CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 2003
GUANGSHEN RAILWAY COMPANY LIMITED
(Translation of Registrant's Name Into English)
No. 1052 Heping Road, Shenzhen, People's Republic of China 518010
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
---
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1).
Yes X No
--- ---
Indicate by check mark whether the registrant by furnishing information
contained in this Form is also thereby furnishing information to the
Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
GUANGSHEN RAILWAY COMPANY LIMITED (the "Registrant") is furnishing under cover
of this Form 6-K an English copy of the following documents in connection with
the Registrant's interim results for the first half of 2003:
(i) a copy of the press release; and
(ii) a copy of the 2003 Interim Report.
Guangshen Railway Announces 2003 Interim Results
Looking Ahead to Take Advantage of
The Great Pearl River Delta Circle and CEPA
(12 August 2003, Hong Kong) - Guangshen Railway Company Limited ("Guangshen
Railway" or the "Company") (SEHK code: 0525, NYSE ticker symbol: GSH) and its
subsidiaries today announce their unaudited profit attributable to shareholders
for the first half of the year was approximately RMB170 million, representing a
decrease of 43% when compared to that of the same period of last year, and
earnings per share were RMB0.039. Total revenues from operations were
approximately RMB1,029 million, which is a decrease of 14.3% when compared to
that of the same period of last year. The Board of Directors has decided not to
declare any interim dividend for the six months ended 30th June 2003.
Mr. Wu Junguang, Chairman of Guangshen Railway, said, " The decrease in revenues
from operations in the first half of the year was largely due to the outbreak of
Severe Acute Respiratory Syndrome ("SARS") in some provinces of China and Hong
Kong, which had negative impact on the Company's core businesses. However, as
the PRC government has succeeded in containing the SARS epidemic at this stage,
we believe that the adverse impact of the SARS epidemic on its transportation
businesses is temporary and will gradually fade away."
In the first half of 2003, the total number of passengers carried by the Company
declined to 17.483 million as a result of SARS, representing a decline of 14.1%
from the same period of last year. In particular, the number of passengers
traveling on the Guangzhou-Shenzhen trains, on the Hong Kong Through Trains and
on the long-distance passenger trains decreased approximately by 8%, 22% and
17.3% respectively.
In the freight transportation segment, the Company recorded a decrease of 17.6%
in the outbound freight and a slight decrease of 2.1% in inbound and
pass-through freight over the same period of last year. The total tonnage of
freight transported by the Company was 12.797 millions tons, representing a
decrease of 6.4% over the same period of last year. The total revenue generated
from the freight transportation was RMB228 million, representing a decrease of
approximately 8.2% over the same period of last year.
The passenger volume and freight volume of the Company have progressively
recovered after the SARS period. In the coming half year, the Company will
continue to take active and effective measures to prevent the recurrence of SARS
in its service areas and provide comfortable, safe, hygienic and convenient
transportation services to passengers. It will take advantage of the gradual
relaxation of restrictions by the PRC government on Chinese residents' traveling
to Hong Kong and Macau, and further enhance its marketing efforts on passenger
and freight transportation businesses. Riding on the opportunity, the Company
will continue to focus on the improvement and implementation of the
"as-frequent-as-buses" Train Project. It also plans to compete in intra-province
short-distance transportation market outside the Guangzhou-Shenzhen route while
accumulating experience of operations to compete in the long-distance passenger
transportation market. With respect to Hong Kong Through Trains, the Company
started the operation of the eighth pair of Hong Kong Through Trains on 28 June,
2003 and began to offer discount to group travelers of Dongguan-Kowloon Through
Trains on July 1, 2003. The Company will also actively cooperate with
Kowloon-Canton Railway Corporation in the "Hong Kong Welcomes You!" promotion
for Hong Kong Through Trains in order to attract more passengers. In relation to
its freight transportation business, the Company will focus on business
potentials at Guangzhou port and Yantian port and emphasize on the importance of
container transportation. The company also plans to operate a container train
between Dongguan and Yantian port to increase the volume of container
transportation. Furthermore, the Company plans to develop freight transportation
market in different geographies and open up new freight sources.
To enhance the Company's overall competitiveness, Guangshen Railway will
continue to invest in certain material projects to improve the facilities and
equipment of its transportation service as well as to strengthen its transport
capacity with internally generated funds this year. These projects include
purchase of locomotives and passenger coaches, construction of the north plaza
of Guangzhou East Railway Station and a technical support and maintenance depot
for passenger vehicles at Northern Shenzhen Station, and the project of capacity
upgrade between Guangzhou and Shenzhen (the Forth Line).
Mr. Wu concluded, "The Company will take advantage of the opportunities arising
from the building of a Great Pearl River Delta economic circle among Guangdong
Province, Hong Kong
and Macau within its service territory and the establishment of closer economic
partnership between the Mainland and Hong Kong and capture the historical
opportunity of the breakthrough in the Chinese railway industry to establish the
Guangzhou-Shenzhen railway into a safe, comfortable, premium, fast and
convenient means of transport among Guangzhou, Shenzhen and Hong Kong and a
convenient passage for people and freight linking the Mainland and Hong Kong.
The Company believes that its passenger and freight transportation businesses
will gradually recover during the second half of this year.
Information about Guangshen Railway Company Limited
The Company was established in 1996 and is principally engaged in railway
passenger and freight transportation businesses and related services and
businesses. It is the first and currently the only enterprise in the PRC railway
industry with its shares listed in Hong Kong and New York.
Enclosure:
Consolidated Income Statement (Unaudited)
Consolidated Balance Sheet (Unaudited)
Press Enquiry:
Guangshen Railway Company Limited Elegance Communications Limited
Yao Xiaocong Carol Yue
Chief Accountant and Company Secretary Account Manager
Tel: (0755) 2558 4891 Tel: (852) 2283 2090
Fax: (0755) 2556 5424 Fax: (852) 2283 2283
Email: yaoxiaocong@vip.sina.com Email: carol.yue@eleganceholdings.com
Website: http://www.gsrc.com Website:http://www.eleganceholdings.com
Condensed Consolidated Income Statement
(Unaudited)
For the six months ended 30th June,
-------------------------------------------------------
2003 2002 2003
---------------- ------------------ -----------------
RMB'000 RMB'000 US$'000
Revenues from railroad businesses
Passenger 748,999 891,029 90,241
Freight 227,694 248,008 27,433
-------------- -------------- ------------
Sub-total 976,693 1,139,037 117,674
Revenues from other businesses 52,691 61,611 6,348
-------------- -------------- ------------
Total revenues 1,029,384 1,200,648 124,022
-------------- -------------- ------------
Operating expenses
Railroad businesses (795,148) (804,486) (95,801)
Other businesses (50,672) (54,007) (6,105)
-------------- -------------- ------------
Total operating expenses (845,820) (858,493) (101,906)
-------------- -------------- ------------
Profit from operations 183,564 342,155 22,116
Other income 17,621 11,387 2,123
Finance cost (920) (302) (111)
Share of profit (losses) of associates
before tax 209 (2) 25
-------------- -------------- ------------
Profit before tax 200,474 353,238 24,153
Income tax expense (31,011) (55,150) (3,736)
Profit from ordinary activities after tax 169,463 298,088 20,417
Minority interests 542 (74) 65
-------------- -------------- ------------
Profit attributable to shareholders 170,005 298,014 20,482
============== ============== ============
Earnings per share
- Basic RMB0.039 RMB0.069 US$0.005
============== ============== ============
- Diluted N/A N/A N/A
============== ============== ============
Condensed Consolidated Balance Sheet
(Unaudited)
As of 31st As of
As of 30th June, December, 30th June,
2003 2002 2003
--------------- ----------- ----------
RMB'000 RMB'000 US$'000
(UNAUDITED) (AUDITED)
Non-current assets
Fixed assets 6,766,012 6,798,280 816,387
Construction-in-progress 716,535 672,827 86,330
Leasehold land payments 649,388 656,998 78,240
Interests in associates 141,539 140,842 17,053
Available-for-sale investments 166,695 166,695 20,084
Deferred tax assets 7,918 7,577 954
Deferred staff costs 173,549 181,095 20,910
------------ ------------ ------------
8,631,636 8,624,314 1,039,958
------------ ------------ ------------
Current assets
Materials and supplies 37,789 34,105 4,553
Trade receivables, net 57,346 51,457 6,909
Due form Parent Company -- 39,374 --
Due from related parties 240,617 267,885 28,990
Prepayments and other receivables, net 316,915 260,075 38,182
Temporary cash investments 614,756 567,339 74,067
Cash and cash equivalents 1,406,379 1,413,045 169,443
------------ ------------ ------------
2,673,802 2,633,280 322,144
------------ ------------ ------------
Current liabilities
Trade payables 51,718 41,734 6,231
Payables for construction of fixed assets 152,558 181,473 18,380
Due to Parent Company 34,581 -- 4,166
Due to related parties 112,501 158,199 13,554
Dividends payable 413,787 90,663 49,854
Taxes payable 19,058 71,844 2,296
Accrued expenses and other payables 533,510 457,953 64,278
------------ ------------ ------------
1,317,713 1,001,866 158,759
------------ ------------ ------------
Net current assets 1,356,089 1,631,414 163,385
------------ ------------ ------------
Total assets less current liabilities 9,987,725 10,255,728 1,203,343
------------ ------------ ------------
Minority interests 7,124 11,577 858
------------ ------------ ------------
Net assets 9,980,601 10,244,151 1,202,485
============ ============ ============
As of 31st As of
As of 30th June, December, 30th June,
2003 2002 2003
--------------- ----------- ----------
RMB'000 RMB'000 US$'000
(UNAUDITED) (AUDITED)
Representing:
Share capital 4,335,550 4,335,550 522,355
Reserves 5,645,051 5,908,601 680,130
------------ ------------ ------------
Total capital and reserves 9,980,601 10,244,151 1,202,485
============ ============ ============
Guangshen Railway Company Limited
(a joint stock limited company incorporated in the People's Republic of China)
INTERIM RESULT OF 2003
The Board of Directors of Guangshen Railway Company Limited (the "Company")
hereby presents the unaudited operating results of the Company and its
subsidiaries for the six months ended June 30, 2003.
REVIEW OF OPERATIONS
In the first half of 2003, the Company's core businesses declined as a result of
the outbreak of Severe Acute Respiratory Syndrome ("SARS") in some provinces of
China and Hong Kong. In the first half of 2003, total revenues of the Company
decreased by 14.3% from that of the same period in 2002. The revenues from
passenger transportation, freight transportation and other businesses decreased
by 15.9%, 8.2% and 14.5%, respectively, when compared with that of the same
period in 2002.
Passenger Transportation
Passenger transportation is the Company's core business segment. As of June 30,
2003, the Company operated 105 pairs of passenger trains per day according to
the train schedule, representing an increase of six pairs of trains over those
at the end of 2002. The 105 pairs of passenger trains included 36 pairs of
long-distance trains, an increase of two pairs over those at the end of 2002,
eight pairs of Hong Kong Through Trains, an increase of one pair over those at
the end of 2002, 57 pairs of high-speed trains between Guangzhou and Shenzhen,
an increase of three pairs over those at the end of 2002, and four pairs of
regular-speed trains between Guangzhou and Shenzhen.
For the six months ended June 30, 2003, the total number of passengers carried
by the Company was 17.483 million, representing a decline of 14.1% from 20.352
million in the first half of 2002. Of the total number of passengers carried,
(1) the total number of passengers travelling on the Guangzhou-Shenzhen route
was 6.939 million, representing a decrease of 8.0% from 7.539 million in the
same period of 2002; (2) the total number of passengers travelling on the Hong
Kong Through Trains was 0.800 million, representing a decrease of 22.0% from
1.026 million in the first half of 2002; and (3) the total number of passengers
travelling on long-distance passenger trains was 9.744 million, representing a
decrease of 17.3% when compared with 11.787 million in the same period of last
year.
Note: During the first half of 2002, as the Company had not officially used
the new data collection methods, the number of passengers of
Guangzhou-Shenzhen route did not include the passengers that travelled
between Guangzhou Station (which is owned by Yangcheng Railway Company)
and stations on the Guangzhou-Shenzhen route. These passengers and
those departing from Dongguan Station for northbound through trains of
the Zhaoqing-Kowloon route and the Beijing (Shanghai)-Kowloon route
were included in the passenger volume of long-distance passenger
trains. In the first half of 2003, the Company used the new data
collection methods. The passengers travelling between Guangzhou Station
and stations on the Guangzhou-Shenzhen route were included in the
calculation of passenger volume of the Guangzhou-Shenzhen route while
the passengers departing from Dongguan Station for northbound through
trains of the Zhaoqing-Kowloon route and the Beijing (Shanghai)-Kowloon
route were included in the calculation of passenger volume of the Hong
Kong Through Trains. Under the new data collection methods, the
passenger volume of the Guangzhou-Shenzhen route, the Hong Kong Through
Trains and the long-distance passenger trains was 8.585 million, 1.03
million and 10.737 million, respectively, in the first half of 2002.
Freight Transportation
Freight transportation is an important business segment of the Company. In the
first half of 2003, the total freight tonnage transported by the Company was
12.797 million tonnes, representing a decrease of 6.4% from 13.674 million
tonnes in the same period of last year. Of the total freight transportation
volume, (1) the outbound freight tonnage was 3.122 million tonnes, representing
a decrease of 17.6% from 3.787 million tonnes in the same period of last year;
and (2) the inbound and pass-through freight tonnage was 9.675 million tonnes,
representing a decrease of 2.1% from 9.887 million tonnes in the same period of
last year.
Other Businesses
For the first half of 2003, revenues from other businesses (including sales of
food and merchandise on the Company's trains and in its stations) were Renminbi
("RMB") 52.7 million, representing a decrease of 14.5% from RMB61.6 million in
the same period of last year.
Profit from Operations
The profit from operations of the Company for the first half of 2003 was
RMB183.6 million, representing a decline of 46.4% from RMB342.2 million for the
same period of last year. Profit attributable to shareholders during this
reporting period was approximately RMB170.0 million, representing a decrease of
43.0% from RMB298.0 million in the same period of last year.
MANAGEMENT DISCUSSION AND ANALYSIS
Total revenues from operations
In the first half of 2003, the Company's total revenues from operations were
RMB1,029.4 million, representing a decline of 14.3% from RMB1,200.6 million in
the same period of last year. Revenues from passenger transportation were
RMB749.0 million and revenues from freight transportation were RMB227.7 million,
representing 72.8% and 22.1% of the Company's total revenues, respectively, and
76.7% and 23.3% of the Company's railroad businesses, respectively. Revenues
from other businesses were RMB 52.7 million, representing 5.1% of the Company's
total revenues.
Passenger transportation business
Revenues from passenger transportation business in the first half of 2003 were
RMB749.0 million, representing a decrease of 15.9% from RMB891.0 million in the
same period of last year. The substantial decline was mainly due to the
significant decrease in the number of passengers as a result of SARS. The impact
is particularly strong on the number of passengers travelling on the more
profitable Hong Kong Through Trains and Shenzhen-Yueyang and Shenzhen-Beijing
long-distance passenger trains. The following table sets forth the revenues from
passenger transportation and the number of passengers from January 1, 2003 to
June 30, 2003 as compared to the same period of 2002:
Increase/
Six months ended (decrease) as
June 30, compared
2003 2002 to 2002
-------------------------------------------------------------------------------------------------
Revenues from passenger transportation (RMB thousands) 748,999 891,029 (15.9%)
-------------------------------------------------------------------------------------------------
- Guangshen trains and long-distance trains 626,858 727,442 (13.8%)
- Hong Kong Through Trains 122,141 163,587 (25.3%)
-------------------------------------------------------------------------------------------------
Total number of passengers (thousand persons) 17,483 20,352 (14.1%)
-------------------------------------------------------------------------------------------------
- Guangshen trains and long-distance trains 16,683 19,326 (13.7%)
- Hong Kong Through Trains 800 1,026 (22.0%)
-------------------------------------------------------------------------------------------------
Revenue per passenger (RMB) 42.84 43.78 (2.1%)
-------------------------------------------------------------------------------------------------
- Guangshen trains and long-distance trains 37.57 37.64 (0.2%)
- Hong Kong Through Trains 152.68 159.44 (4.2%)
-------------------------------------------------------------------------------------------------
Total passenger-kilometers (millions) 1,451.3 1,717.7 (15.5%)
-------------------------------------------------------------------------------------------------
Revenue per passenger-kilometer (RMB) 0.52 0.52 --
In the first half of 2003, revenues of the Company from the Guangshen and
long-distance passenger trains were RMB626.9 million, representing a decrease of
13.8% when compared to the same period of last year. The main reasons for the
substantial decline in revenues generated from the Guangshen and long-distance
trains were: (1) Guangdong Province, the Company's major operating area, was the
region where SARS initially occurred in China in the first half of this year.
The epidemic had lasted for a relatively long time and had significantly
affected our business. Since the issue of travel warning for Guangdong Province
by the World Health Organization on April 2, 2003, travelling activities in
Guangdong Province from April to May declined rapidly. Large-scale trade
negotiations and conventions were restricted and tourists and businessmen
travelling to and from Guangdong Province declined sharply. This caused a
substantial decline in the passenger volume; (2) considering the SARS impact,
the Company reduced or temporarily suspended part of its train operations to cut
operating cost and minimize the spread of SARS. The Company suspended the
operation of five pairs of long-distance passenger trains, five pairs of
Guangshen high-speed passenger trains and four pairs of regular-speed passenger
trains on the Guangzhou-Shenzhen route. The operation of passenger trains
between Shenzhen and Yueyang was suspended between May 2 and June 12 and resumed
with a reduced train configuration between June 13 and July 2. The
Shenzhen-Beijing passenger trains were operated with a reduced train
configuration from May to July. The suspension and reduction of part of the
passenger train operations have contributed to the decrease in the number of
passengers; and (3) on festivals during the SARS period (such as the May 1
Golden Week), the Company did not adjust ticket prices upwards as it usually did
on these festivals, and allowed for a full refund for tickets within a specified
period. This also reduced the passenger revenues to a certain extent.
Revenues from the Hong Kong Through Trains of the Company in the first half of
2003 were RMB122.1 million, representing a decrease of 25.3% from that in the
same period of last year. The decrease was mainly caused by: (1) the temporary
ban on all tours from China to Hong Kong and Macao because of SARS epidemic in
the first half of 2003, which spanned a few very important public holidays such
as Hong Kong's Tomb Sweeping Day and Easter holiday and May 1 Labour Day,
causing a sharp decline in business and tourist travels in and out of Hong Kong;
and (2) the around-the-clock service of the Shenzhen Huanggang checkpoint since
January 27, 2003 also affected the Company's passenger volume and revenues from
the Hong Kong Through Trains.
Freight transportation business
Revenues generated from the Company's freight transportation in the first half
of 2003 were RMB227.7 million, representing a decrease of 8.2% from RMB248.0
million in the first half of 2002. The following table sets forth the revenues
and volume of freight transportation from January 1, 2003 to June 30, 2003 as
compared to the same period in 2002:
Increase/
Six months ended (decrease) as
June 30, compared
2003 2002 to 2002
--------------------------------------------------------------------------------------------------
Revenues from freight transportation (RMB thousands) 227,694 248,008 (8.2%)
--------------------------------------------------------------------------------------------------
Revenues from outbound freight 40,864 48,403 (15.6%)
Revenues from inbound and pass-through freight 150,439 144,856 3.9%
Revenues from storage, loading and miscellaneous items 36,391 54,749 (33.5%)
Total tonnage (thousand tonnes) 12,797 13,674 (6.4%)
Revenue per tonne (RMB) 17.79 18.14 (1.9%)
Total tonne-kilometers (millions) 914.2 939.7 (2.7%)
Revenue per tonne-kilometer (RMB) 0.249 0.264 (5.7%)
In the first half of 2003, the Company's outbound freight revenue was RMB40.9
million, representing a decline of 15.6% when compared with that of the same
period in 2002; the inbound and pass-through freight revenues were RMB150.4
million, representing an increase of 3.9% when compared with that of the same
period in 2002; and revenues from storage, loading and miscellaneous items were
RMB36.4 million, representing a decline of 33.5% when compared with that of the
same period in 2002. The decrease in the revenues from freight transportation as
compared with that of the same period in 2002 was mainly due to: (1) the impact
of SARS. The volume of some categories of freight, such as aero-fuel, food and
articles of daily use, decreased sharply; (2) the decrease in import freight.
Part of the freight formerly imported through Hong Kong is imported through
other ports as a result of the opening of more ports to the outside world by the
Chinese government. This reduced the outbound freight of the Company; and (3)
intense competition. Since the expressway between Beijing and Zhuhai started
operation, a large quantity of northbound freight had been transported via the
expressway, causing a decrease in outbound railway freight. As a result of this
decrease in freight volume, revenues from related businesses of storage and
miscellaneous items also declined. Revenues from inbound and pass-through
freight increased from the same period of last year. The increase was mainly due
to the operation of the second track of the Beijing-Jiujiang line, resulting in
the growth of pass-through freight from other railway companies.
Other businesses
Revenues from other businesses of the Company in the first half of 2003
decreased by 14.5% from RMB61.6 million in the same period of 2002 to RMB52.7
million. This was mainly due to the decrease in the passenger volume and
reduction in passengers' onboard consumption as a result of the SARS epidemic.
Furthermore, in order to offer more comfortable and convenient waiting areas,
the Company dismantled some shops and advertisement boards at Guangzhou East
Station, Shenzhen Station and Dongguan Station, which also reduced part of the
revenues.
OPERATING EXPENSES OF THE RAILROAD BUSINESSES
Operating expenses of the Company's railroad businesses in the first half of
2003 were RMB795.1 million, representing a decrease of 1.2% from RMB804.5
million in the first half of 2002. This was mainly because the Company adjusted
the depreciation rate for certain fixed assets, which led to a decrease in fixed
asset depreciation expenses in the first half of 2003 as compared to the first
half of 2002. Secondly, the Company temporarily suspended the operation of some
of the trains due to the SARS epidemic, which reduced the expenses on use of
railway tracks, hauling and in-station passenger service. At the same time, the
Company took various measures in the first half of 2003 to control the impact of
the SARS epidemic. Such activities increased the workload of employees. As a
result, the Company's salary and general administrative expenses increased.
Furthermore, the rise in diesel price caused by changes in the international
market increased the Company's fuel expenses. To prevent the spread of the SARS
epidemic, the Company had to maintain continuous operation of air-conditioners
in the trains. The consumption of diesel and electricity was therefore
increased. Although the consumption of materials and supplies was reduced as a
result of the decreased train operation, the overall consumption of materials
and supplies did not reduce accordingly as the two factors offset each other.
LIQUIDITY AND FINANCIAL RESOURCES
During the first half of 2003, the main source of the Company's capital was
revenues from operations. Such capital was used primarily for capital and
operational expenditures and tax payments.
As at June 30, 2003, the Company's liabilities to assets ratio was 11.7%.
The Company believes that it has sufficient working capital to support its
operation and development.
PROSPECTS
As the Chinese government has succeeded in containing the SARS epidemic at this
stage, the Company believes that the adverse impact of the SARS epidemic on its
transportation businesses is temporary and will gradually fade away.
The Company will take advantage of the opportunities arising from the
development of a Great Pearl River Delta economic circle among Guangdong
Province, Hong Kong and Macau within its service areas and the establishment of
closer economic partnership between the Mainland and Hong Kong, capture the
historical opportunity in the breakthrough of the railway industry in China and
continue with the implementation and improvement of the "as-frequent-as-buses"
Train Project. It will continue to expand its transportation capacity, continue
with upgrading equipment and maximize resources allocation of transportation
management by focusing on computerized central control systems of railway
traffic. It will also further strengthen its modern corporate management
mechanism, establish corporate culture and improve its quality of service so as
to establish the Guangzhou-Shenzhen railway as a profitable modernized railway
which provides high speed and frequent services and which is equipped with most
advanced science and technology, and turn the Guangzhou-Shenzhen railway into a
safe, comfortable, premium, fast and convenient means of transport between
Guangzhou, Shenzhen and Hong Kong and a convenient passage for people and
freight linking the Mainland and Hong Kong.
During the second half of 2003, the Company will take active and effective
measures to prevent the recurrence of SARS in its service areas and to provide
comfortable, safe, hygienic and convenient train service and environment for its
passengers. It will take advantage of the gradual relaxation of restrictions
imposed by the Chinese government on Chinese residents' travelling to Hong Kong
and Macau, enhance its marketing efforts on passenger and freight transportation
and boost revenues and reduce costs. The Company believes that its passenger and
freight transportation businesses will gradually recover during the second half
of this year.
In relation to its passenger transportation business, the Company will continue
to focus on the improvement and implementation of the "as-frequent-as-buses"
Train Project, optimize the train schedule, and increase the number of trains
stopping at Guangzhou Station and main intermediary stations to attract
passengers from Guangzhou Station into the Guangzhou-Shenzhen route and the
intermediary stations. The Company will further improve services of the two
long-distance passenger trains that are operated by the Company between Shenzhen
and Yueyang and between Shenzhen and Beijing. While accumulating experience of
operations to compete in the long-distance passenger transportation market, the
Company plans to extend the route of one pair of its regular-speed passenger
trains, which currently run between Shenzhen and Guangzhou, to run further to
Shaoguan, a city in the northern part of Guangdong Province, and compete in
intra-province short-distance transportation market outside the
Guangzhou-Shenzhen route. With respect to Hong Kong Through Trains, the Company
added one pair of Hong Kong Through Trains on June 28, 2003 and began to offer
discount to group travelers of Dongguan-Kowloon Through Trains on July 1, 2003.
In order to attract more passengers, the Company will cooperate with
Kowloon-Canton Railway Corporation actively in the "Hong Kong Welcomes You!"
promotion for Hong Kong Through Trains. With respect to improvement in passenger
service, the Company plans to add more ticket agents in major cities and towns
along the Guangzhou-Shenzhen route and extend the presale period of tickets for
the convenience of passengers. It will refurbish Shenzhen Station, Guangzhou
East Station and Dongguan Station to offer a more comfortable environment for
passengers.
In relation to its freight transportation business, the Company will focus on
business potentials at Guangzhou port and Yantian port and continue to develop
freight transportation in relation to ports. Emphasizing on the importance of
container transportation, the Company also plans to operate a container train
between Dongguan and Yantian port to increase the volume of container
transportation. Furthermore, the Company plans to adjust freight transportation
tariffs in its service territory, develop freight transportation market in
different geographies, conduct freight transportation market research and
marketing activities and open up new freight sources.
In relation to its other businesses, the Company will endeavour to develop new
businesses. While providing passengers with more comfortable and convenient
waiting areas, the Company will also create a more pleasant shopping environment
for its passengers by opening a shopping mall after the refurbishment of the
stations. It also plans to further develop the tourism business by taking
advantage of the huge demand for travel after SARS and travel ban is lifted
nationwide.
To ease the pressure of insufficient transportation capacity and to enhance the
Company's overall competitive strength, the Company plans to invest in certain
material projects (purchases) (major items as listed in the table below) to
improve the facilities and equipment of the Company's transportation service
with internally generated funds this year:
PROJECTS AMOUNT NOTES
(RMB'000)
----------------------------------------------------------------------------------------------------------------------
1 Purchase of locomotives and 219,200 To upgrade the equipment and improve the
passenger coaches quality of services
2 North plaza of Guangzhou 50,000 Together with Guangzhou Subway that is
East Railway Station under construction to provide passengers
with convenience in transfer and dispersion
3 Technical support and 40,000 For the technical preparation, examination
maintenance depot for and parking of long-distance
passenger vehicles at passenger trains
Northern Shenzhen Station
4 Capacity upgrade between 10,000 To upgrade the transportation capacity of
Guangzhou and Shenzhen the Company and to enhance its
(the Fourth Line) competitive strength. This project has not
yet been approved by the relevant
government authorities
5 The pedestrian passage between 10,000 To improve the service facilities at
Shenzhen Railway Station and Shenzhen Station and
Luohu Subway Station connect the railway station with the
subway station
6 An elevated carpark at Nan 10,000 To improve the auxiliary service facilities
Huan Lang and the construction at Shenzhen Station
at Xi Huan Lang of Shenzhen Station
7 Revamping of old station 10,000 To improve the service facilities at Dongguan
buildings at Dongguan Station
Station and the related projects
8 Construction of a connecting track for 10,000 An auxiliary project of the technical support
passenger trains from Pinghu and maintenance depot for passenger
to northern Shenzhen vehicles at Northern Shenzhen Station.
This line is constructed for solving the problems
created by the intersection of the train stocks and
locomotives moving in and out of the depot for
maintenance and examination between Pinghu and
Shenzhen and the high-speed trains running on the
main tracks
9 Construction of other transportation 101,700 To improve railway transportation
facilities and small-scale purchases facilities and upgrade quality of service
and construction projects
Note: The projects listed above are the Company's proposals which will be
subject to change in the actual implementation.
FINAL DIVIDEND OF 2002
Resolution approving the distribution of a dividend of RMB0.10 (inclusive of
tax) per share to the shareholders of the Company was passed at the annual
general meeting of the Company for the year 2002 held on June 10, 2003. The
dividend was distributed to the shareholders on or before July 10, 2003.
INTERIM DIVIDEND
The Board of Directors has decided not to declare any interim dividend for the
six months ended June 30, 2003.
APPOINTMENT OF DIRECTORS, CHAIRMAN OF THE BOARD AND GENERAL MANAGER
Mr. Feng Qifu was appointed as the general manager of the Company by a
resolution passed in a Board meeting held on May 8, 2003.
The annual general meeting for the year 2002 and a meeting of the Board of
Directors were held on June 10, 2003. In the annual general meeting, resolutions
to appoint Mr. Wu Junguang, Mr. Feng Qifu, Mr. Hu Lingling and Mr. Wen Weiming
as directors of the Company were passed . Mr. Wu Junguang was elected the
Chairman of the Board in the Board meeting.
EMPLOYEES, SALARY DISTRIBUTION POLICY AND TRAINING PLANS
As of June 30, 2003, the Company had a total of 9,255 employees, which is three
less than the total number of employees at the end of year 2002.
The Company implemented a salary distribution policy which links remuneration
closely with operating results, labour efficiency and individual contribution.
Employees' salary distribution is subject to macro-control and is based on their
post scores and performance reviews. As of June 30, 2003, the Company paid
salaries of RMB139.6 million in total.
Pursuant to relevant state policies and regulations, the Company's employees
enjoy the following benefits: (1) retirement pension - the Company is required
to set aside a sum equivalent to 18% of the aggregate amount of salaries of all
of its employees for the year and 5% of the aggregate amount of salaries of all
of its employees for the year as employees' retirement pension and supplemental
retirement pension, respectively; (2) welfare fund - the Company is required to
set aside 14% of the aggregate amount of salaries of all of its employees as
employees' welfare fund contributions and medical service fees; and (3) housing
fund - both the Company and its employees are required to deposit 7% (for
residents in Guangzhou area or along the Guangzhou-Shenzhen route), or 13% (for
Shenzhen residents) of the employee's monthly salary into the employee's
personal housing fund account. Save as disclosed, the Company has not
participated in any other employees' basic medical insurance scheme.
In the first half of 2003, the Company had trained 30 managers and 173 workers
on standardized operations required by their posts, and 286 managers and 2,576
workers on adaptability. The training included: computerized central control
system of railway traffic, knowledge about new types of locomotives, operation
for disconnectors, safety regulation, handling of emergency and knowledge about
prevention of SARS. The Company also held 12 skill contests and 69 special
lectures. The Company organized most of these training courses but also employed
certain external experts for these purposes. Due to SARS epidemic, the Company
has only completed 35% of its full-year training plans and the direct cost for
these training programs was about RMB1.1 million.
EMPLOYEES' RESIDENTIAL PROPERTIES AND ACCOUNTING TREATMENT FOR DIFFERENCES
BETWEEN THE SELLING PRICES AND COSTS
The Company constructed and purchased new residential properties for its
employees to improve their living conditions. Under a housing benefit scheme,
the Company sold these residential properties to its employees at a price
approved by the government. The losses arising from the difference between the
book value of the staff quarters and the proceeds collected from the sale of
such quarters to the employees was less than RMB226.4 million as of June 30,
2003. Pursuant to the prevailing policies of the Ministry of Finance, the
aforesaid losses should be credited to retained earnings in the statutory
accounts as of January 1, 2001, or in case of a debit balance, to offset the
statutory public welfare fund, statutory surplus reserve, discretionary surplus
reserve and capital surplus reserve upon the approval by the Board. Such
treatment conforms with the accounting rules and regulations applicable to the
Company and its subsidiaries in China.
In the financial statements of the Company as of June 30, 2003, prepared in
accordance with International Financial Reporting Standards, the Company
accounted for the housing losses as follows: losses arising from the sales of
completed staff quarters to the employees, or from the sales of premises under
construction which could be reasonably estimated for future services was
approximately RMB226.4 million. Such losses were amortized on a straight-line
basis over the estimated remaining average service period of 15 years from the
time of such sales. During the first half ended June 30, 2003, the housing
losses charged to the deferred staff costs in the consolidated income statement
was approximately RMB7.55 million and the accumulated amortized amount was
RMB52.82 million.
As of June 30, 2003, the unamortized deferred expenses, which were recorded as
deferred staff costs in the balance sheet of the Company and its subsidiaries,
were RMB173.5 million.
CAPITAL STRUCTURE
No change has occurred to the Company's share capital structure during the
reporting period. The Company's capital structure as at June 30, 2003 was as
follows:
As at June 30, 2003
Percentage of
total share
Class of shares Number of shares capital (%)
--------------------------------------------------------------------------------
State-owned legal person shares 2,904,250,000 66.99
H Shares 1,431,300,000 33.01
--------------------------------------------------------------------------------
Total 4,335,550,000 100.00
SHAREHOLDERS
As at June 30, 2003, the interests and short positions of the persons, other
than directors or supervisors of the Company, in the shares and underlying
shares of the Company as recorded in the register required to be kept under
section 336 of the Securities and Futures Ordinance (Chapter 571 of the Laws of
Hong Kong) were as follows:
As at June 30, 2003
Percentage of Percentage of
Number class of shares total share
Name of shareholder Class of shares of shares held (%) capital (%)
--------------------------------------------------------------------------------------------------
Guangzhou Railway State-owned legal 2,904,250,000 100 66.99
(Group) Company person shares
DIRECTORS' AND SUPERVISORS' INTERESTS
As at June 30, 2003, there was no record of interests and short positions
(including the interests and short positions which were taken or deemed to have
under the provisions of the Securities and Futures Ordinance) of the directors
or supervisors of the Company in the shares, underlying shares and debentures of
the Company or any associated corporation (within the meaning of the Securities
and Futures Ordinance) in the register required to be kept under section 352 of
the Securities and Futures Ordinance. The Company had not received notification
of such interests and short positions from each director or supervisor of the
Company as required to be made to the Company and The Stock Exchange of Hong
Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities
Transactions by Directors of Listed Companies in Appendix 10 to the Listing
Rules.
PURCHASE, SALE OR REDEMPTION OF Shares
Neither the Company nor any of its subsidiaries has purchased, sold or redeemed
any of the Company's shares during this reporting period.
IMPACT OF ECONOMIC POLICIES ON THE COMPANY
The policies on adjustment of national economic structure and policies relating
to import and export activities have affected the composition of the Company's
railway freight and freight pricing policies. Save as disclosed, the Company is
not aware of any other governmental policies that are likely to have effects on
the Company's business and financial position.
TAXATION POLICY
As the Company is located in the Shenzhen Special Economic Zone, it enjoys a
preferential income tax rate of 15%. The Company believes that such rate will
continue to apply in the future.
On May 16, 2003, according to the document Shendishuifa [2003] 406 - (Notice
Concerning Certain Taxation Measures for Promoting the Prevention and Cure of
Atypical Pneumonia of Our Municipality) issued by (Shenzhen Bureau of Finance),
(Shenzhen Municipality Office of the State Administration of Taxation) and
(Shenzhen Local Taxation Bureau), the Company enjoys the following preferential
taxation policies: (1) during the period from May 1, 2003 to September 30, 2003,
the business tax levied on the Company's revenues generated from its passenger
transportation business, city construction tax and education sub-charge will be
reduced by half; and (2) upon the application of the Company, the real estate
tax for the Company's real estate at Shenzhen Station used in its passenger
transportation business will be reduced by half during the period from April 1,
2003 to September 30, 2003.
MATERIAL ACQUISITIONS OR DISPOSALS
During the six months ended June 30, 2003, the Company had made no material
acquisitions or disposals.
OVERDUE TIME DEPOSITS
As of June 30, 2003, the Company had approximately RMB31.365 million overdue
time deposits placed with Zengcheng Urban Credit Cooperative. The Company had
initiated legal proceedings in respect of such overdue deposits and had obtained
judgment in its favour. However, as the judgment debtor was under restructuring,
the Court ordered a stay of execution of the judgment. The said overdue time
deposits account for approximately 0.3% of the Company's net assets and 1.2% of
the Company's total current assets, and have no material impact on the capital
usage and operations of the Company. For prudence, the Company has reclassified
such amount to other receivables and made certain provision for such overdue
deposits.
Other than the overdue time deposits as disclosed, the Company has no other
overdue time deposits that have not been repaid. The Company has not encountered
any difficulty in withdrawing deposits. The Company has placed its deposits with
other commercial banks in China and the Railway Deposit-taking Centre of the
Ministry of Railway.
ENTRUSTED DEPOSITS
As of June 30, 2003, the Company did not have any entrusted deposits with any
financial institutions in China.
BANK BORROWINGS
As of June 30, 2003, the Company had no bank loans or borrowings.
CONTINGENCY
As of June 30, 2003, the Company's investment in an associated company,
Guangzhou Tiecheng Enterprise Company Limited ("Tiecheng"), amounted to
approximately RMB140 million. In 1996, Tiecheng and a Hong Kong incorporated
company jointly established Guangzhou Guantian Real Estate Company Limited
("Guangzhou Guantian"), a sino-foreign cooperative joint venture to carry on
real estate business near a railway station operated by the Company.
On October 27, 2000, Guangzhou Guantian together with Guangzhou Guanhua Real
Estate Company Limited ("Guangzhou Guanhua") and Guangzhou Guanyi Real Estate
Company Limited ("Guangzhou Guanyi") agreed to act as joint guarantors ("the
Guarantors") on certain payables owed by Guangdong Guangcheng Real Estate
Company Limited ("Guangdong Guancheng") to an independent third party. Guangzhou
Guanhua, Guangzhou Guanyi and Guangdong Guancheng and Guangzhou Guantian were
related companies with a common chairman. As Guangdong Guancheng failed to repay
the debt, the independent third party sued Guangzhou Guantian, Guangzhou Guanhua
and Guangzhou Guanyi for the debt owed to it by Guangdong Guancheng. According
to a court verdict on November 4, 2001, Guangzhou Guanhua, Guangzhou Guanyi and
Guangzhou Guantian had to pay an amount of approximately RMB257 million plus
interest.
As stated above, if Guangzhou Guantian is held responsible for the guarantee,
the Company may need to make provision for the decrease in value of its
investment in Tiecheng. Having consulted an independent lawyer, the directors of
the Company believe that the guarantee is invalid according to the relevant
rules and regulations of China. Tiecheng is now in the process of appealing for
discharge of the obligation of Guangzhou Guantian under the guarantee.
Accordingly, the directors consider that as of the date of this report, the
chance of Guangzhou Guantian having to settle the above claim is remote and no
provision for the decrease in value of the Company's investment in Tiecheng was
made in the accounts.
EXCHANGE RISK
The Company currently holds a certain amount of deposits denominated in United
States dollars and Hong Kong dollars. It also receives revenues in Hong Kong
dollars from the provision of transportation service. When there are major
fluctuations in the exchange rates of these currencies to RMB, the Company's
operating results will be affected.
CHARGE ON ASSETS AND GUARANTEE
As at June 30, 2003, the Company had not charged any of its assets and had not
provided any guarantee.
MATERIAL LITIGATION
As at June 30, 2003, the Company was not involved in any major litigation or
dispute.
CONNECTED TRANSACTION
As at June 30, 2003, the Company's connected transactions of railway transport
have been carried out on normal terms according to the conditions and contents
of the waiver granted by the Stock Exchange and the contracts entered into by
the contracting parties. There has been no new connected transaction.
AUDIT COMMITTEE
The Audit Committee is composed of two independent non-executive directors of
the Company. Its principal duties include the review and supervision of the
Company's financial reporting procedures and internal controls. The unaudited
interim financial statement for the six months ended June 30, 2003 has been
reviewed by the Audit Committee.
CODE OF BEST PRACTICE
None of the directors of the Company is aware of any information that would
reasonably indicate that the Company is not, or was not for any part of the
accounting period covered by the interim report, in compliance with the Code of
Best Practice set out in Appendix 14 to the Listing Rules of the Stock Exchange.
DOCUMENTS AVAILABLE FOR INSPECTION
The full text of the Interim Report and Financial Statements signed by the
Chairman are available for inspection at No. 1052 Heping Road, Shenzhen, the
People's Republic of China.
On behalf of the Board of Directors
Wu Junguang
Chairman of the Board of Directors
Shenzhen, the People's Republic of China, August 12, 2003
INTERIM RESULTS
The Board of Directors of Guangshen Railway Company Limited (the "Company")
hereby presents the unaudited interim operating results of the Company and its
subsidiaries (the "Group") for the six months ended June 30, 2003 prepared in
conformity with International Financial Reporting Standards ("IFRS").
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
For the six months ended June 30,
2003 2002 2003
Note RMB'000 RMB'000 US$'000
(Note 14)
-----------------------------------------------------------------------------------------------------------------------------------
Revenues from railroad businesses
Passenger 748,999 891,029 90,241
Freight 227,694 248,008 27,433
-----------------------------------------------------------------------------------------------------------------------------------
Sub-total 976,693 1,139,037 117,674
Revenues from other businesses 52,691 61,611 6,348
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues 1,029,384 1,200,648 124,022
-----------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Railroad businesses (795,148) (804,486) (95,801)
Other businesses (50,672) (54,007) (6,105)
-----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses (845,820) (858,493) (101,906)
-----------------------------------------------------------------------------------------------------------------------------------
Profit from operations 183,564 342,155 22,116
Other income 17,621 11,387 2,123
Finance costs (920) (302) (111)
Share of profit (losses) of
associates before tax 209 (2) 25
-----------------------------------------------------------------------------------------------------------------------------------
Profit before tax 3 200,474 353,238 24,153
Income tax expense 4 (31,011) (55,150) (3,736)
-----------------------------------------------------------------------------------------------------------------------------------
Profit from ordinary activities after tax 169,463 298,088 20,417
Minority interests 542 (74) 65
-----------------------------------------------------------------------------------------------------------------------------------
Profit attributable to shareholders 170,005 298,014 20,482
-----------------------------------------------------------------------------------------------------------------------------------
Earnings per share
- Basic 6 RMB0.039 RMB0.069 USD0.005
-----------------------------------------------------------------------------------------------------------------------------------
- Diluted 6 N/A N/A N/A
CONDENSED CONSOLIDATED BALANCE SHEET
---------------------------------------------------------------------------------------------------------------------------------
As of As of As of
June 30, December 31, June 30,
2003 2002 2003
Note RMB'000 RMB'000 US$'000
(Unaudited) (Audited) (Note 14)
---------------------------------------------------------------------------------------------------------------------------------
Non-current assets
Fixed assets 7 6,776,012 6,798,280 816,387
Construction-in-progress 7 716,535 672,827 86,330
Leasehold land payments 649,388 656,998 78,240
Interests in associates 141,539 140,842 17,053
Available-for-sale investments 166,695 166,695 20,084
Deferred tax assets 7,918 7,577 954
Deferred staff costs 173,549 181,095 20,910
---------------------------------------------------------------------------------------------------------------------------------
8,631,636 8,624,314 1,039,958
---------------------------------------------------------------------------------------------------------------------------------
Current assets
Materials and supplies 37,789 34,105 4,553
Trade receivables, net 8 57,346 51,457 6,909
Due from Parent Company - 39,374 -
Due from related parties 240,617 267,885 28,990
Prepayments and other receivables, net 316,915 260,075 38,182
Temporary cash investments 614,756 567,339 74,067
Cash and cash equivalents 1,406,379 1,413,045 169,443
---------------------------------------------------------------------------------------------------------------------------------
2,673,802 2,633,280 322,144
---------------------------------------------------------------------------------------------------------------------------------
Current liabilities
Trade payables 9 51,718 41,734 6,231
Payables for construction of fixed assets 152,558 181,473 18,380
Due to Parent Company 34,581 - 4,166
Due to related parties 112,501 158,199 13,554
Dividends payable 413,787 90,663 49,854
Taxes payable 19,058 71,844 2,296
Accrued expenses and other payables 533,510 457,953 64,278
---------------------------------------------------------------------------------------------------------------------------------
1,317,713 1,001,866 158,759
---------------------------------------------------------------------------------------------------------------------------------
Net current assets 1,356,089 1,631,414 163,385
---------------------------------------------------------------------------------------------------------------------------------
Total assets less current liabilities 9,987,725 10,255,728 1,203,343
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
As of As of As of
June 30, December 31, June 30,
2003 2002 2003
Note RMB'000 RMB'000 US$'000
(Unaudited) (Audited) (Note 14)
---------------------------------------------------------------------------------------------------------------------------------
Minority interests 7,124 11,577 858
---------------------------------------------------------------------------------------------------------------------------------
Net assets 9,980,601 10,244,151 1,202,485
---------------------------------------------------------------------------------------------------------------------------------
Representing:
Share capital 10 4,335,550 4,335,550 522,355
Reserves 5,645,051 5,908,601 680,130
---------------------------------------------------------------------------------------------------------------------------------
Total capital and reserves 9,980,601 10,244,151 1,202,485
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
Reserves
Share Share Revenue Retained
capital premium reserves earnings Sub-total Total
Note RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
-----------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 2002 4,335,550 3,984,135 1,287,370 637,096 5,908,601 10,244,151
Profit attributable
to shareholders - - - 170,005 170,005 170,005
Dividends relating to 2002 5 - - - (433,555) (433,555) (433,555)
-----------------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 2003 4,335,550 3,984,135 1,287,370 373,546 5,645,051 9,980,601
-----------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 2001 4,335,550 3,984,135 1,198,335 602,603 5,785,073 10,120,623
Profit attributable
to shareholders - - - 298,014 298,014 298,014
Dividends relating to 2001 5 - - - (433,555) (433,555) (433,555)
-----------------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 2002 4,335,550 3,984,135 1,198,335 467,062 5,649,532 9,985,082
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------
For the six months ended June 30,
2003 2002 2003
RMB'000 RMB'000 US$'000
(Note 14)
-----------------------------------------------------------------------------------------------------------------
Net cash from operating activities 242,152 557,534 29,175
Net cash used in investing activities (229,050) (133,305) (27,596)
Net cash used in financing activities (19,768) (3,198) (2,382)
-----------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (6,666) 421,031 (803)
Cash and cash equivalents at beginning of period 1,413,045 365,508 170,246
-----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 1,406,379 786,539 169,443
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and accounting policies
The accompanying condensed consolidated financial statements are prepared in
accordance with IFRS 34 "Interim Financial Reporting" promulgated by the
International Accounting Standards Board and Appendix 16 of the Rules
Governing the Listing of Securities on the Stock Exchange of Hong Kong
Limited.
The accounting policies adopted by the Group in preparing the interim
condensed consolidated financial statements are the same as those adopted in
the preparation of the annual consolidated financial statements as of and
for the year ended December 31, 2002.
2. Segment information
(i) Business Segments
The Group conducts the majority of its business activities in railroad and
other business operations. These segments are determined primarily because
the senior management makes key operating decisions and assesses performance
of the segments separately. The accounting policies of the Group's segments
are the same as those described in the principal accounting policies adopted
in preparing the consolidated financial statements of the Group. The Group
evaluates performance based on profit from operations. An analysis of the
Group's revenues and results for the period by business segment is as
follows:
For the six months ended June 30,
Railroad businesses Other businesses Unallocated Consolidation Total
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
-----------------------------------------------------------------------------------------------------------------------------------
Revenues
- External 976,693 1,139,037 52,691 61,611 -- -- -- -- 1,029,384 1,200,648
- Inter-segment -- -- 27,483 33,537 -- -- (27,483) (33,537) -- --
-----------------------------------------------------------------------------------------------------------------------------------
976,693 1,139,037 80,174 95,148 -- -- (27,483) (33,537) 1,029,384 1,200,648
Segment result 181,545 334,551 2,019 7,604 -- -- -- -- 183,564 342,155
Other income 14,885 9,185 2,736 2,202 -- -- -- -- 17,621 11,387
Including:
Interest income 13,754 9,561 220 240 -- -- -- -- 13,974 9,801
Finance costs -- -- -- -- (920) (302) -- -- (920) (302)
Share of profit (losses) of
associates before tax 209 (2) -- -- -- -- -- -- 209 (2)
Income tax expense (31,011) (55,150)
Minority interests 542 (74)
-----------------------------------------------------------------------------------------------------------------------------------
Profit attributable
to shareholders 170,005 298,014
(ii) Geographic Segments
For the six months ended June 30, 2003, all of the Group's business
operations were conducted in the People's Republic of China (the "PRC").
3. Profit before tax
Profit before tax is stated after charging (crediting) the following:
For the six months ended
June 30,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------
Depreciation of fixed assets 159,818 176,121
Amortisation of leasehold land payments 7,714 7,521
Amortisation of deferred staff costs 7,546 7,666
Interest expenses 920 302
Interest income (13,974) (9,801)
4. Income tax expense
The amount of taxation charged to the condensed consolidated income
statement represents:
For the six months ended
June 30,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------
PRC enterprise income tax 30,987 55,090
Share of taxation attributable to associates 24 60
--------------------------------------------------------------------------------
31,011 55,150
Income tax was provided in accordance with the income tax law of the PRC. As
the Company was incorporated in the Shenzhen Special Economic Zone, it is
subject to income tax rate of 15%. Other businesses of the Group are subject
to income tax rates of 15% or 33%, depending mainly on their places of
incorporation.
5. Dividends
No appropriation from retained earnings has been made to the statutory
reserves for the six months ended June 30, 2003. Such appropriation will be
made at year end in accordance with the Company Law of the PRC and the
Articles of Association of the Company.
On April 23, 2003, the Company declared a dividend of RMB0.10 per share in
respect of the year ended December 31, 2002, totaling RMB433,555,000. The
Board of Directors has decided not to declare any interim dividend for the
six months ended June 30, 2003.
6. Earnings per share
Basic earnings per share for the six months ended June 30, 2003 were
computed by dividing, consolidated profit attributable to shareholders by
4,335,550,000 shares (2002: 4,335,550,000 shares) outstanding throughout the
period. No diluted earnings per share was presented as there was no dilutive
potential ordinary shares as of period end.
7. Fixed assets and construction-in-progress
During the six months ended June 30, 2003, the addition of the Group's fixed
assets and construction-in-progress amounted to approximately
RMB147,729,000; the disposal of the Group's fixed assets and
construction-in-progress amounted to approximately RMB13,255,000.
8. Trade receivables, net
For the six months ended
As of As of
June 30, December 31,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------
Trade receivables 73,104 67,416
Less: Provision for doubtful accounts (15,758) (15,959)
--------------------------------------------------------------------------------
57,346 51,457
Trade receivables was mainly the charges from cargo transportation and the
credit terms granted to the customers were normally 90 to 180 days. The
aging analysis of trade receivables was as follows:
As of As of
June 30, December 31,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------
Within 1 year 49,655 44,985
Over 1 year but within 2 years 7,691 3,491
Over 2 years but within 3 years -- 1,652
Over 3 years 15,758 17,288
--------------------------------------------------------------------------------
73,104 67,416
9. Trade payables
The aging analysis of trade payables was as follows:
As of As of
June 30, December 31,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------
Within 1 year 50,766 40,677
Over 1 year but within 2 years 952 850
Over 2 years but within 3 years -- 207
--------------------------------------------------------------------------------
51,718 41,734
10. Share capital
As of June 30, 2003, the authorised capital of the Company consisted of
ordinary shares of par value RMB1.00 per share:
Number Percentage of
of shares Nominal value share capital
'000 RMB'000
----------------------------------------------------------------------------------------
Authorised, issued and fully paid:
State-owned Legal Person Shares 2,904,250 2,904,250 67%
H Shares 1,431,300 1,431,300 33%
----------------------------------------------------------------------------------------
4,335,550 4,335,550 100%
11. Commitments
(i) Capital commitments
As of As of
June 30, December 31,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------
Authorised and contracted for - 10,158
Authorised but not contracted for - -
--------------------------------------------------------------------------------
- 10,158
(ii) Operating lease commitments
As of As of
June 30, December 31,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------
Machinery and equipment
- not more than one year 108,000 108,000
- more than one year but not more than five years 237,375 291,375
--------------------------------------------------------------------------------
345,375 399,375
12. Related party transactions
A portion of transactions undertaken by the Group for the six months ended
June 30, 2003 was with related PRC state-owned enterprises and on such terms
as determined by the relevant PRC authorities and stipulated in the related
agreements entered into with these parties. The following is a summary of
significant recurring transactions carried out in the ordinary course of
business by the Group with related parties during the six months ended June
30, 2003:
For the six months ended
June 30,
2003 2002
RMB'000 RMB'000
--------------------------------------------------------------------------------------------------------
Lease of locomotives and related services from
Yang Cheng Railway Company, a subsidiary of
Guangzhou Railway (Group) Company (the "Parent Company") 17,160 17,528
Provision of train and related services from
Guangmeishan Railway Company Limited,
a subsidiary of the Parent Company 2,510 2,196
Purchase of materials and supplies from
Guangzhou Railway Material Supply Company,
a subsidiary of the Parent Company 5,492 4,088
Social services (employee housing, health care, educational and
public security services and other ancillary services) provided by
Guangzhou Railway (Group), Guangshen Railway Enterprise Development
Company, a subsidiary of the Parent Company 34,388 28,400
Operating lease rentals paid to the PRC Ministry of Railway (the "MOR") 26,990 26,889
Provision of trains and related services through MOR 90,950 116,927
Provision of trains and usage and related services from
Guangzhou Railway (Group) Passenger Transportation Company,
a subsidiary of the Parent Company 2,362 1,893
Interest expenses paid to the Parent Company 814 757
Interest received from the MOR's Railroad Deposit-taking Centre 1,619 1,641
Interest received from Pingnan Railway Company Limited,
an associate of the Parent Company -- 287
Interest received from Guangmeishan Railway Company Limited -- 300
13. Contingency
As of June 30, 2003, the Company's investment in an associated company,
Guangzhou Tiecheng Enterprise Company Limited ("Tiecheng"), amounted to
approximately RMB140,000,000. In 1996, Tiecheng entered into an agreement
with a Hong Kong incorporated company to establish Guangzhou Guantian Real
Estate Company Limited ("Guangzhou Guantian"), a sino-foreign contractual
joint venture to develop certain properties near a railway station operated
by the Group.
On October 27, 2000, Guangzhou Guantian together with Guangzhou Guanhua Real
Estate Company Limited ("Guangzhou Guanhua") and Guangzhou Guanyi Real
Estate Company Limited ("Guangzhou Guanyi") agreed to act as joint
guarantors (the "Guarantors") of certain payables of Guangdong Guancheng
Real Estate Company Limited ("Guangdong Guancheng") to an independent third
party. Guangzhou Guantian, Guangzhou Guanhua, Guangzhou Guanyi and Guangdong
Guancheng were related companies with a common chairman. As Guangdong
Guancheng failed to repay the payables, according to a court verdict on
November 4, 2001, Guangzhou Guantian, Guangzhou Guanhua and Guangzhou Guanyi
were liable to the independent third party to recover an amount of
approximately RMB257,000,000 plus interest from Guangdong Guancheng.
As stated above, if Guangzhou Guantian is held responsible for the
guarantee, the Group may need to provide for impairment on its interests in
Tiecheng. Having consulted an independent lawyer, the directors are of the
opinion that the guarantee arrangement should be invalid according to the
relevant PRC rules and regulations. Tiecheng is now in the process to apply
to the court for discharging the obligation of Guangzhou Guantian in
relation to the guarantee. Accordingly, the directors consider that the
chance of Guangzhou Guantian to settle the above claim is remote and no
provision for impairment on the interests in Tiecheng was made.
14. Translation of amounts from Chinese Renminbi ("RMB") into United States
dollars ("US$") for the convenience of the reader has been made at the
exchange rate quoted by the People's Bank of China on June 30, 2003 of
US$1=RMB8.3. No representation is made that the RMB amounts could have been,
or could be, converted into US$ at that rate on June 30, 2003 or on any
other date.
15. Principal Financial Ratios
2003 2002
------------------------------------------------------------------------------------------------------
a. Basic earnings per share
(Consolidated profit attributable to shareholders
for the six months ended June 30/weighted
average number of shares outstanding) RMB0.039 RMB0.069
b. Return on net assets
(Consolidated profit attributable to shareholders
for the six months ended June 30/consolidated
net assets as of June 30) 1.7% 3.0%
c. Net assets per share
(Consolidated net assets as of June 30/number
of shares outstanding as of June 30) RMB2.30 RMB2.30
ADDITIONAL INFORMATION FOR NORTH AMERICAN SHAREHOLDERS (UNAUDITED)
Effects on the consolidated profit attributable to shareholders and consolidated
net assets of significant differences between IFRS and generally accepted
accounting principles in the United States of America ("US GAAP") are summarised
below. The estimated US GAAP adjustments shown below have been prepared by the
management of the Company and have not been subject to independent audit.
For the six months ended June 30,
2003 2002 2003
RMB'000 RMB'000 US$'000
(Note 2)
---------------------------------------------------------------------------------------------
Consolidated profit attributable
to shareholders under IFRS 170,005 298,014 20,482
Impact of estimated US GAAP adjustments:
Reversal of additional depreciation
charges arising from the revaluation
surplus of fixed assets 24,211 24,211 2,917
Effect of US GAAP adjustment on taxation (3,632) (3,632) (438)
---------------------------------------------------------------------------------------------
Estimated consolidated profit attributable
to shareholders under US GAAP 190,584 318,593 22,961
---------------------------------------------------------------------------------------------
Estimated basic earnings per share
under US GAAP RMB0.044 RMB0.073 USD0.005
---------------------------------------------------------------------------------------------
Estimated basic earnings per equivalent
American Depositary Share (ADS)
under US GAAP RMB2.198 RMB3.67 USD0.265
---------------------------------------------------------------------------------------------
As of As of As of
June 30, December 31, June 30,
2003 2002 2003
RMB'000 RMB'000 US$'000
(Note 2)
--------------------------------------------------------------------------------------------------
Consolidated net assets under IFRS 9,980,601 10,244,151 1,202,485
Impact of estimated US GAAP adjustments:
Reversal of the revaluation surplus
on fixed assets (1,492,185) (1,492,185) (179,781)
Reversal of additional depreciation
charges arising from the revaluation
surplus on fixed assets 330,884 330,884 39,866
Deferred tax assets created 223,828 223,828 26,967
Effect of US GAAP adjustment on taxation (49,634) (49,633) (5,980)
--------------------------------------------------------------------------------------------------
Estimated consolidated net assets
under US GAAP 8,993,494 9,257,045 1,083,557
Notes:
1. Estimated basic earnings per share and equivalent ADS for the six months
ended June 30, 2003 were computed by dividing estimated consolidated profit
attributable to shareholders under US GAAP by 4,335,550,000 shares (2002:
4,335,550,000) and 86,711,000 equivalent ADSs (2002: 86,711,000) outstanding
throughout the period respectively. No diluted earnings per share and per
equivalent ADS was presented as there was no dilutive potential ordinary
shares as of period end.
2. Translation of amounts from RMB into US$ for the convenience of the reader
has been made at the exchange rate quoted by the People's Bank of China on
June 30, 2003 of US$1=RMB8.3. No representation is made that the RMB amounts
could have been, or could be, converted into US$ at that rate on June 30,
2003 or on any other date.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GUANGSHEN RAILWAY COMPANY LIMITED
By: /s/ YAO XIAOCONG
--------------------------------
Name: Yao Xiaocong
Title: Company Secretary
Dated: August, 2003