09:19 ANDRE JUICE<08259> - Quarterly 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 three months ended 31 March 2005, the turnover of the Group increased to approximately RMB158,684,000, compared to approximately RMB136,408,000 for the corresponding period in 2004, representing an increase by approximately 16%. The increase in turnover was mainly attributable to the increase in selling price and sales volume. The Group's turnover for the three months ended 31 March 2005 was principally derived from the manufacture and sale of apple juice concentrate, pear juice concentrate, apple essence, feedstuff and related products. As compared with the same period in 2004, the increase in the Group's turnover during the first quarter of 2005 was mainly attributable to higher income arising from the sale of apple juice concentrate. The Directors believe that the high quality of the Group's products has resulted in an increase in demand from its customers during 2005. For the three months ended 31 March 2005, the Group's net profit increased to approximately RMB33,822,000, as compared to approximately RMB30,069,000 for the corresponding period in 2004. For the three months ended 31 March 2005, the Group's other operating income increased to approximately RMB3,554,000, as compared to approximately RMB2,868,000 for the corresponding period in 2004. The increase in other operating income was mainly due to the increase in grants from government. For the three months ended 31 March 2005, the Group had incurred distribution expenses of approximately RMB18,747,000, as compared to approximately RMB17,988,000 for the corresponding period in 2004, representing an increase of approximately RMB759,000. Distribution expenses of the Group mainly comprised transportation expenses, export inspection fee and promotion expenses. The increase in distribution expenses was mainly attributable to the increase of sea freight charges resulted from the higher sales volume. For the three months ended 31 March 2005, the Group had incurred general and administration expenses of approximately RMB5,094,000, as compared to approximately RMB3,816,000 for the corresponding period in 2004, representing an increase of approximately 33%. Such increase was mainly attributable to the expansion of production scale which led to the increase in general administration expenses, such as related storage charges, land transportation expenses and related administration expenses. 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 years when the Company's export sales amount to 70% or more of its total sales. According to the Company's previous years' sales records and sales in the first three months of 2005, the Board expects that the Company will meet the requirements and be entitled to 50% relief on its PRC income tax for 2005. This tax preferential policy is subject to approval from the local tax authorities. The subsidiary operating in the 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 concession, at a rate 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 For the three months ended 31 March 2005, the calculation of earnings per share is based on the unaudited profit attributable to shareholders of approximately RMB33,822,000 (for the three months ended 31 March 2004, the unaudited profit attributable to shareholders was approximately RMB30,069,000), and the weighted average number of shares in issue during the respective period. For the three months ended 31 March 2005, the weighted average number of shares in issue was 1,697,300,000 (for the three months ended 31 March 2004, the weighted average number of shares in issue was 1,518,800,000). Diluted earnings per share has not been calculated for the three months ended 31 March 2005 and 2004 as there were no dilutive potential ordinary shares outstanding during these periods.