China Jushi FY2004: Cash generation and working capital

The FY2004 consolidated statements report CNY 1,145.65374968 million of main-business revenue, compared with CNY 852.23100095 million in the preceding year. Main-business profit of CNY 338.79824233 million is revenue less CNY 804.54397167 million of cost and CNY 2.31153568 million of main-business taxes and surcharges. Operating profit was CNY 173.23509958 million. Investment income of CNY 8.19354494 million, subsidy income of CNY 11.45401252 million and net non-operating expenses bring profit before tax to CNY 191.99877196 million. After CNY 32.63387317 million of income tax and CNY 67.51879681 million of minority shareholders' earnings, the listed shareholders' net profit was CNY 91.84610198 million. The report gives CNY 87.00162418 million after excluding its stated non-recurring items; the reconciliation includes impairment reversals and tax/minority effects, so subsidies alone are not the net benefit to listed shareholders. The glass-fiber subsidiaries' own profits and the listed parent's investment earnings are different reporting layers, not extra earnings to add to these consolidated totals.

Reported business revenue / 2004 / consolidated main business revenue

RMB 1,145,653,749.68

Reported business cost / 2004 / consolidated main business cost

RMB 804,543,971.67

Reported consolidated operating profit / 2004 / consolidated operating profit

RMB 173,235,099.58

Reported profit before tax / 2004 / consolidated profit before tax

RMB 191,998,771.96

Profit attributable to subsidiary minority / 2004 / consolidated minority profit

RMB 67,518,796.81

Reported consolidated owner profit / 2004 / consolidated historical owner profit

RMB 91,846,101.98

Consolidated investment income or loss / 2004 / consolidated investment income

RMB 8,193,544.94

Consolidated operating cash inflow increased to CNY 475.97021621 million in 2004 from CNY 122.35969052 million. Management attributes better cash growth partly to sales collections, while the cash-flow supplement also reports inventory and operating-receivable reductions and increased operating payables. Cash paid for fixed, intangible and other long-lived assets was CNY 858.53059141 million, with CNY 90.05 million separately paid for investments. These are cash categories, not the construction carrying balance or a budget assigned to either new furnace. Net investing outflow was CNY 911.07149274 million, exceeding the year's operating inflow. Net financing supplied CNY 565.73593502 million: borrowing receipts were CNY 1,527.66322899 million and repayments CNY 936.26259146 million; capital contributions supplied CNY 72.49921543 million. The CNY 98.21244325 million distribution-and-interest payment combines dividends, profits and interest. Including a negative CNY 0.53045723 million currency effect, the cash increase was CNY 130.10420126 million. Closing short-term borrowings were CNY 684.87 million and long-term borrowings CNY 563.76220060 million, with a separate CNY 96.312 million current portion of long-term liabilities. These dated debt lines differ from gross borrowing receipts, all group liabilities and guarantee exposures, and do not alone establish unrestricted liquidity.

Reported operating cash flow / 2004 / consolidated operating cash

RMB 475,970,216.21

Reported cash capital expenditure / 2004 / consolidated long lived asset acquisition cash

RMB 858,530,591.41

Reported cash investment payments / 2004 / consolidated investment payment cash

RMB 90,050,000

Reported investing cash flow / 2004 / consolidated investing net cash

RMB -911,071,492.74

Reported financing cash flow / 2004 / consolidated financing net cash

RMB 565,735,935.02

Reported cash borrowing receipts / 2004 / consolidated new borrowing cash

RMB 1,527,663,228.99

Reported cash debt repayments / 2004 / consolidated debt repayment cash

RMB 936,262,591.46

Reported cash fx effect / 2004 / consolidated exchange effect

RMB -530,457.23

Reported cash change / 2004 / consolidated cash change

RMB 130,104,201.26

Reported short-term borrowings / 2004 / consolidated short term borrowings

RMB 684,870,000

Reported long term borrowings / 2004 / consolidated long term borrowings

RMB 563,762,200.6

The parent's operating cash flow was negative CNY 22.51631301 million. Cash received for investment income was CNY 21.62908499 million, much lower than its CNY 94.18619347 million accounting investment income; the two figures measure different things. Investment payments of CNY 166.4974 million, investment recoveries of CNY 21.58686111 million and the other stated items resulted in a CNY 123.29186390 million net investing outflow. The parent received CNY 298 million from borrowing and repaid CNY 110 million of debt. After CNY 25.19493393 million of combined dividend, profit-distribution and interest payments, financing produced CNY 162.80506607 million. Together these cash-flow categories increased cash and cash equivalents by CNY 16.99688916 million. The large other-operating cash receipts and payments in the parent statement are not all sales collections or factory procurement; group and parent cash flows should be read separately.

Reported operating cash flow / 2004 / parent only operating cash

RMB -22,516,313.01

Reported investing cash flow / 2004 / parent only investing cash

RMB -123,291,863.9

Reported financing cash flow / 2004 / parent only financing cash

RMB 162,805,066.07

Reported cash investment payments / 2004 / parent only investment payment cash

RMB 166,497,400

Reported cash borrowing receipts / 2004 / parent only borrowing cash

RMB 298,000,000

Reported cash debt repayments / 2004 / parent only debt repayment cash

RMB 110,000,000

Consolidated gross trade receivables were CNY 304.42011560 million at 31 December 2004, against CNY 298.96364460 million a year earlier. Bad-debt allowance of CNY 18.88739366 million left a net balance of CNY 285.53272194 million; the preceding-year net balance was CNY 279.89584337 million after CNY 19.06780123 million of allowance. The report classifies 81.06% of the gross closing balance as less than one year old. Age is not the same as a contractual overdue assessment. The five largest accounts totalled CNY 113.64644785 million, or 37.33% of gross trade receivables. This year-end balance concentration differs from the five largest customers' 38.20% share of annual sales. Gross other receivables of CNY 29.81127884 million, less CNY 10.20548233 million of allowance, left CNY 19.60579651 million net. Their preceding-year gross and allowance were CNY 167.35340734 million and CNY 11.69163877 million, respectively. The large reduction includes the separately described debt-to-equity conversion, so it cannot all be treated as cash collection. These measures explain credit exposure without assigning balances to a particular production line or asserting full recoverability.

Reported gross trade receivables / 2004 / consolidated historical trade receivables gross

RMB 304,420,115.6

Reported gross trade receivables / 2003 / consolidated historical trade receivables gross comparative 2003

RMB 298,963,644.6

Reported trade-receivable allowance / 2004 / consolidated historical trade receivables allowance

RMB 18,887,393.66

Reported trade-receivable allowance / 2003 / consolidated historical trade receivables allowance comparative 2003

RMB 19,067,801.23

Reported net trade receivables / 2004 / consolidated historical trade receivables net

RMB 285,532,721.94

Reported net trade receivables / 2003 / consolidated historical trade receivables net comparative 2003

RMB 279,895,843.37

Reported gross other receivables / 2004 / consolidated historical other receivables gross

RMB 29,811,278.84

Reported gross other receivables / 2003 / consolidated historical other receivables gross comparative 2003

RMB 167,353,407.34

Reported other-receivable allowance / 2004 / consolidated historical other receivables allowance

RMB 10,205,482.33

Reported other-receivable allowance / 2003 / consolidated historical other receivables allowance comparative 2003

RMB 11,691,638.77

Reported other receivables net / 2004 / consolidated historical other receivables net

RMB 19,605,796.51

Reported other receivables net / 2003 / consolidated historical other receivables net comparative 2003

RMB 155,661,768.57

Reported top five receivable balance / 2004 / consolidated top five trade receivables gross

RMB 113,646,447.85

Consolidated prepayments were CNY 28.29950728 million, down from CNY 34.62509085 million. The largest individual advance was CNY 9.20 million to the Tongxiang development-zone authority for land; the other major named advances concerned fuel or materials. These amounts are outstanding advance balances, not the year's total project expenditure. The intangible-asset note separately records CNY 20 million paid for land associated with project 208; the two disclosures are not assumed to be the same outstanding amount. Closing inventory fell from CNY 183.50552298 million to CNY 150.83881805 million, but its composition changed: raw materials rose from CNY 44.11393968 million to CNY 76.08463621 million, while finished goods fell from CNY 134.80981469 million to CNY 66.66280039 million. The remaining balance includes packaging, consumables, semi-finished goods and goods on consignment. The company reported no inventory impairment provision at year-end. That accounting judgement and the decline in finished goods do not by themselves prove customer acceptance, cash receipt or the absence of obsolescence risk.

Reported supplier prepayments / 2004 / consolidated supplier and construction advances

RMB 28,299,507.28

Reported supplier prepayments / 2003 / consolidated supplier and construction advances comparative 2003

RMB 34,625,090.85

Reported net inventory / 2004 / consolidated historical inventory net

RMB 150,838,818.05

Reported net inventory / 2003 / consolidated historical inventory net comparative 2003

RMB 183,505,522.98

Reported raw material inventory / 2004 / consolidated raw material inventory

RMB 76,084,636.21

Reported raw material inventory / 2003 / consolidated raw material inventory comparative 2003

RMB 44,113,939.68

Reported net inventory category / 2004 / consolidated finished goods inventory

RMB 66,662,800.39

Reported net inventory category / 2003 / consolidated finished goods inventory comparative 2003

RMB 134,809,814.69

Consolidated monetary funds rose from CNY 172.62096662 million to CNY 302.72516788 million. The note attributes the increase to higher sales collections and bank borrowing. Its CNY 46.45984414 million of other monetary funds included CNY 18.90478919 million of bank-draft guarantee deposits at BNBM Technology, CNY 19.69101310 million in the parent's securities account and a CNY 7 million Jiujiang term deposit; the remainder included letter-of-credit deposits. These descriptions identify the purposes of particular balances without establishing that all are unavailable or all are freely deployable for manufacturing expansion. The reported monetary-funds total, project funding needs and unrestricted cash are therefore distinct concepts. No unsupported unrestricted-cash total is calculated.

Reported monetary funds / 2004 / consolidated historical monetary funds

RMB 302,725,167.88

Reported monetary funds / 2003 / consolidated historical monetary funds comparative 2003

RMB 172,620,966.62

Reported other monetary funds / 2004 / consolidated historical other monetary funds

RMB 46,459,844.14

The tax note states a 15% income-tax rate for the listed parent. Jushi Group's foreign-invested-enterprise incentive began on 1 July 2001 and comprised two exemption years followed by three half-rate years; the report calls 2004 its second half-rate year and states an actual 13.2% tax burden after the reduction. For Jiujiang's newly expanded lines, income tax was first collected lawfully and the local retained portion was then rewarded back: 100% for 2004-2008 and 50% for 2009-2013 under the cited historical arrangement. This was not an exemption from all taxes. Consolidated subsidy income was CNY 11.45401252 million: CNY 9.05098582 million of fiscal subsidies, CNY 1.83458070 million of VAT relief and CNY 0.568446 million of other subsidies. The fiscal component included Jushi's CNY 1.637279 million of interest support, CNY 0.431 million industrial-investment award and CNY 4.366 million fiscal assistance, plus CNY 2.61670682 million rewarding Jiujiang's January-June local retained income tax. The VAT amount concerned Junan Cement's fly-ash hollow and solid blocks under a 2004-2005 arrangement; it cannot be applied to all glass-fiber sales. These historical, activity-specific measures help explain earnings and financing support, but their gross recognised amounts are not the net benefit to listed shareholders or necessarily the same period's cash receipts. They establish no current tax rate or continuing entitlement.

The FY2004 report restates its 2003 comparison following Jushi Group's CNY 2.00381982 million additional 2003 income-tax settlement. The consolidated adjustment increased tax payable and income-tax expense by that amount and reduced minority earnings and interests by CNY 0.87146125 million. The resulting CNY 1.13235857 million reduction in the listed shareholders' preceding-year profit and opening retained earnings moves reported 2003 net profit from CNY 71.25521967 million to CNY 70.12286110 million. The parent comparison also reduced investment income, long-term equity investments and retained earnings by CNY 1.13235857 million. This is a correction to the prior-year comparison reported in the 2004 filing, not an additional 2004 manufacturing expense or evidence of a new current tax rate. Historical FY2003 source figures remain separately traceable; comparisons must specify whether they use the original or restated basis.

Comparative owner profit / 2003 / consolidated owner profit restated comparative 2003

RMB 70,122,861.1

Huazheng's audit report dated 3 March 2005 gives an unmodified opinion on the 2004 consolidated and parent-company balance sheets, profit and profit-distribution statements and cash-flow statements under the Chinese Enterprise Accounting Standards and Enterprise Accounting System then applicable. This historical basis is retained; no IFRS restatement or automatic comparability with later standards is implied. Financial-statement audit is separate from independent review of the site's English explanations and translations. Parent financial statements and consolidated operations remain separately scoped.