|
UNAUDITED INTERIM RESULTS The Directors of Ocean Grand Holdings Limited (the "Company") are pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 June, 1999 together with the comparative figures for the corresponding period in 1998 as follows:
Six months ended 30 June,
1999 1998
Notes HK$'000 HK$'000
Turnover 1 267,952 264,281
=========== ============
Profit before taxation 46,025 36,485
Taxation 2 (5,698) (5,240)
----------- ------------
Profit before minority interests 40,327 31,245
Minority interests (2,914) (2,099)
----------- ------------
Profit attributable to shareholders 37,413 29,146
Interim dividend 4 (3,379) (5,632)
----------- ------------
Retained profit for the period 34,034 23,514
Earnings per share 3
- Basic HK6.64 cent HK5.18 cents
=========== ============
- Diluted N/A HK5.09 cents
=========== ============
Notes: 1. Turnover Turnover comprises (i) the net invoiced value (excluding value-added tax) of merchandise sold after allowances for returns and discounts, (ii) subcontracting fees, and (iii) gain on commodity dealing. 2. Taxation The Company is exempted from taxation in Bermuda until March 2016. Taxation in the consolidated profit and loss accounts comprised current Hong Kong profits tax provided at the rate of 16.0% (1998: 16.0%) on the estimated assessable profit arising in or derived from Hong Kong. The Group's sales and subcontracting services in the People's Republic of China (the "PRC") are carried out by Nanhai Xingye Shaped Bronze & Aluminium Products Co., Ltd. ("Nanhai Xingye"), a subsidiary established and operated at Nanhai, Guangdong Province, the PRC. Both sales revenue and subcontracting fees are subject to value-added tax ("VAT") at a rate of 17% on the selling price/subcontracting fees. An input credit is available whereby input VAT previously paid on purchases can be used to offset the output VAT on sales revenue and subcontracting fees to determine the net VAT payable. The net VAT paid/payable by Nanhai Xingye was based on the amount confirmed by the Nanhai tax bureau on an annual basis which was substantially lower than the net VAT payable under the standard rate. Nanhai Xingye is subject to PRC income taxes at a rate of 27% (24% state tax and 3% local tax). However, it is exempted from PRC state income tax and local income tax for two years starting from the first year of profitable operations, followed by a 50% reduction for the following three years. Nanhai Xingye was entitled to the 50% reduction on its PRC state income tax for the period ended 30 June, 1998 and 1999. If the tax holiday of Nanhai Xingye did not exist, the Group's provision for PRC income tax (net of minority interests) for the period ended 30 June, 1998 and 1999 would have been increased substantially. 3. Earnings per share The calculation of basic earnings
per share for the period ended 30 June, 1999 was based on the unaudited
consolidated profit attributable to shareholders of approximately HK$37,413,000
and on the weighted average of 563,200,000 shares in issue during the
period ended 30 June, 1999. The calculation of basic earnings per share
for the period ended Diluted earnings per share is not applicable because it has anti-dilutive effect. 4. Interim dividend The Directors have resolved to pay an interim dividend of HK0.6 cent (1998: HK1 cent per share) for the six months ended 30 June, 1999 to shareholders whose names appear on the Register of Members of the Company on 15 October, 1999. The dividend will be payable on 30 November, 1999. PROPOSED ISSUE OF BONUS WARRANTS The Board proposes a bonus issue of warrants ("Bonus Issue") on the basis of one warrant for every five shares of the Company held by shareholders whose names appear on the register of members of the Company on 15 October, 1999 (except for overseas shareholders). Each warrant will carry the right to subscribe for new shares of the Company at an initial subscription price of HK$0.20 per share (subject to adjustment) exercisable during the period from the date of issue of the warrants to 31 December 2000 (both dates inclusive). Fractional entitlements to the warrants will not be issued but will be aggregated and sold. Resolutions will be proposed at a special general meeting of the Company to approve the Bonus Issue. Shareholders will be advised of the details of the Bonus Issue and the special general meeting by a separate circular to be despatched as soon as practicable. The Bonus Issue is subject to, amongst others, the approval by the shareholders and the Stock Exchange of Hong Kong Limited granting or agreeing to grant listing of and permission to deal in, and the Bermuda Monetary Authority granting permission for the issue and free transferability of, the warrants and any shares which may fall to be issued upon the exercise of the subscription rights under the warrants. CLOSURE OF REGISTER OF MEMBERS The register of members of the Company will be closed from Wednesday, 13 October, 1999 to Friday, 15 October, 1999, both dates inclusive, during which period no transfer of shares will be effected. In order to qualify for the proposed interim dividend and for the Bonus Issue, all transfers of shares accompanied by the relevant share certificates must be lodged with the Company's branch share registrar in Hong Kong, Tengis Limited, 1601 Hutchison House, 10 Harcourt Road, Central, Hong Kong not later than 4:00 pm on Tuesday, 12 October, 1999. REVIEW AND PROSPECTS Principal Business The Group is principally engaged in the manufacture and sale of aluminium alloy. The business lies in manufacture and distribution of aluminium extrusion products, which are widely used for construction, interior decoration and industrial purposes. In the recent year, curtain walls, doors and windows products become the Group's major products. Financial results For the period ended 30 June, 1999, turnover was HK$267,952,000, representing an increase of 1.4% comparing that of last year. Operating profit achieved a significant growth reaching HK$46,025,000, up 26.1%. Profit attributable to shareholders was HK$37,413,000, increased 28.4%. Earnings per share were HK6.64 cents. Business review and prospects Notwithstanding economic downturn in the East and Southeast Asia including the People's Republic of China (the "PRC") and Hong Kong which has affected many businesses in the region, the Group has achieved encouraging results for the period ended 30 June, 1999. The notable performance obviously gives a credit to its experienced and professional management team and also earmarks the strong market penetration in the Group. During the economic downturn, the Group still maintained normal production schedule in midst of bad time. For the period under review, the Group expanded its product portfolio which was developed by the research and development team and promoted new products which are market-oriented to reduce market risk and satisfy various needs of customers. The Group continues to develop manufacturing and industrial products of aluminium extrusion materials in order to capture a larger market share. Simultaneously, the Group has opened new markets in Europe and the US. It has been making every attempt to enter into concrete cooperation terms with a large Japanese conglomerate, the UBE Industrial Limited. In addition, the economic situation in Japan has shown signs of improvement. The Group believes that these new markets can generate a significant revenue to the Group in the coming years. The principal market in the PRC posts growth in demand for better living environment. It is anticipated that aluminium products in the construction industry would be definitely accelerated. Over 60% of the Group's products contracted by the PRC architecture companies or construction bureau are used in large projects. The customer base in the country is broadened. The directors believe that the coming economic and housing reforms in the PRC will present good business opportunities for the Group. Integration is an invaluable strategy to ensure raw material supply, facilitate cash flow as well as diversify market risk. In the second half of the year, the Group plans to put much effort in the trading of aluminium ingots in order to stabilize the product prices and establish long-term relationship with the suppliers. The Group has entered into an agreement to acquire Kenlap P.G.C. Manufacturer Company Limited which is principally engaged in the trading and refining of gold material, including inter alia gold potassium cyanide. The Group is expected to diversify its investment into the metal-related industry which further accelerates the growth rate of the Group. DIRECTORS' INTERESTS IN SECURITIES As at 30th June, 1999, the Directors and their associates had the following beneficial interests in the securities of the Company and its associated corporations as recorded in the Register of Directors' Interests required to be maintained by the Company pursuant to Section 29 of the Securities (Disclosure of Interests) Ordinance ("SDI Ordinance"): (A) The Company
Number of
share options
Number of held as at
shares held 30th June,
Name of Personal Corporate 1999
directors interest interest (Note 1)
Yip Kim Po 26,000,000 328,634,987 12,000,000
(Note 2)
Tang Hin Lun 1,000,000 - 4,500,000
Lo Wai Ming 1,000,000 - -
Choy Tak Ho - - 5,000,000
Kwan Yan - - 3,000,000
Yip Wan Fung 4,922,000 - 12,000,000
Notes: 1. The share options are exercisable at any time up to 3rd September, 2007 at an exercise price of HK$0.37 per share. No options were exercised by the Directors during the period. 2. As at 30th June, 1999, Holylake Resources Limited ("Holylake") held 253,982,000 shares of the Company and Grecian Resources Limited ("Grecian") held 74,652,987 shares of the Company. Since Mr. Yip Kim Po owned 76% of the issued share capital of each of Holylake and Grecian, the shares of the Company held by Holylake and Grecian were deemed to be the corporate interests of Mr. Yip Kim Po by virtue of Practice Note 5 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. (B) Associated Corporation Name of associated Name of Number of Nature of corporation director shares held Type of shares shares held Holylake Resources Yip Kim Po 76 Ordinary Personal Limited Save as disclosed above, none of the directors and chief executives had, as at 30th June, 1999, any personal, family, corporate or other interests in the securities of the Company or any of its associated corporations as recorded in the register required to be kept under Section 29 of the SDI Ordinance. SUBSTANTIAL SHAREHOLDERS As at 30th June, 1999, the following interests of 10% or more of the share capital of the Company were recorded in the register of interests required to be maintained by the Company pursuant to Section 16(1) of the SDI Ordinance:
Number of Percentage of
Name of shareholders Notes shares held shareholding
(%)
Holylake Resources Limited 1 253,982,000 45.10
Grecian Resources Limited 2 74,652,987 13.26
Notes: 1. The interests of Holylake Resources Limited have been disclosed as Yip Kim Po's interests in the Company share capital under the section headed "Directors' interests in securities" set out above. 2. The interests of Grecian Resources Limited have been disclosed as Yip Kim Po's interests in the Company's share capital under the section headed "Directors' interests in securities" set out above. DIRECTORS Mr. Cheung Sze Hoo resigned as an Executive Director with effect from 30 June, 1999 and Mr. Hui Ching Shan has been appointed as a Non-executive Director with effect from 28 June, 1999. COMPLIANCE WITH CODE OF BEST PRACTICE None of the Directors is aware of any information that would reasonably indicate that the Company is not, or was not for any part of the accounting period covered by this interim report, in compliance with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. An audit committee has been established by the Board in compliance with paragraph 14 of the said Code of Best Practice. YEAR 2000 COMPLIANCE The Company had in its 1998 annual report (despatched on 18 May 1999) fully disclosed the progress of the Group's Year 2000 ("Y2K") compliance in accordance with the requirements of the Stock Exchange of Hong Kong Limited and had therein scheduled that the Group shall be fully Y2K compliant by 31 May 1999. The Group has, as at 31 May 1999, fully completed its Y2K compliance project as scheduled and since that day, the Group is not aware of any material change(s) or issue(s) arising from the Y2K issue which may be considered necessary for disclosure purpose. PURCHASE, SALE OR REDEMPTION OF SHARES During the first half of 1999, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed shares. On behalf of the Directors Hong Kong, 17 September, 1999 |