11:03 ANDRE JUICE<08259> - Yearly Results Announcement (2) At 28 June 2004, the Company entered into a placing agreement on a fully underwritten basis of 178,500,000 new H Shares of HKD0.80 per H share. The placing shares represent approximately 11.8% of the existing issued share capital of the Company and approximately 10.5% of the issued share capital as enlarged by the issue of the placing shares. The placing of the shares of the Company was completed on 14 July 2004. The Placing Shares is transacted on the GEM. 2. Financial review For the year ended 31 December 2004, the turnover of the Group increased to approximately RMB563,734,000, compared to approximately RMB363,855,000 in 2003. The Group's turnover was principally derived from the manufacture and sale of apple juice concentrate, pear juice concentrate, apple essence and related products. As compared with the same period in 2003, the increase in the Group's turnover was mainly attributable to higher income arising from the sale of apple juice concentrate. The Directors believe that the quality of the Group's products had stimulated the increased customer's demand during 2004. For the year ended 31 December 2004, the Group's net profit increased to approximately RMB91,587,000, as compared to approximately RMB74,456,000 in 2003. For the year ended 31 December 2004, the Group's other operating income increased to approximately RMB23,718,000, as compared to approximately RMB7,095,000 for the last year, representing an increase of approximately RMB16,623,000. The increase in other operating income was mainly due to the sale of packaging materials and the government grants. For the year ended 31 December 2004, the Group had incurred distribution expenses of approximately RMB88,921,000, as compared to approximately RMB64,428,000 in 2003, representing an increase of approximately RMB24,493,000. Distribution expenses of the Group mainly comprised transport, export inspection and marketing expenses. Partly due to the increase in prices, the increase in distribution expenses was mainly attributable to higher sea freight charges resulted from the rise in sales volume. Sea freight charges in 2004 increased by approximately RMB 23,071,000, as compared with 2003. For the year ended 31 December 2004, the Group had incurred general administration expenses of approximately RMB21,064,000, as compared to approximately RMB16,206,000 of last year, representing an increase of approximately RMB 4,858,000. Such increase was mainly attributable to the increase in administrative expenses of Xuzhou Andre Juice Co., Ltd. (owned as to 75% by the Company and 25% by Andre Juice Co., Ltd. (a wholly-owned subsidiary of the Company)), which commenced operations in August 2003; and the increase in operational scale of the Group. 3. Taxation The Company is subject to PRC income tax, before any relief or concessions, at a rate of 24%. In accordance with the relevant PRC tax rules and regulations, the Company is entitled to a 50% relief on PRC income tax in 2004 as the Company's export sales account for more than 70% of its total sales for the year. The Company has obtained approval from the local tax authorities on this tax preferential policy for the year ended 31 December 2004. The subsidiary operating in United States is subject to income tax at the appropriate current rates of taxation ruling in the United States. The other subsidiaries operating in the PRC are subject to PRC income tax, before any relief or concessions, at rates of 15% to 33%. In accordance with the relevant PRC tax rules and regulations, these subsidiaries are exempt from PRC income tax for two years starting from their first profit-making year, and are entitled to a 50% relief on PRC income tax for the following three years. 4. Basic earnings per share Pursuant to a resolution passed at a Special General Meeting and the Class Meetings of the holders of the H shares and Promoter shares of the Company on 24 October 2003 and approvals from relevant government authorities, every Promoter share and H share with a nominal or face value of RMB 1.00 in the share capital of the Company was subdivided into ten Promoter shares and ten H shares with a nominal or face value of RMB 0.10 each, respectively (the "Share Subdivision") with effect from 1 December 2003. For the year ended 31 December 2004, the calculation of earnings per share is based on the profit attributable to shareholders of RMB91,587,000 (2003: RMB74,456,000) and the weighted average of 1,602,197,541 shares (2003: 1,408,443,840 Shares) in issue during the year. Diluted earnings per share has not been presented as there were no dilutive potential ordinary shares in exercise for the years ended 31 December 2003 and 2004.