Yearly Results announcement form Name of listed company : Tong Ren Tang Technologies Co. Ltd. Stock code : 8069 Year end date : 31/12/2001 Auditors' report : Qualified Modified X Neither Important Note : This result announcement form only contains extracted information from and should be read in conjunction with the detailed results announcement of the issuer, which can be viewed on the GEM website at http://www.hkgem.com Currency: RMB'000 (Audited) (Audited) Final Results Announcement Current Last Corresponding Period Period from 01/01/2001 from 01/01/2000 to 31/12/2001 to 31/12/2000 RMB'000 RMB'000 Turnover : 497,373 338,699 Profit/(Loss) from Operations : 85,327 67,790 Finance cost : -7,614 1,164 Share of Profit/(Loss) of Associates : -173 0 Share of Profit/(Loss) of Jointly Controlled Entites : 0 0 Profit/(Loss) after Taxation & MI : 99,798 54,379 % Change Over the Last Period : 83.52 % EPS / (LPS) - Basic : RMB0.55 RMB0.44 - Diluted : RMB0.55 RMB0.44 Extraordinary (ETD) Gain/(Loss) : 0 0 Profit (Loss) after ETD Items : 99,798 54,379 Final Dividend per Share : RMB0.30 RMB0.21 (specify if with other options) : N/A N/A B/C Dates for Final Dividend : 20/04/2002 to 19/05/2002 bdi. Payable Date : 31/08/2002 B/C Dates for AGM/SGM : 20/04/2002 to 19/05/2002 bdi. Other Distribution for Current Period: Nil B/C Dates for Other Distribution : N/A to N/A bdi. (bdi: both days inclusive) For and on behalf of Tong Ren Tang Technologies Co. Ltd. Signature : Name : Edward Choi Title : Company Secretary Responsibility statement The directors of the Company (the "Directors") as at the date hereof hereby collectively and individually accept full responsibility for the accuracy of the information contained in this results announcement form (the "Information") and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief the Information are accurate and complete in all material respects and not misleading and that there are no other matters the omission of which would make the Information herein inaccurate or misleading. The Directors acknowledge that the Stock Exchange has no responsibility whatsoever with regard to the Information and undertake to indemnify the Exchange against all liability incurred and all losses suffered by the Exchange in connection with or relating to the Information. Remark: 1. Basis of presentation The Company was incorporated as a joint stock company with limited liability in the People's Republic of China (the "PRC") on 22 March 2000 and, upon the placing of its H shares, were listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited ("GEM") on 31 October 2000. In preparing for the listing of the Company's H shares, Beijing Tongrentang Company Limited ("Tongrentang Ltd.") underwent a restructuring (the "Restructuring"), details of which are set out in the prospectus of the Company dated 24 October 2000 (the "Prospectus"). The Restructuring was accounted for as a reorganisation of the Company as a continuing operation and accordingly, the financial statements have been prepared as if the current structure of the Company had been in existence throughout the year ended 31 December 2000, rather than from the date on which the Restructuring was completed. The Company's directors are of the opinion that the financial statements prepared on this basis present fairly the results of operations and the state of affairs of the Company as a whole. Therefore, the net profit for the year ended 31 December 2000 includes the results of operations before the Restructuring. The accompanying financial statements are prepared in accordance with International Financial Reporting Standards as published by the International Accounting Standards Board. 2. Turnover The Company's turnover is derived principally from the sales of Chinese Patent Medicine. An analysis of the Company's turnover is as follows: 2001 2000 RMB'000 RMB'000 Sales of Medicine Domestic 472,322 327,486 Overseas 16,707 9,734 Agency fee income - domestic 8,344 1,479 --------- --------- 497,373 338,699 ========= ========= 3. Taxation Pursuant to the relevant regulations of the PRC, a high- technology enterprise ("HTE") located in a designated area of Beijing Economic and Technological Development Zone ("BETDZ") is subject to EIT at a rate of 15%. Moreover, upon approval by the relevant local tax bureau, such a HTE is entitled to an exemption from EIT for the first three years from its commencement of operations and a 50% reduction for the three years thereafter. The certification as a HTE is subject to an annual review by the relevant government bodies. In addition, an amount equal to the EIT exemption or reduction from 15% has to be appropriated to a non- distributable tax reserve. In August 2001, the Company renewed the HTE certification granted by Zhongguancun Technological District Committee for the year of 2001. The Company was registered in the BETDZ and has obtained an approval from the BETDZ Local Tax Bureau ("BETDZLTB") to enjoy an EIT exemption for three years commencing from 2000 and a 50% reduction in EIT for the three years thereafter. BETDZLTB has verbally confirmed to the Company that the above EIT preferences should be available to the Company as long as the Company's registered address is in BETDZ and it remains as a HTE. However, the preferential tax treatment these entities comprising the Group obtained, including the EIT exemption as mentioned in the preceding paragraph, may be subject to review by higher authorities. Should the EIT exemption not be available to the Company, an additional EIT liability of approximately RMB39,611,000 may arise. Management believes that the possibility of such a liability arising is unlikely. For the year ended 31 December 2001, an amount equal to the 15% EIT exempted amounting to approximately RMB18,766,000 (2000:RMB4,427,000) was transferred to the tax reserve. The reconciliation of the Company's statutory tax rate to the effective tax rate is as follows: 2001 2000 RMB'000 RMB'000 Accounting profit 92,768 66,626 --------- --------- Tax at the statutory tax rate of the Company of 33% 30,613 21,987 Non-deductible permanent differences 8,998 - Effect of different applicable EIT rates upon expected reversal of temporary difference 531 - Effect of tax benefits of being a HTE (40,372) (16,420) Application of the Parent Company's tax rate in 2000 prior to issuance of income tax registration certificate and refund in 2001 (6,680) 6,680 --------- --------- Tax (credit)expenses (6,910) 12,247 ========= ========= Under PRC income tax law, the Company's subsidiaries and joint venture are generally subject to EIT at a rate of 33% on the taxable income. However, as these entities had no material operating activities nor taxable profits for the year, no EIT provision is made. 4. Earnings per share The calculation of the basic earnings per share is based on the net profit for the year attributable to ordinary shareholders of approximately RMB99,798,000 (2000: RMB54,379,000) divided by the weighted average number of shares issued during the year of 182,800,000 shares (2000: 122,942,222 shares). Diluted earnings per share equal basic earnings per share because there were no potential dilutive ordinary shares outstanding during the year.