the report period. Section 4 Directors, Supervisors and Senior Executives In the report period, Director and General Manager of the Company Mr. Lin Shaobin has bought 10,000 shares of circulating A shares of the Company and the relevant shares have been reported to Shenzhen Stock Exchange for freezing. Besides, the shares of the Company held by other directors, supervisors and senior executives remained unchanged. Section 5 Discussions and Analysis of the Management (I) Operation in the report period The Company is a large controlling company, which is mainly engaged in the development and operation of real estate, public utility in the industrial zone and storage, transportation and operation of petrochemical oil and gas and its business structure is both growing and stable. In the report period, the Company has continued to grow steadily in terms of core business and has realized income from core business amounting to RMB 2, million and net profit amounting to RMB million, an increase of 34.53% and 40.35% respectively compared with the corresponding period of the previous year. The earning per share has reached to RMB Within the period, the Company has been awarded as Top 10 in the Listed Companies of Real Estate by the magazine called New Real Estate and Tsing Hua University Real Estate Research Center and as Top 50 in the Listed Companies in Shenzhen Market by the magazine called Listed Companies successively, which reflected the increasingly growing strength of the Company. 1. Statement of core business classified according to industries Income from Cost of core Gross Increase/decrease core business business profit of income from Increase/decrease of cost of core Increase/decrease of gross profit

5 ratio core business business ratio compared (%) compared with compared with with the same the same period the same period period of last of last year (%) of last year (%) year (%) Development of 440,264, ,360, % % % % commercial housing Housing lease 85,329,176 43,992, % -0.74% 10.17% -9.53% Industry of production 293,870, ,778, % 7.32% 10.65% % and supply of power and water Industry of storage, 1,278,168,956 1,203,150, % 22.62% 23.80% % transportation and supply of oil and gas (Note) In the report period, the Company has carried forward the sales area of commercial housing amounting to 55,000 sq. m. mainly from the projects of Sea Moon 2 nd Stage, Banshan Seascape Villa and Spring Square, whose areas carried forward increased by 170% compared with the corresponding period of the previous year amounting to 20,000 sq. m., thus the sales income of commercial housing in the period has increased by a big margin. The sales cost of commercial housing has increased along with the growth of business volume, whose growth margin was fundamentally the same as the growth of sales income. (Note) In the report period, the varieties and structures of the commercial housing carried forward were somewhat different and the Company has set about conducting maintenance alteration and establishment renewal to partial lease properties, thus the gross profit ratio of development of commercial housing and housing lease in the period decreased somewhat. In the report period, due to the influence of decrease of price of electricity by the government, in terms of power supply business and due to the influence of international situation and epidemic situation of SARS, in terms of storage, transportation and operation business of petrochemical oil and gas, their gross profit ratio decreased somewhat at the same time when the business income increased. 2. Operation of the controlling subsidiaries (particulars about investment earnings taking over 10% of the net profit) At the end of the report period, the Company totally had four main controlling subsidiaries, respectively namely CMRE, CMPS, CMWS and CMP. The operation of the main controlling subsidiaries was as follows: (1) In the report period, the development business of commercial housing of CMRE has kept a trend of rapid development and the main projects had a good sales status; in terms of property lease business, the Company timely adjusted the operation strategy according to the market change and controlled the cost of lease business and the planned newly increased property constructions in progress went on smoothly. In the report period, the Company has gained a certain progress in terms of project

6 expansion and land reserve outside the Shekou zone, such as successively cooperating with TCL Company to develop Bagualing project and controlling Zhangzhou CMB Real Estate Co., Ltd.. Ended June 30, 2003, the sale of each main project of CMRE has all reached the planned progress, of which the sales rate of Sea Moon Garden 2 nd Stage was 74% and the sales rate of project of Brocade Shore (Sun Seashore City 1 st Stage) was 59%. Within the period, the accumulated lease area was 1,646,900 sq. m. and it has realized a net profit amounting to RMB million, which has reflected the leading position of the real estate business of the Company. (2) In the report period, CMPS has completed the power supply volume of million degrees, an increase of 16% compared with the corresponding period of the previous year and has realized net profit amounting to RMB million. The Company reduced the operating cost through adopting various measures, which has overcome the disadvantageous influence of continuous decrease of electrical price in Shenzhen and has stabilized the business income and profits. CMPS has also gained import and export qualification certificate on June 20, which has provided guarantee for the smooth development of electricity s import application to customs and exchange adjustment of foreign exchange. Besides, the engineering of the 3 rd transformer substation has entered into the completion phase and shall be put into operation soon, which could largely solve the pressure of electrical network of Shekou. (3) In the report period, CMWS reduced the production cost and strictly controlled the administrative expense through the measures of technical renovation and cost and expense control etc.. In the report period, the Company has completed the water sales volume of million m 3, an increase of 10% compared with the corresponding period of the last year and has realized a net profit amounting to RMB 3.28 million. CMWS also strictly controlled the management of water quality and has gained the trust of numerous consumers and enterprises through the supervision and control on the craftworks of water purification and disinfectant procedures. (4) Facing the large fluctuation of oil price and intensified market competition, CMP deeply researched the market change, tightly caught the operating opportunity, attached importance to expanding the retail business and gained good results. In the report period, the Company has completed the sales volume of liquefied gas amounting to 70,200 tons, sales volume of light oil amounting to 183,900 tons, sales volume of heavy oil amounting to 257,200 tons and has realized a net profit amounting to million. (II) Investment 1. The proceeds raised through previous shares offering have been used up as per the requirements and in the report period, there were no raised proceeds or the application of raised proceeds went down to this period. 2. The actual progress and earnings of material projects invested with the proceeds raised through shares offering (1) In the report period, the progress and earnings of each main investment projects of real estate of CMRE were as follows:

7 Sea Moon 2 nd Stage: The Company has invested RMB million, an increase of 14% compared with the beginning of the period and has realized a gross sales profit amounting to RMB million within the period. It has all been occupied. Brocade Shore and Rainbow Shore: The Company has completed the investment amounting to RMB million, an increase of 20% compared with the beginning of the period. Brocade Shore has been conducting environmental virescence and it was estimated to be checked and accepted in August with no earnings accrued within the period. Rainbow Shore has been conducted construction of main body. Banshan Seascape Villa: The Company has invested RMB million, an increase of 5% compared with the beginning of the period and has realized the gross sales profit amounting to RMB million within the period. Other villas have been checked and accepted except for the self-designed villas. Banshan Seascape Garden: The Company has invested RMB million, an increase of 37% compared with the beginning of the period. Its underground garage has been completed and at present it has been conducted the preparation work of main body bidding with no earnings accrued within the period. Taige Flat (originally called Fushan Flat): The Company has invested RMB 4.73 million, an increase of 197% compared with the beginning of the period. Now its basement has been completed its peak with no earnings accrued within the period. (2) In the report period, the Company has completed investment amounting to RMB 24,246,000 in the fixed assets, of which CMPS has actually completed an investment amounting to RMB 11,069,000, which was mainly used in the renewal and alteration of electric equipments; CMWS has actually completed an investment amounting to RMB 4,609,000, which was mainly used in the renewal and alteration of pipe network of water supply and alteration of water factory; CMP has actually completed an investment amounting to RMB 2,811,000, which was mainly used in the alteration of gas station and increase of production equipments; CMRE has actually completed an investment amounting to RMB 5,757,000, which was mainly used in the renewal of facilities of lease properties and purchase of production equipments. Section 6 Significant Events (I) Corporate governance Ended June 30, 2003, there were three independent directors in the Company, which took one third of the total member of the Board of Directors, in compliance with the requirements of Guidance Opinion on Establishing Independent Director System in Listed Companies. In the report period, according to the relevant regulations and the actual situation of the Company, the Company has revised the Articles of Association in the aspects such as director election and etc. and gained the approval of 2002 Shareholders General Meeting, which made the administrative structure of the Company more standardized. (II) Implementation of 2002 Profit Distribution Plan

8 The Company has published Public Notice on Bonuses Distribution and Dividends Allotment for Year 2002 on China Securities, Securities Times and Hong Kong Ta Kung Pao dated June 11, The equity registration date is June 23, 2003 and the ex-dividend date is June 24, The bonuses distribution and dividends allotment has all been accomplished before July 10. (III) 2003 Semi-annual Profit Distribution Preplan The Company shall neither distribute profits nor convert public reserve into share capital in the middle of (IV) Material lawsuits and arbitrations In March 2000, Guangdong Conghua Agricultural Production Materials Company (hereinafter referred to as Conghua Agricultural Materials) proceeded against the Company and its subsidiaries Hong Kong Ruijia Investment Industrial Co., Ltd. and China Chemical Import and Export Corporation to pay 18,000 tons goods (urea) with the involved amount of RMB 15,465, and compensation of RMB 696, On Dec. 27, 2002, Guangdong Shenzhen Intermediate People s Court made an judgment and required the Company to return RMB 13,766,090 and the interests (Calculated as per the loan interest of the same period of People s Bank of China from Apr. 1, 1998 to the date of paying off) and the final payment amount was still subject to negotiation between the Company and Conghua Agricultural Materials for confirmation. Ended June 30, 2003, the Company has estimated the liabilities amounting to RMB 8,000,000 and RMB 9,790,566 respectively in 2001 and 2002 and has paid the involved amount amounting to RMB 1,000,000 in May (V) Related transactions 1. In the report period, the Company had no any material related transaction such as purchase and sale of commodities and labor service provision. 2. The related transactions about purchase and sale of assets in the report period On Apr. 10, 2003, the Company has held the 7 th meeting of the 4 th Board of Directors and has passed the relevant proposals to agree the Company to accept the transfer of 45% and 5% equity of Zhangzhou CMB Real Estate Co., Ltd. (hereinafter referred to as CMB Real Estate Company) respectively held by China Merchants Zhangzhou Development Zone Co., Ltd. (hereinafter referred to as Zhangzhou Development Zone) and China Merchants Zhangzhou Development Zone Public Utility Company. After the equity transfer, the Company and Zhangzhou Development Zone respectively invested cash RMB 15 million to increase the investment pro rata to CMB Real Estate Company. After the investment increase, CMB Real Estate Company has been changed into Zhangzhou China Merchants Real Estate Co., Ltd. with the registered capital amounting to RMB 50 million. The pricing of this related transaction has been referred to Net Assets Validation Report produced by Shenzhen Nanfang Minhe Certified Public Accountants, Assets Evaluation Report produced by Zhongtongcheng Assets Evaluation Co., Ltd. and Auditors Report produced by Zhangzhou Zhongcheng CPAs Co., Ltd. (the datum

9 date of each report is Nov. 30, 2002) and the total payment of transfer is RMB 9,599,200. This acceptance of transfer of 50% equity of CMB Real Estate Company made the Company to successfully jointly hold the shares of CMB Real Estate Company, which has realized the mutual compensation of advantages of Zhangzhou Development Zone and the Company, has reinforced the market competitive force of CMB Real Estate Company and has found the foundation for the Company to enter into the real estate market in Fujian Province. 3. The credits, liabilities and guarantees existing between the Company and the related parties at the end of the report period (1) Ended June 30, 2003, CMSIZ provides the guarantee amounting to RMB 150,918,000 for the Company; (2) Ended June 30, 2003, the Company should pay RMB 52,147,900 to the related company Shenzhen China Merchants Industrial Co., Ltd.; (3) Ended June 30, 2003, the Company should pay RMB 9,121,500 to the related company CMSIZ; (4) Ended June 30, 2003, the Company and its subsidiaries provide bank loan guarantee amounting to USD 474,000 for Shenzhen Keluo Storage Industrial Co., Ltd.. The aforesaid events have impacted no material influence on the Company. 4. Other material related transactions (1) CMWS provides water used in the production for the large shareholder CMSIZ and its controlling subsidiaries. (2) CMPS provides electricity used in the production for the large shareholder CMSIZ and its controlling subsidiaries. (3) The related transactions about land use The facilities and equipments of business of power and water supply of the Company and the office all situate in Shekou; The majority of lease properties in the real estate business are constructed in Shekou; The main bases of storage, transportation and operation business of petrochemical oil and gas are also in Shekou. Thus, the Company and the subsidiaries, which are engaged in the aforesaid business, have always leased the lands of CMSIZ from their establishment. It was estimated that the Company should pay the land use expense amounting to RMB million to CMSIZ in the whole year of 2003 and has reckoned RMB million into the gains and losses in the report period. (4) The related transactions about the assets lease On Dec. 25, 2002, the Company has held the 5 th meeting of the 4 th Board of Directors and has considered and passed Proposal on Continuing to Lease Assets to China Merchants Port Service (Shenzhen) Co., Ltd. that agrees to continue to lease the assets in the port zone of Shekou port held by the Company to China Merchants Port Service (Shenzhen) Co., Ltd. for application. The contents of lease assets remained unchanged,

10 including offices, warehouses, dorms, roads, constructions in progress, beacons and other port facilities. As per the book value on Dec. 31, 2001, the book value of lease assets was RMB 2,540,781, The rents amounted to RMB 884, per month, as keeping the same as the original contract price, with the renting term of one year, namely from Nov. 1, 2002 to Oct. 31, The land use expense and property administrative expense occupied by the lease assets were burdened by China Merchants Port Service (Shenzhen) Co., Ltd.. (VI) Other significant events 1. In the report period, the controlling subsidiary of the Company China Merchants Real Estate and Shenzhen TCL Investment Co., Ltd. have signed Contract on Jointly Developing Bagualing Land Pieces B and the both parties shall jointly invest into the target land pieces in the Shenzhen city and shall cooperate to develop them. This action is the results that the Company conducts the development of real estate projects outside the zone by adopting various measures. The relevant public notices of resolutions are published on Securities Times, China Securities and Hong Kong Ta Kung Pao dated March 1, 2003 with the notice number of [CMSH] On June 16, 2003, the Company has held the 9 th meeting of the 4 th Board of Directors that has considered and passed Proposal on Changing the Way of Financing into Shares Allotment and requested the 1 st Extraordinary Shareholders General Meeting for 2003 to consider and pass it. The resolutions of the Shareholders General Meeting are published on Securities Times, China Securities and Hong Kong Ta Kung Pao dated July 19, 2003 with the notice number of [CMSH] Section 7 Financial Report (I) Financial Report Attached Income Statement (II) Notes to Accounting Statement (1) In the report period, there were no issues such as change of accounting policies and accounting estimation and correction of accounting error. (2) The consolidate scope of the financial statement remained unchanged. (3) 2003 Semi-annual Financial Report of the Company has not been audited. Section 8 Documents Available for Reference (I) The text of Semi-annual Report carried with the signature of Chairman of the Board; (II) The text of Financial Report carried with the signatures and seals of the principal of the Company, principal in charge of the accounting work and principal in charge of accounting institutes; (III) All texts of documents ever disclosed in public in the report period in the newspapers designated by CSRC; (IV) The text of Articles of Association of the Company; (V) Other documents available for reference;

11 (VI) The documents of the Company can be consulted in the international internet website designated by CSRC. Board of Directors of China Merchants Shekou Holdings Co., Ltd. July 25, 2003