09:10 BJ CAPITAL LAND<02868> - Results Announcement (2) 3 OPERATING PROFIT Operating profit is stated after crediting the following: 2004 2003 RMB'000 RMB'000 Interest Income 64,234 13,932 Gain on disposal of associated companies 49,315 41 Gain on disposal of subsidiaries 55,751 2,182 Gain on disposal of other investments - 32,413 Unrealized gain on other investments - 5,579 Grant from government authorities 6,396 1,756 Others 862 86 and after charging the following!G Cost of inventories sold 1,096,274 1,307,661 Depreciation 14,992 3,110 Less: capitalized in properties under development (1,582) (1,885) Loss on disposal of long-term investments - 1,280 Provision for doubtful debts 17,937 153 Cancellation of sales from land development (a) 70,854 - Note (a): Sales of a development project amounting to RMB272,250,000 for the year ended 31st December 2003 was reversed in 2004 upon the cancellation of the sales agreement. The relevant development project was then substantially sold to another independent party in 2004 at RMB274, 000,000. The gross profit from the original contract of RMB70,854,000 that recognized in 2003 was reversed in 2004 while gross profit from the new contract amounting to RMB80,853,000 was recognized in the current year. 4 TAXATION 2004 2003 RMB'000 RMB'000 PRC income tax: Company and subsidiaries - Current taxation 126,556 154,312 - Deferred taxation (22,023) 5,627 Share of taxation attributable to Jointly controlled entities: 7,524 (1,452) Share of taxation attributable to associated companies: 23,036 - ------------------------- 135,093 158,487 ========================= No provision for land appreciation tax ("LAT") had been made as the directors consider that the Group is unlikely to receive demands from the tax authorities for payment of LAT up to the years ended 2004, which would otherwise have accumulated to approximately RMB156,184,000 (2003: RMB149,300,000) attributed to the Group after netting off potential income tax saving. In 2003, upon the reorganization and the listing of the Company, a deed of tax indemnity has been entered into between the Promoters and the Group whereby the Promoters undertake to indemnify the Group in respect of, inter alia, all LAT payable in consequence of the disposal of the Group's existing properties as at 30th April 2003. 5 DIVIDENDS 2004 2003 RMB'000 RMB'000 Proposed dividend for the period from 1st January 2003 to 18th June 2003 to the shareholders of the Company - 69,477 Proposed final dividend of RMB7 cents (2003: final dividend of RMB 2.5 cents per share and a final special dividend of RMB2.5 cents per share) per share 120,117 80,576 ----------------------- 120,117 150,053 At a meeting held on 22nd March 2005, the directors declared a final dividend of RMB7 cents per share based on the Company's share capital of 1,715,960,000 of the day and the total amount payable will be RMB120,117, 200. This proposed dividend is not represented as a dividend payable in these accounts, but will be reflected as an appropriation of retained profit for the year ending 31st December 2005.