09:08 MEILAN AIRPORT<00357> - Results Announcement (2) 3. Profit from operations The following items have been included in arriving at profit from operations: 2004 2003 (RMB'000) (RMB'000) Cost of goods sold 11,366 5,929 Depreciation of property, plant and equipment 34,582 31,313 Amortisation of prepaid leases 2,409 3,731 Loss on disposal of property, plant and equipment 452 674 Repairs and maintenance expenditure on property, plant and equipment 6,702 4,365 Amortisation of goodwill 413 69 Amortisation of negative goodwill (included in other gains) (37) (37) Operating lease rentals - buildings 509 509 Trade receivables - (reversal)/impairment charge for bad and doubtful debts (2,176) 1,876 Staff costs 33,364 29,176 Auditors' remuneration 2,121 2,603 ----------------------- 4. Interest expenses 2004 2003 (RMB'000) (RMB'000) Interest on bank loans - wholly repayable within five years - 12,812 - not wholly repayable within five years 7,496 484 ------------------------- 7,496 13,296 Less: interest capitalised (7,496) (1,576) ------------------------- - 11,720 ========================= 5. Tax Enterprise income tax Hong Kong profits tax has not been provided as the Group had no estimated assessable profits arising in Hong Kong during the year (2003: Nil). Taxation in the income statement represents provision for PRC enterprise income tax. Under PRC income tax law, the entities within the Group are subject to enterprise income tax of 15% (2003: 15%) on the taxable income as reported in their statutory accounts which are prepared using the accounting principles and financial regulations applicable to PRC enterprises. Pursuant to the approval documents issued by Hainan Qiongshan State Tax Bureau, the Company has been granted full exemption from enterprise income tax from 2000 to 2004 and a 50% reduction from 2005 to 2009. Except for the tax losses of Hainan Meilan International Airport Advertising Co., Ltd. and Hainan Meilan Duty Free Shop Limited attributable to the Group as at 31 December 2004 of approximately Rmb821, 000 (as at 31 December 2003: Rmb438,000) and Rmb1,464,000(as at 31 December 2003: Rmb1,103,000), respectively, there are no other material deductible temporary differences for which deferred tax assets were not recognised. The difference between the annual taxation charge in the consolidated income statement and the amount which would result from applying the enacted tax rate to consolidated profit before taxation can be reconciled as follows: 2004 2003 (RMB'000) (RMB'000) Profit before taxation 185,666 154,563 Tax calculated at a tax rate of 15% (2003: 15%) 27,850 23,184 Effect of tax holidays (28,231) (26,198) Effect of current year losses of subsidiaries 108 106 Investment income not subject to income tax (28) (81) Expenses not deductible for tax purposes 334 3,149 ------------------------ Tax charge 33 160 ------------------------