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Business Credit Report
Credit Evaluation
Normal

Order Date:	Mar 12, 2001
Report Date:	Mar 23, 2001
Our Ref.:	M0S0100T
Your Ref.:	000X

Contents

I. Summary

II. Registration

III. History

IV. Shareholders/Responsible Authority

V. Management

VI. Administrative Structure

VII. Operations

VIII. Bankers

IX. Financial Standing

X. Major Indicators

XI. Affiliated Companies XII. Field Enumeration XIII. Industry Overview XIV. Comments

All amounts in this report are given in Renminbi Yuan unless otherwise stated and in this report, the “subject” means the “Sample Cosmetics Co., Ltd.”

I. Summary

Name：	Sample Cosmetics Co., Ltd. (SSS)
Address：	** North Road, Beijing, China
Zip Code：	100000
Telephone：	86-10-68888888
Fax：	86-10-68888888
Starting Year：	1991
Legal Form:	Joint Venture
Executive：	Mr. Mu **
Nature of Business：	Daily used chemicals manufacturing
Scale:	Middle
Employees：	1080 (average in 2000)
Registered Capital：	94,300,000
Right to Imp. & Exp.:	Yes
Listed Company or Not:	Unlisted

II. Registration

Registered Office:	Beijing Administration of Industry and Commerce
First Registered Date:	Dec 24, 1991
New Registered Date:	Jan 5, 2000
Registered Add:	Same as above
Registration Number:	S0000001
Registered Capital:	94,300,000
Legal Representative:	Mr. Sen **
The Term of Validity:	15 years
Business Scope:	Cosmetic, dressing appliance, packing container, mouth care and cleaning article, cosmetic materials, traveling cleaning article, and little ornament manufacture and sales; related technology consulting

III. History

Beijing LL Company was one of the early factories in China to produce and sell cosmetics. It is recognized by the state as a pillar enterprise in the national cosmetics industry.

Foreign Sample Co., Ltd. and Beijing LL Company jointly established the Sample-LL Cosmetic Co., Ltd. (SSS) in December 1991. The registered capital was 72.3 million yuan at that time and Foreign Sample Co held 65% shares.

IV. Shareholders/Responsible Authority

Region

Name

Add/Tel

(%)

Investment Mode

Japan

Sample Co., Ltd.

65%

Cash

Equipment

China

Beijing LL Co.

TT District Beijing China

35%

V. Management

Position: General Manager
Name: Mr. Mu		Nationality: JJ
Gender: Male		Married Status: Married
Age: 52		Education: BS degree
Work Experience:
2000-present	At the present position, responsible for daily operation
Before 2000	Worked in Japanese Sample Co., Ltd.

VI. Administrative Structure

Board of Directors

Chairman of Board

General Manager

Operation & Management Dept., Production Dept., Marketing Dept.

VII. Operation

1. Employees

Total Employees:	1080	(Average in 2000)
Administrators:	121
Technicians:	35

2. Area

Total Area: 32700	Square Meters
Out of which, the owned office area: 2700		Square Meters
the owned factory area:30000		Square Meters

3. Main business

Cosmetics manufacture and sales; related beauty consulting and service

4. Primary Products

Name of Products	Brand	Shares of total sales
Skin-care products	Auau	About 75%
Make-up products	Auau	About 25%

5. Purchase and Payment Terms

Source Region	% of Purchase	Payment	Terms
Domestic	35%	T/T, Partial Advanced	30 days
Overseas: Japan, Malaysia, Germany, France (Through Japan Sample)	65%	T/T, L/C	30 days

6. Sales and Payment Terms

Sales Region	% of Sales	Payment	Terms
Domestic: big cities around China	100%	T/T	30 days

VIII. Bankers

Currency	Banker for Open Account	Account No.
RMB	Industrial and Commercial Bank of China, Jintai Sub-branch	09004301307
Foreign currency	Bank of China, Beijing Branch	1002003334456

Rating Banker	Banker’s Rating	Rating Time
Bank of China, Beijing Branch	AAA	2000

IX. Financial Standing

Data Source: Local ABIC

1. Profit & Loss Sheet

Unit: RMB 1,000

Item	2000
Sales Revenue	212,862
Sales Cost	39,332
Sales Expense	70,737
General and Administrative Expense	16,489
Financial Expense	291
Pre-tax Profit	73,309
Net Income	67,811

2.Balance Sheet

Dec 31; RMB 1,000

Item	2000
ASSETS
Total Current Assets	155,868
Cash Funds	49,354
Accounts Receivable	52,722
Inventories	26,122
Other Current Assets	27,670
Long Term Investments	0
Total Fixed Assets	65,669
Fixed Assets-Cost	79,932
Other Assets	5,804
Total Assets	227,341
LIABILITIESAND OWNER'S EQUITY
Total Current Liabilities	75,074
Short Term Loans	50,000
Accounts Payable	16,430
Other Current Liabilities	8,644
Total Long Term Liabilities	6,836
Long term loans	4,000
Long term accounts payable	2,836
Other Liabilities	0
Owner’s Equity (Net Assets)	145,431
Liabilities and owner’s equity	227,341

X. Major Indicators

Item	Subject	Industry
Of Profit Gaining
Profit of Sales	34.44%	3.25%
Turnover of Total Assets	93.63%	78.60%
Profit Return	32.25%	2.56%
Equity Return	50.41%	6.07%
Of Returning Debts
Debt Raito	36.03%	57.90%
Current Ratio	2.08	1.07
Quick Ratio	1.73	-

(Source: The Annual Report of Industry, 1999, State Statistical Bureau)

Profit of Sales = Pre-Tax Profit/Sales Revenue

Turnover of Total Assets = Sales Revenue/Total Assets

Profit Return = Pre-Tax Profit/Total Assets

Equity Return = Pre-Tax Profit/Equity

Debt Raito = Total Liability/Total Assets

Current Ratio = Current Assets/Current Liability

Quick Ratio = Current Assets-Inventories/Current Liability

Inventory Turnover Rate = Cost of Sales/Inventory

Receivable Turnover Rate = Sales Revenue/Accounts Receivable

XI. Affiliated Companies

1. Office (18)

Tianjin, Shenyang, Changchun, Dalian, Zhengzhou, Nanjing, Shanghai, Fuzhou, Changsha, Hangzhou, Wuxi, Chengdu, Kunming, Wuhan, Jinan, Hefei, Chongqing, and Nanchang

2. Sister company

Name:	Shanghai Zotos CITIC Cosmetics Co., Ltd.
Add:	No. 1558, Long Dong Street, Shanghai, China
Tel:	021-58558788
Fax:	021-58952786

XII. Field Enumeration

Area:	Industrial area
Type of building:	Office/factory
Condition of premises:	Good
Condition of facilities:	Advanced

XIII. Industry Overall

The company belongs to the Daily used chemicals manufacturing sector. In this sector, there are 1197 producers, of which, 27.32% are of deficit enterprises. In 1999 sales revenue was 52,892,000,000. The average Pre-Tax Profit/Total Assets in this sector is 2.56%.

Top five enterprises in the industry in term of revenue (1999)

Name	Revenue
1. Guangzhou P&G Co., Ltd.	Over 2,000
2. Hangzhou Lejin Cosmetic Co., Ltd.	Over 2,000
3. Shanghai White Cat Co., Ltd.	1,000-1,500
4. Shaoxing Yadong Cosmetic Group Ltd.	1,000-1,500
5. Hubei C-Bons Fine Chemical Industry Co.	1,000-1,500

XIV. Comments

l The profit gaining indicators is much higher than the average level in the industry, which shows its strong capacity of profit gaining.

l The debt ratio is 25.68%, and the current ratio and quick ratio is good. The capacity of paying off short-term debts is good.

l The inventory turnover rate and receivable turnover rate is fair.

l Foreign Sample is a famous cosmetic company in the world, which is good for its products to enter China market.

XV. Credit Rating

Evaluation Result			Evaluation Standard
Items	Full marks	Result marks	Rating	Score	Description
Operation	20	17	AAA	95-100	Most Excellent, Subject is good for transactions of large amounts.
Financial Strength	20	18	AA	85-94	Excellent, Subject is good for transactions of relatively large amounts.
Financial Indicators	25	20	A	70-84	Good, Subject is good for normal business transactions.
Proficiency	25	21	BB	55-69	Fair, Subject is only good for transactions of small amounts.
Perspective	10	9	B	40-54	Poor, Subject is only good for transactions of small amounts and relatively safe payment terms.
Total	100	85	C	Below 40	Bad, No transactions are advisable.

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