13:45 CHINA ELECTRON<00085> - Results Announcement (1) China Electronics Corporation Holdings Company Limited announced on 18/03/2005: (stock code: 00085 ) Year end date: 31/12/2004 Currency: HKD Auditors' Report: Unqualified (Winsan Group -not comparable) Audited Audited Audited Last Last Current Corresponding Corresponding Period Period Period from from 1/1/2004 from 1/1/2003 1/1/2003 to 31/12/2004 to 31/12/2003 to 31/12/2003 ('000) ('000) ('000) Turnover : 4,590,123 2,862,236 3,369 Profit/(Loss) from Operations : 97,637 70,910 (28,738) Finance Cost : (21,180) (6,484) (1,041) Share of Profit/(Loss) of Associates : N/A N/A N/A Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A N/A Profit/(Loss) after Tax & MI : (19,263) 38,506 (85,756) % Change over Last Period : N/A EPS/(LPS)-Basic (in Dollars) : (0.0027) 0.0059 (0.0550) -Diluted (in Dollars): N/A N/A N/A Extraordinary ("ETD") Gain /(Loss) : N/A N/A N/A Profit/(Loss) after ETD Items : (19,263) 38,506 (85,756) Final Dividend per Share : Nil Nil Nil (Specify if with other options):N/A N/A N/A B/C Dates for Final Dividend: N/A Payable Date : N/A B/C Dates for (-) General Meeting: N/A Other Distribution for Current Period : NIL B/C Date for other Distribution : N/A Remarks: 1. BASIS OF PREPARATION On 10 December 2003, China Electronics Corporation ("CEC"), the Company and the Company's then holding company, Winsan International Holdings Limited, entered into a sale and purchase agreement to acquire CEC's 65% equity interest in Shenzhen Sang Fei Consumer Communications Company Limited ("Sang Fei"), a Sino-foreign joint venture company established in the Peoples Republic of China (the "PRC") principally engaged in the manufacturing and sale of mobile phones (the "Acquisition"), at a consideration of HK$260 million. The consideration was satisfied by the issuance of 6,500,000,000 shares (the "Consideration Shares") of the Company to CEC. The Acquisition was completed on 24 September 2004. Under the HK GAAP and as stated in the circular to the shareholders dated 21 June 2004, the Acquisition has been accounted for as a reverse acquisition since the issuance of the Consideration Shares in exchange for the 65% equity interest in Sang Fei resulted in CEC becoming the controlling shareholder of the Company. For accounting purpose, Sang Fei is regarded as the acquirer while the Company and its then subsidiaries ( the "Winsan Group") are deemed to have been acquired by Sang Fei. In preparing these consolidated accounts, Sang Fei has applied the purchase method in accounting for the deemed acquisition of the Winsan Group. The assets and liabilities of the Winsan Group were recorded on the balance sheet of the Group at their fair value as at the date of completion of the Acquisition. Goodwill arising from the Acquisition of the Winsan Group of HK$63,075,000 was recorded, representing the excess of the cost of acquisition deemed to be incurred by Sang Fei over the fair value of the separable assets and liabilities of the Winsan Group at the date of completion of the Acquisition. These consolidated accounts have been prepared as a continuation of the consolidated financial statements of Sang Fei and accordingly, (a) the assets and liabilities of Sang Fei are recognised and measured at their historical carrying values prior to the completion of the Acquisition; (b) the retained earnings and other equity balances recognised in these consolidated accounts are those of Sang Fei; (c) the amount recognised as issued equity, which consists of share capital and share premium, has been determined by adding to the issued equity of Sang Fei immediately before completion of the Acquisition the cost of the acquisition of the Winsan Group. The equity structure (i.e. the number and type of shares issued) reflects the equity structure of the Company including the Consideration Shares; and (d) the 2003 comparative information presented is that of Sang Fei. Additional information of Winsan Group for the year ended 31 December 2003 are also presented. However, they are not comparable to the basis of preparation of the accounts as set out above.