SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a - 16 OR 15d - 16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2003
CHINA ENTERPRISES LIMITED
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(Translation of Registrant's Name Into English)
8/F., Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F [X] Form 40-F [ ]
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes [ ] No [X]
CHINA ENTERPRISES LIMITED
PRESS RELEASE
CONSOLIDATED RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
NEW YORK, April 23, 2003 - China Enterprises Limited ("China Enterprises" or the
"Company") (OTCBB: CSHEF) announced today its audited consolidated results for
the year ended December 31, 2002:-
Financial Highlights
Year ended Year ended
December 31, 2001 December 31, 2002 Change %
----------------- ----------------- --------
Revenues Rmb2,087.9M Rmb2,610.1M +25.0%
Profit (loss) from continuing
operations Rmb36.4M Rmb(62.9M) -272.8%
Loss from discontinued operations
Rmb(171.8M) Rmb(199.8M) +16.3%
Net loss Rmb(135.4M) Rmb(262.8M) +94.1%
Net loss per common share Rmb(15.01) Rmb(29.14) +94.1%
Revenues, profit from continuing operations and loss from discontinued
operations for the year ended December 31, 2001 have been restated from amounts
previously reported to reflect the additional effect of discontinued operations
of Yinchuan C.S.I. (Greatwall) Rubber Co., Limited ("Yinchuan CSI") as of
December 31, 2001. Please refer to Note 1 to the attached Financial Highlights
for details.
In the second quarter of fiscal 2002, the Company had successfully diversified
its business outside the tire manufacturing and trading sectors through the
acquisition of a substantive stake in Ananda Wing On Travel (Holdings) Limited
("Ananda"), a leading travel operator based in Hong Kong whose shares are listed
on The Stock Exchange of Hong Kong Limited. The Company held a 32.21% equity
interest in Ananda as of December 31, 2002 and the investment was accounted for
as investment in an affiliate.
For the year under review, the Company disposed of two of its subsidiaries,
Yantai C.S.I. Rubber Co., Limited ("Yantai CSI") and Shandong C.S.I. Synthetic
Fiber Co., Limited ("Shandong Synthetic"). In the fourth quarter of fiscal 2001,
the Company entered into a share transfer agreement with a third party to
dispose of its entire interest in Yantai CSI and the respective shareholder's
advance of Rmb20.2 million for a net aggregate consideration of Rmb25.5 million.
The approval from the relevant governmental authorities had been obtained in
late January 2002 and the Company transferred substantially all its risks and
benefits of ownership of Yantai CSI to the buyer. The Company recognized a net
realized gain on such disposal of Rmb7.9 million and the sale proceeds were
fully received by the Company in cash in August 2002.
In January 2002, the Company signed a transfer agreement to sell its entire
interest in Shandong Synthetic to its Chinese joint venture partner for a
consideration of Rmb10,000. The sale was completed in early July 2002 and
approval from the relevant governmental authorities was obtained and the Company
transferred substantially all its risks and
benefits of ownership of the factory to the buyer. The Company recognized a net
realized gain on such disposal of Rmb12.2 million.
The tire market in China rebounded in fiscal year 2002. The production volume of
tires grew by approximately 18.9% compared with that of year 2001. The increased
demand of tires was mainly due to the strong growth in outputs of motor vehicles
manufactured and the development of roads and highways under government policy.
In fiscal year 2002, China Enterprises remained one of the largest tire
manufacturer in China and sold a total of 5.3 million units of vehicle tires,
40.9 million units of bicycle tires and 2.8 million units of wheelbarrow tires.
Total revenues of the Company arising from continuing operations increased by
25.0% to Rmb2.61 billion, compared with Rmb2.09 billion in fiscal year 2001. The
increase was mainly attributed to the increase in both sales volume and tires
prices. Export sales constituted approximately 20.9% of the total turnover in
fiscal year 2002 as compared with 21.8% of that in fiscal year 2001,
representing an increase of 19.6% over the monetary amount in fiscal year 2001.
The Company achieved a positive increase in gross margin from continuing
operations from 12.0% for the year 2001 to 13.8% for the year 2002. In monetary
amount, the Company was able to generate Rmb359.3 million of gross profit from
continuing operations in fiscal year 2002 versus Rmb250.9 million in fiscal year
2001. The increase was mainly due to the rise in margin of Hangzhou Zhongce
Rubber Co., Limited to 13.5% in fiscal year 2002 compared with 11.8% in the
previous year. The better margin was mainly achieved through increase in sales
volume, higher selling prices and efficiency gain in outsourcing procurement.
Operating income from continuing operations increased to Rmb172.1 million in
fiscal year 2002 as compared with Rmb89.5 million in fiscal year 2001. This is
mainly due to the increase in gross profit and the implementation of more
efficient and effective marketing strategies. Further, there was a net recovery
of amounts due from related companies amounting to Rmb5 million during fiscal
2002.
Loss from continuing operations increased to Rmb62.9 million compared to a
profit of Rmb36.4 million last year. It comprised a loss upon a decrease in fair
value of call option associated with the convertible note of Ananda amounting to
Rmb45.3 million and the Company's share of losses of Ananda in an amount of
Rmb93.1 million since its acquisition on April 19, 2002. Under the unfavorable
global sentiment of terrorism and the domestic deflationary economy in Hong
Kong, appetite for international travel was dampened. Travel business of Ananda
was in turn affected by the sharp fall in the long-haul tours while short-haul
tours to Asia were only slowly recovering. After the Company's management team
taking control of Ananda, it launched several large-scale promotion programmes
which had proven to be successful in gaining consumers' positive feedback and
thus enhancing Ananda's image. Additionally, the award of ISO9002 to Ananda on
all its tour itineraries had further proved its achievement in maintaining high
quality services to consumers. Ananda will continue to develop the rapidly
emerging China market since it is a country with the largest traveling demand
and the greatest potential for further economic growth in the coming decade.
Given that Hong Kong is still facing significant economic uncertainties in the
near future, Ananda will adopt a strategy by not only focusing on new
developments in its traveling products but also identifying new opportunities to
better utilize existing assets through renovation and rejuvenation.
Although the Company decided to reengineer the operation of Yinchuan CSI during
2002 and engaged in negotiations with its Chinese joint venture partner to
formulate different alternatives for the future operations of Yinchuan CSI, the
operating results of Yinchuan CSI remained poor. The Company recognized an
impairment loss for the long-lived assets of Yinchuan CSI of Rmb174.3 million
and initiated a process to sell Yinchuan CSI subsequently. An additional
impairment charge of Rmb74.8 million was recognized for fiscal year 2002
representing management's best estimate of the loss to be recognized upon the
sale of the Company's entire interest in Yinchuan CSI. The operating results of
Yinchuan CSI had been segregated from continuing operations and reported as a
separate line item on the consolidated statement of operations. The Company has
also restated its prior years' financial information to present the operating
results of Yinchuan CSI as discontinued operations. In early January 2003, the
Company entered into a share transfer agreement with the Chinese joint venture
partner to sell its entire interest in Yinchuan CSI at a consideration
determined with reference to the carrying value of Yinchuan CSI as of December
31, 2002.
Loss from discontinued operations increased to Rmb199.8 million in the fiscal
year 2002 from Rmb171.8 million in fiscal year 2001 which was mainly due to the
impairment loss on Yinchuan CSI.
For the year ended December 31, 2002, the Company recorded a consolidated net
loss of Rmb262.8 million, or Rmb29.14 per share. By comparison, net loss in 2001
was Rmb135.4 million and net loss per share was Rmb15.01.
The New York Stock Exchange (the "NYSE") notified the Company on December 31,
2002 that the Securities and Exchange Commission granted the application of the
NYSE for removal of the common stock of the Company from listing and
registration on the NYSE under the Securities Exchange Act of 1934 effective on
December 30, 2002. On the other hand, the Company's common shares began trading
on the OTC (over-the-counter) Bulletin Board ("OTCBB") under the stock symbol
CSHEF on November 26, 2002.
The Annual General Meeting for China Enterprises will be held in Hong Kong on
May 30, 2003. Based on the record date of April 14, 2003, the Company will send
notice of the meeting and proxy statement to shareholders in due course.
*** End ***
For more information, please contact:
Hong Kong New York
- --------- --------
China Enterprises Limited Citigate Financial Intelligence
Mr. Lien Kait Long Ms. Patricia Baronowski
Tel: (852) 2372 0130 Tel: (1) 212 688 6840
Fax: (852) 2537 6591 Fax: (1) 212 838 3393
CHINA ENTERPRISES LIMITED - FINANCIAL HIGHLIGHTS
Consolidated Statements of Operations:
FOR THE YEAR ENDED DECEMBER 31,
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2001 2002
------------ -------------------------
Notes Rmb'000 RMB'000 US$'000 (2)
----- ------------ ----------- ------------
(As restated,
See Note 1)
Revenues 2,087,885 2,610,076 315,226
Cost of revenues (1,837,000) (2,250,785) (271,834)
---------- ---------- --------
Gross Profit 250,885 359,291 43,392
Selling, general and administrative expenses (134,424) (192,211) (23,214)
(Provision for) recovery on amounts due from related companies (27,000) 5,016 606
---------- ---------- --------
Operating income 89,461 172,096 20,784
---------- ---------- --------
Interest expenses, net (28,083) (13,584) (1,640)
Other (expenses) income (385) 191 23
Change in fair value of call option -- (45,328) (5,474)
Recovery on loan receivable 9,800 -- --
Equity in losses of affiliates (2,486) (89,520) (10,812)
---------- ---------- --------
Profit from continuing operations before
income taxes and minority interests 68,307 23,855 2,881
Provision for income taxes (2,454) (17,697) (2,137)
Minority interests (29,428) (69,101) (8,346)
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Profit (loss) from continuing operations 36,425 (62,943) (7,602)
Loss from discontinued operations (1) (171,784) (199,838) (24,135)
---------- ---------- --------
Net loss (135,359) (262,781) (31,737)
========== ========== ========
Basic and diluted (loss) earnings per common share (in
Rmb/US$ as stated) (3)
- Continuing operations 4.04 (6.98) (0.84)
- Discontinued operations (19.05) (22.16) (2.68)
---------- ---------- --------
Basic and diluted loss per common share (15.01) (29.14) (3.52)
========== ========== ========
Consolidated Balance Sheets Data :
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
2001 2002
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Rmb'000 RMB'000 US$'000(2)
---------- --------- ----------
Working capital 346,678 41,338 4,992
Property, plant and equipment, net 924,679 622,967 75,238
Total assets 2,978,965 2,880,680 347,908
Current liabilities 1,558,660 1,830,763 221,107
Long-term bank loans, net of current portion 37,979 76,319 9,217
Due to Chinese joint venture partners 30,807 10,871 1,313
Loan from related companies 24,498 1,689 204
Minority interests 522,824 425,832 51,429
Shareholders' equity 804,197 535,206 64,638
NOTES TO FINANCIAL HIGHLIGHTS
1. After careful consideration, the Company finally decided to dispose of
Yinchuan CSI during fiscal 2002. Yinchuan CSI had previously been reported
under the results from continuing operations for the year ended December
31, 2001.
Accordingly, the operating results of Yinchuan CSI had been segregated from
continuing operations and reported as a separate line item on the
consolidated statements of operations together with Double Happiness,
Yantai CSI and Shandong Synthetic. The Company had also restated its
consolidated financial statements for the year ended December 31, 2001 to
present the operating results of Yinchuan CSI as discontinued operations.
Operating results of the discontinued operations are summarised below:
YEAR ENDED DECEMBER 31,
-----------------------
2001 2002
RMB'000 RMB'000
--------- ----------
Revenues 1,066,083 621,653
========== ========
Loss from operations of discontinued components before income taxes and
minority interests (including impairment write-downs for those business
components of Rmb54,156 in 2001 and Rmb291,648 in 2002, loss on
disposition of Rmb28,588 in 2001 and gain on disposition of Rmb20,144 in
2002) (259,052) (345,012)
Provision for income taxes -- --
Minority interests 87,268 145,174
---------- --------
Loss from discontinued operations (171,784) (199,838)
========== ========
2. The translation of Renminbi (Rmb) amounts into United States Dollar (US$)
amounts are included solely for the convenience of readers in the United
States of America and have been made at the unified exchange rate quoted
by the People's Bank of China on December 31, 2002 at US$1.00 = Rmb8.28.
No representation is made that the Renminbi amounts could have been, or
could be, converted into United States Dollars at that or at any other
rate.
3. The calculation of the basic and diluted loss per common share for the
years ended December 31, 2001 and 2002, is based on the weighted average
number of common shares outstanding during the years ended December 31,
2001 and 2002 of 9,017,310. There had not been any dilutive securities.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorised.
CHINA ENTERPRISES LIMITED
By (Sd.) Lien Kait Long
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Lien Kait Long
Chief Financial Officer
Dated: 30th April, 2003