China Jushi FY2002: Cash generation and working capital

FY2002 as filed reports CNY 634.39418489 million main-business revenue, CNY 426.35778368 million main-business cost and CNY 2.28821455 million main-business taxes and surcharges, leaving CNY 205.74818666 million main-business profit. After other-business profit of CNY 3.73105677 million, selling expenses of CNY 23.20329090 million, administration expenses of CNY 114.27098921 million and finance expenses of CNY 36.12440128 million, operating profit was CNY 35.88056204 million. It was lower than the adjusted 2001 comparative of CNY 44.08252946 million despite higher revenue. Investment income of CNY 0.94754333 million, subsidy income of CNY 1.072432 million and net non-operating expense of CNY 4.66978528 million brought profit before tax to CNY 33.23075209 million. Deducting CNY 1.76134363 million income tax and CNY 16.40450092 million minority shareholders' profit leaves reported consolidated net profit attributable to the issuer of CNY 15.06490754 million. Subsidiary total profit and minority interests therefore cannot be counted as wholly belonging to the listed shareholders. These are historical accounting categories from this filing; later restated FY2002 comparatives are preserved separately.

Reported business revenue / 2002 / fy2002 consolidated as filed

RMB 634,394,184.89

Reported business cost / 2002 / fy2002 consolidated as filed

RMB 426,357,783.68

Operating profit / 2002 / fy2002 consolidated as filed

RMB 35,880,562.04

Reported profit before tax / 2002 / fy2002 consolidated as filed

RMB 33,230,752.09

Reported consolidated owner profit / 2002 / fy2002 consolidated as filed

RMB 15,064,907.54

The consolidated cash-flow statement reports operating inflows of CNY 617.16691833 million and outflows of CNY 528.63840505 million, producing CNY 88.52851328 million net operating cash. Investing used a net CNY 97.10988796 million; cash spent acquiring fixed assets, intangible assets and other long-term assets was CNY 96.01571986 million. This cash spending is not the same measure as project budgets, engineering additions or completed-capacity tonnage. Financing provided CNY 11.70593895 million net cash, and the statement reports a positive CNY 3.13127130 million exchange-rate effect. These components reconcile to the CNY 6.25583557 million increase in cash and cash equivalents and to closing monetary funds of CNY 98.36835466 million versus CNY 92.11251909 million at opening. Operating cash was below the net investing outflow before financing. The parent-company cash position was tighter: operating cash of CNY 24.85105786 million, investing outflow of CNY 32.43423278 million and financing outflow of CNY 29.11466102 million left only CNY 2.76804306 million closing cash. Parent and consolidated cash must not be interchanged.

Net cash from operating activities / 2002 / fy2002 consolidated cash

RMB 88,528,513.28

Net cash from investing activities / 2002 / fy2002 consolidated cash

RMB -97,109,887.96

Net cash from financing activities / 2002 / fy2002 consolidated cash

RMB 11,705,938.95

Cash net change / 2002 / fy2002 consolidated cash

RMB 6,255,835.57

Reported monetary funds / 2002 / fy2002 consolidated cash

RMB 98,368,354.66

Reported monetary funds / 2001 / comparative fy2002 consolidated cash

RMB 92,112,519.09

Net cash from operating activities / 2002 / fy2002 parent cash

RMB 24,851,057.86

Reported monetary funds / 2002 / fy2002 parent cash

RMB 2,768,043.06

At 31 December 2002 consolidated borrowings comprised CNY 300.47 million short-term loans, CNY 121.955 million current portions of long-term loans and CNY 223.21377186 million noncurrent long-term loans. The same filing gives CNY 366.932341 million, CNY 15.7766 million and CNY 312.92055969 million respectively at the prior year end. The decline in the noncurrent category therefore must not be read as an equal repayment of debt: the report specifically attributes much of it to maturity reclassification, including CNY 86 million of mortgaged borrowing moved into the current portion. The notes identify CNY 285.47 million of short-term guaranteed borrowing and CNY 15 million of mortgaged short-term borrowing. Support came from the listed parent for Jushi Group, Jushi Group for its Jiujiang company, and Zhenshi for specified subsidiary borrowings; these inbound loan guarantees differ from the issuer's separate contingent liabilities. The long-term category includes reported US-dollar and euro borrowing. Currency exposure and upcoming maturities matter for funding, but this filing does not supply a complete repayment calendar or demonstrate that all reported cash is freely available for repayment.

Reported short-term borrowings / 2002 / fy2002 consolidated maturity

RMB 300,470,000

Reported current long term borrowings / 2002 / fy2002 consolidated maturity

RMB 121,955,000

Reported long term borrowings / 2002 / fy2002 consolidated maturity

RMB 223,213,771.86

Reported short-term borrowings / 2001 / comparative fy2002 consolidated maturity

RMB 366,932,341

Reported current long term borrowings / 2001 / comparative fy2002 consolidated maturity

RMB 15,776,600

Reported long term borrowings / 2001 / comparative fy2002 consolidated maturity

RMB 312,920,559.69

Consolidated gross trade receivables were CNY 262.39576867 million at the end of 2002; the CNY 14.99895992 million allowance left CNY 247.39680875 million net. The same note reports CNY 182.42667942 million, or 69.52%, aged under one year, and CNY 17.91020772 million, or 6.83%, aged more than three years. Age is not the same as days past due. The five largest debtors accounted for CNY 108.4055 million, or 41.31% of the gross total. Bank acceptance bills were CNY 4.281885 million and the report says they were not pledged. In contrast, the parent company's trade receivables fell to zero because businesses had been disposed of and their accounts were no longer aggregated into its closing statements; this was not proof that their customers had all paid. Receivable quality and perimeter changes therefore need separate explanations.

Reported receivables gross / 2002 / fy2002 consolidated trade credit

RMB 262,395,768.67

Reported receivables allowance / 2002 / fy2002 consolidated trade credit

RMB 14,998,959.92

Bank acceptance receivables / 2002 / fy2002 consolidated bills

RMB 4,281,885

Consolidated other receivables were CNY 158.64480080 million gross and CNY 149.86698094 million after a CNY 8.77781986 million allowance. The five largest balances represented CNY 139.1888 million, or 87.74% of the gross total. The allowance note identifies CNY 2.97174 million of additional individually assessed provisions, on top of the age-based provision. The parent carried a different gross total of CNY 232.81748987 million and CNY 217.47037556 million net after CNY 15.34711431 million of allowances. These balances include financial-company and ultimate-parent claims and disposal consideration; they are not a second measure of customer sales credit or cash on hand.

Reported gross other receivables / 2002 / fy2002 consolidated other credit

RMB 158,644,800.8

Reported other receivables net / 2002 / fy2002 consolidated other credit

RMB 149,866,980.94

Reported gross other receivables / 2002 / fy2002 parent other credit

RMB 232,817,489.87

Reported other receivables net / 2002 / fy2002 parent other credit

RMB 217,470,375.56

Consolidated inventories increased to CNY 194.41259649 million before allowances from CNY 130.53565842 million in the same filing's opening comparison. Finished products of CNY 152.84315170 million made up most of the closing total. A CNY 0.82211472 million inventory allowance left CNY 193.59048177 million net; the decrease in allowances is not evidence that all stock was sold. Supplier prepayments were CNY 45.13054899 million, compared with CNY 62.58270199 million at the prior year end, with 85.12% aged under one year. Customer advances were CNY 40.82101832 million versus CNY 32.75322422 million. These are working-capital balances, not cash sales, a verified order backlog or finished-goods tonnes. Restructuring changed the balance-sheet perimeter and limits direct comparison with annual income figures.

Reported gross inventory / 2002 / fy2002 consolidated inventory

RMB 194,412,596.49

Reported gross inventory / 2001 / comparative fy2002 consolidated inventory

RMB 130,535,658.42

Reported prepayments gross / 2002 / fy2002 consolidated prepayments

RMB 45,130,548.99

Reported prepayments gross / 2001 / comparative fy2002 consolidated prepayments

RMB 62,582,701.99

The tax note gives a 15% parent-company income-tax rate and a general 33% rate for local subsidiaries, with specific historical relief: the Jiujiang business enjoyed three exempt years followed by two half-rate years from 2001, and Jushi Group's foreign-invested-enterprise relief began on 1 July 2001 with two exempt years followed by three half-rate years. These are the issuer's historical disclosures, not current tax guidance. FY2002 subsidy income was CNY 1.072432 million, comprising CNY 0.652432 million export-increment interest support and CNY 0.42 million technical-upgrade support. A separate approximately CNY 4.6835 million interest subsidy reduced interest expense and must not be double-counted as subsidy income. The report's non-recurring-item summary records CNY 2.03179205 million net non-recurring gains and CNY 13.03311549 million net profit excluding them, versus CNY 15.06490754 million reported net profit. Tax relief, financing support and disposals therefore form part of the earnings context rather than proof of operating productivity.

Beijing JingDu Certified Public Accountants issued an unqualified audit opinion dated 25 March 2003 on the FY2002 parent and consolidated statements prepared under the historical Chinese Enterprise Accounting Standards and Enterprise Accounting System. These statements are not presented as IFRS accounts. The report says that a CNY 3.2 million guarantee-related provision recognized in 2001 was corrected after a CNY 3.2 million payment and an equal substantive compensation in 2002: the 2001 comparative net profit was increased by CNY 3.2 million, opening retained earnings by CNY 2.72 million and surplus reserves by CNY 0.48 million. The FY2002 filing consequently presents adjusted 2001 consolidated net profit of CNY 4.67115265 million against an unadjusted CNY 1.47115265 million in its summary. This is a prior-period correction, not FY2002 recurring profit. The FY2002 as-filed revenue and net profit are CNY 634.39418489 million and CNY 15.06490754 million; later filings' restated comparatives remain separate evidence versions.

Reported consolidated owner profit adjustment / 2001 / fy2002 disclosed 2001 owner profit correction

RMB 3,200,000

Comparative owner profit / 2001 / fy2002 adjusted 2001 comparative

RMB 4,671,152.65

Comparative owner profit / 2001 / fy2002 unadjusted 2001 summary

RMB 1,471,152.65