1
CAF DE CORAL HOLDINGS LIMITED
大家樂集團有限公司
(Incorporated in Bermuda with Limited Liability)
Website: http://www.cafedecoral.com
(Stock Code: 341)
INTERIM REPORT TO SHAREHOLDERS
FOR THE SIX MONTHS ENDED 30TH SEPTEMBER, 2007
HIGHLIGHTS
◆
Half-year double digit profit growth reaching record high of HK$175 million.
◆
Recognized as “PRC Consumer’s Most Favourable Hong Kong Brand” and
“2007 Service Retailer of the Year”.
◆
HK$300 million investment in new central food processing plants both in Hong
Kong and China.
◆
Establish presence at major international airports in Shenzhen, Zhuhai, Chicago,
Dallas, New York, and Hong Kong International Airport.
◆
Return on investment in “Tao Heung” with attractive dividend yield and capital
appreciation.
2
CHAIRMAN’S STATEMENT
I am glad to report that the Group achieved another encouraging interim results for the six months
ended 30
th
September, 2007. Turnover and profit attributable to shareholders reached HK$2.09
billion and HK$175 million, both representing another period of double-digit growth of 10.2% and
15.6% respectively as compared last year.
In recognition of the long term support of our shareholders, the Board resolved to distribute an
interim dividend of 15 HK cents per share to shareholders whose names appear on the register of
members of the Company on 3rd January, 2008, representing an increase of 25% over that of last
year.
Hong Kong Business Platform
In the period under review, it was gratifying to witness that the performance of our core businesses
in Hong Kong recorded a solid growth amid the ever-increasingly competitive landscape in this
territory. Both our Caf de Coral and The Spaghetti House in Hong Kong achieved a double digit
growth in operating profit against the operating pressure of rising labour and raw material costs.
Other than the contribution from the new outlets, much of the growth was, in fact, derived from our
dedicated effort in marketing initiatives, product mix and enhancing business and operating
efficiencies which, altogether, resulted in encouraging volume increase and margin improvement.
Our strong branding power was recognized by the recent award of “2007 Top Service Awards” to
our Caf de Coral and the “Certificate Award for the Best Brand Enterprise” and the “2007 Service
Retailer of the Year” to our The Spaghetti House, both of which are indeed testaments of our
brand preference among the dining public in Hong Kong. Furthermore, our Caf de Coral once
again won the applause among the mainland visitors by claiming the Gold Award as “PRC
Consumer’s Most Favourable Hong Kong Brand” which ultimately translated to our business
competitiveness in brand building and customer loyalty.
3
Other than our core businesses, Luncheon Star raised its bar on its quality standard in April, 2007
with the accreditation of ISO22000, being the strictest food safety system in the industry in addition
to its two other quality recognitions, namely ISO9001 and HACCP. With the vote of confidence
from parent and teachers, Luncheon Star now firmly secured its market leading position in the
school catering arena.
As I reported to you in the last annual report, we decided to devote more resources on our back up
infrastructure, including searching for suitable sites to establish new central food processing plants
both in Hong Kong and in the Pearl River Delta Region, in order to cope with the fast growing
business at these strategic markets of great potentials. I am glad to report that we have procured a
suitable site at the Tai Po Industrial Estate, Hong Kong for developing it into another central food
processing plant of the Group in Hong Kong. The capital expenditure involved is expected in the
region of HK$200 million. Upon completion by middle of 2010, we plan to transfer our existing
central food processing facilities in Fo Tan, Shatin to this new processing plant, thereby freeing the
necessary space in Fo Tan plant for the future expansion of Luncheon Star. The strategic relocation
not only further enhances our productivity and operating efficiency, it also safeguards the quality
assurance and food safety standards in all our products.
PRC Business Platform
In Southern China, our proactive expansion initiative of Caf de Coral continues. Notwithstanding
that the Central Government introduced certain austerity measures to cool down the property
market, it did not hamper our rapid pace of development. As at today, there are 36 operating units of
this branded restaurant in the region, an increase of 7 units from the beginning of this financial year,
covering almost all the key first-tier and second-tier cities in the Pearl River Delta region. Among
these new openings, two of which were strategically located at the Shenzhen Airport and the Zhuhai
Airport which, we believe, would have significant strategic value for our future expansion in major
transportation hubs in China.
4
As a long term strategy to back up the fast growing business in Southern China region, we
acquired a parcel of land of 30,000 square meters at the Guangzhou Development District, China in
November, 2007, aiming to develop it into a new central food processing plant. The capital
expenditure involved for the project is expected in the region of HK$120 million and the new
factory plant is expected to commence production by the late 2009. Once completed, our
production capacity in Southern China would be greatly enhanced and the new factory plant would
also act as our permanent training centre to the ever growing demand of our frontline staff.
In Eastern China, I am glad to report that the business performance of the chain, New Asia Dabao,
finally turned around with profits for the months under review. The profit-making of the chain,
New Asia Dabao, is not a coincidence but a result of years of dedicated effort in adopting various
value-added business improvement initiative. Notwithstanding however that we were still in the
progress of establishing Caf de Coral presence in the region, there remain certain teething
challenges to establish a relatively unknown brand in this part of the region, and naturally certain
preliminary development expenses were incurred. We adhere and remain confident to our
dual-brands market penetration strategy in capturing the sizeable market potential of the Yangtze
River Delta Region development platform.
North America Business Platform
Across the Ocean, since acquiring the remaining interests in Manchu Wok in October, 2005, we
adopted various value-added initiative to rationalize the cost structure of this sizeable business
platform, resulting in substantial savings in business overheads.
Other than the necessary consolidation, we commenced our business development program by
focusing on the development opportunities at non-traditional areas such as casinos, airports and
military bases. Our presence in various renowned airports in North America, such as Chicago
O’Hare Airport, Dallas Fort Worth International Airport and JFK International Airport, exemplified
our effort in pursuing this development strategy. As a result, Manchu Wok was able to strengthen
its branding power in this sizable market.
5
Looking Ahead
The buoyant stock and property markets in Hong Kong brought us challenges and opportunities.
With the successful listing of “Tao Heung” in June, 2007, our strategic investment in this leading
Chinese restaurant group has returned us with attractive dividend income as well as capital
appreciation due to its reputable image with the investing public.
As reported, since acquiring the 6,500 sq feet property in Admiralty, we are now going through a
major restructuring of the premises to turn it into a restaurant court, planning to house our own
reputable restaurant brands at this strategic location. We believe such move would not only help to
generate constant rental income stream to the Group but more importantly, to provide a haven for
our many restaurants at this very important catchment area of the central business district.
In respect of all the other business platforms in the Greater China region and overseas, it is the
Group’s objective to unlock their vast potential in the not too distant future, turning them to become
meaningful profit contributors to the Group in their own rights. In the second half of the year, we
are confident that our shareholders would recognize our effort made for enhancing the shareholders’
value and our commitment in delivering quality services to our customers.
By order of the Board
Chan Yue Kwong, Michael
Chairman
Hong Kong, 11
th
December, 2007
6
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30TH SEPTEMBER, 2007
Six months
ended 30th September,
Note 2007 2006
HK$’000 HK$’000
(Unaudited) (Unaudited)
Revenue 4 2,085,381 1,892,717
Cost of sales (1,782,055) (1,616,259)
───────── ─────────
Gross profit 303,326 276,458
Administrative expenses (112,219) (107,643)
Other gain, net 5 3,301 1,774
───────── ─────────
Operating profit 6 194,408 170,589
Finance income 7 17,687 17,277
Finance costs 7 (134) (803)
───────── ─────────
211,961 187,063
Share of profit/(loss) of
- Associated companies 1,228 560
- Jointly controlled entities (368) (2,937)
───────── ─────────
Profit before income tax 212,821 184,686
Income tax expense 8 (37,723) (33,214)
───────── ─────────
Profit attributable to equity holders of the
Company 175,098 151,472
═════════ ═════════
Earnings per share for profit attributable to the
equity holders of the Company, expressed in HK
cents per share
-Basic 9 31.88 HK cents 28.00 HK cents
═════════ ═════════
-Diluted 9 31.53 HK cents 27.61 HK cents
═════════ ═════════
Dividends 10 82,622 65,390
═════════ ═════════
7
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30TH SEPTEMBER, 2007
As at
30th September,
As at
31st March,
Note 2007 2007
HK$’000 HK$’000
(Unaudited) (Audited)
ASSETS
Non-current assets
Property, plant and equipment 540,420 491,978
Leasehold land and land use rights 276,779 308,788
Investment properties 217,800 155,200
Intangibles assets 246,889 213,068
Available-for-sale financial assets 454,081 267,398
Held-to-maturity investments 1,022 8,837
Investment in associates 5,465 4,357
Investment in jointly controlled entities 32,365 32,195
Non-current deposits 114,508 107,079
Deferred income tax assets 14,526 12,647
Retirement benefit assets 34,479 31,736
──────── ────────
1,938,334 1,633,283
-------------- --------------
Current assets
Inventories 97,475 74,413
Trade and other receivables 11 50,581 44,145
Prepayments, deposits and other current assets 126,873 87,811
Financial assets at fair value through profit or loss 141,712 98,720
Cash and cash equivalents 660,595 546,655
──────── ────────
1,077,236 851,744
-------------- --------------
Total assets 3,015,570 2,485,027
════════ ════════
LIABILITIES
Non-current liabilities
Deferred income tax liabilities 74,053 65,121
Provision for long service payments 4,563 4,377
──────── ────────
78,616 69,498
-------------- --------------
Current liabilities
Trade payables 12 115,410 94,741
Other creditors and accrued liabilities 373,173 300,463
Current income tax liabilities 39,496 23,858
──────── ────────
528,079 419,062
-------------- --------------
Total liabilities 606,695 488,560
-------------- --------------
8
CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 30TH SEPTEMBER, 2007
As at
30th September,
As at
31st March,
Note 2007 2007
HK$’000 HK$’000
(Unaudited) (Audited)
EQUITY
Capital and reserves attributable to the equity
holders of the Company
Share capital 55,071 54,593
Reserves (including interim dividend proposed of
HK$82,622,000; 31st March, 2007: final and
special dividends proposed of HK$164,791,000) 13 2,353,804 1,941,874
──────── ────────
Total equity 2,408,875 1,996,467
-------------- --------------
Total equity and liabilities 3,015,570 2,485,027
════════ ════════
Net current assets 549,157 432,682
════════ ════════
Total assets less current liabilities 2,487,491 2,065,965
════════ ════════
9
Notes: -
1 Basis of preparation
This unaudited condensed consolidated interim financial information for the six months
ended 30th September, 2007 has been prepared in accordance with Hong Kong Accounting
Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of
Certified Public Accountants (“HKICPA”).
This condensed consolidated interim financial information should be read in conjunction
with the 2007 annual financial statements for the year ended 31st March, 2007.
2 Accounting policies
The accounting policies adopted are consistent with those described in the annual financial
information for the year ended 31st March, 2007.
The following new standards, amendments to standards and interpretations are mandatory
and relevant for financial year ending 31st March, 2008:
HKAS 1 (Amendment) Presentation of Financial Statements : Capital Disclosures
HKFRS 7 Financial Instruments : Disclosures
HK(IFRIC) – Int 8 Scope of HKFRS 2
HK(IFRIC) – Int 9 Reassessment of Embedded Derivatives
HK(IFRIC) – Int 10 Interim Financial Reporting and Impairment
HK(IFRIC) – Int 11 HKFRS 2- Group and Treasury Share Transactions
The adoption of these new standards, amendments to standards and interpretations has no
significant impact on the Group’s interim results and financial position.
The following new standards, amendments to standards and interpretations, which are
relevant to the Group, have been issued but are not effective for the financial year ending
31st March, 2008 and have not been early adopted by the Group:
HKAS 23 (Revised) Borrowing Costs
HKFRS 8 Operating Segments
HK(IFRIC) – Int 12 Service Concession Arrangements
HK(IFRIC) – Int 13 Customer Loyalty Programmes
HK(IFRIC) – Int 14 HKAS 19 - The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction
10
3 Segment information
(i) Primary reporting format - geographical segments
The Group’s business activities are conducted predominantly in Hong Kong, Mainland
China and North America.
The segment results for the six months ended 30th September, 2007 are as follows:
Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Segment revenues
Total segment revenue 1,751,523 203,913 161,605 2,117,041
Inter-segment revenue (569) (31,091) - (31,660)
───── ───── ───── ─────
Revenue 1,750,954 172,822 161,605 2,085,381
═══════ ═══════ ═══════ ═══════
Segment results 184,994 16,781 (7,367) 194,408
═══════ ═══════ ═══════
Finance income 17,094 471 122 17,687
Finance costs - (134) - (134)
Share of profit of associates 1,228 - - 1,228
Share of loss of jointly
controlled entities - (368) - (368)
─────
Profit before income tax 212,821
Income tax expense (37,723)
─────
Profit attributable to the
equity holders of the
Company 175,098
═══════
Other segment terms included in the condensed consolidated interim income statement for
the six months ended 30th
September, 2007 are as follows:
Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Depreciation 59,071 8,740 5,886 73,697
Amortisation of intangible
assets 1,351 - 4,280 5,631
Amortisation of leasehold
land and land use rights 2,498 721 - 3,219
(Gain)/loss on disposal of
property, plant and
equipment (2,925) (45) 887 (2,083)
═══════ ═══════ ═══════ ═══════
11
3 Segment information (Continued)
(i) Primary reporting format - geographical segments (Continued)
The segment assets and liabilities at 30th September, 2007 and capital expenditure for the
six months ended 30th September, 2007 are as follows:
Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Segment assets
1,752,470 301,340 312,589 2,366,399
Associated companies
5,465 - - 5,465
Jointly controlled entities
- 32,365 - 32,365
─────── ────── ────── ───────
1,757,935 333,705 312,589 2,404,229
═══════ ══════ ══════
Unallocated assets
611,341
───────
Total assets
3,015,570
═══════
Segment liabilities
387,659 55,100 50,387 493,146
═══════ ══════ ══════
Unallocated liabilities
113,549
───────
Total liabilities
606,695
═══════
Capital expenditure
141,074 28,339 13,014 182,427
═══════ ══════ ══════ ═══════
Segment assets consist primarily of leasehold land and land use rights, property, plant and
equipment, intangible assets, investments in associates and jointly controlled entities,
inventories, receivables, cash and cash equivalents and other operating assets. Unallocated
assets comprise deferred taxation, available-for-sale financial assets, held-to-maturity
investments and financial assets at fair value through profit or loss.
Segment liabilities comprise operating liabilities and borrowing. They exclude items such as
taxation.
Capital expenditure comprises additions to leasehold land and land use rights, property,
plant and equipment, investment properties and intangible assets.
12
3 Segment information (Continued)
(i) Primary reporting format - geographical segments (Continued)
The segment results for the six months ended 30th September, 2006 are as follows:
Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Segment revenues
Total segment revenue 1,617,967 152,431 151,535 1,921,933
Inter-segment revenue (674) (28,542) - (29,216)
───── ───── ───── ─────
Revenue 1,617,293 123,889 151,535 1,892,717
═══════ ═══════ ═══════ ═══════
Segment results 163,947 16,288 (9,646) 170,589
═══════ ═══════ ═══════
Finance income 16,625 590 62 17,277
Finance costs (803) - - (803)
Share of profit of associates 560 - - 560
Share of loss of jointly
controlled entities - (2,937) - (2,937)
─────
Profit before income tax 184,686
Income tax expense (33,214)
─────
Profit attributable to the
equity holders of the
Company 151,472
═══════
Other segment terms included in the condensed consolidated interim income statement for
the six months ended 30th
September, 2006 are as follows:
Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Depreciation 62,553 8,300 6,617 77,470
Amortisation of intangible
assets 1,351 - 3,829 5,180
Amortisation of leasehold
land and land use rights 2,893 107 - 3,000
Impairment of trade
receivables - - 242 242
Loss on disposal of
property, plant and
equipment 2,129 - - 2,129
══════ ══════ ══════ ══════
13
3 Segment information (Continued)
(i) Primary reporting format - geographical segments (Continued)
The segment assets and liabilities at 31st March, 2007 and capital expenditure for the six
months ended 30th September, 2006 are as follows:
Hong Kong
Mainland
China
North
America Group
HK$’000 HK$’000 HK$’000 HK$’000
(Audited) (Audited) (Audited) (Audited)
Segment assets 1,518,550 258,964 283,359 2,060,873
Associated companies 4,357 - - 4,357
Jointly controlled entities - 32,195 - 32,195
─────── ─────── ─────── ───────
1,522,907 291,159 283,359 2,097,425
═══════ ═══════ ═══════
Unallocated assets 387,602
───────
Total assets 2,485,027
═══════
Segment liabilities 321,040 38,472 40,069 399,581
═══════ ═══════ ═══════
Unallocated liabilities 88,979
───────
Total liabilities 488,560
═══════
Capital expenditure
(Unaudited)
87,647 17,724 3,724 109,095
═══════ ═══════ ═══════ ═══════
(ii) Secondary reporting format - business segment
No segment analysis by business segment is presented as the Group principally operates in
one business segment, which is the operation of quick service restaurants, fast casual dining,
institutional catering and specialty restaurant chains.
14
4 Revenue
Six months
ended 30th September,
2007 2006
HK$’000 HK$’000
(Unaudited) (Unaudited)
Sales of food and beverages 2,016,857 1,837,920
Rental income 18,022 14,622
Royalty income 21,750 21,908
Management and service fee income 4,439 2,021
Sundry income, net 24,313 16,246
──────── ────────
2,085,381 1,892,717
════════ ════════
5 Other gain, net
Six months
ended 30th September,
2007 2006
HK$’000 HK$’000
(Unaudited) (Unaudited)
Gain on disposals of financial assets at fair value
through profit or loss 514 1,146
Fair value gains on financial assets at fair value
through profit or loss 2,787 628
──────── ────────
3,301 1,774
════════ ════════
6 Operating profit
The following items have been charged/(credited) to the operating profit during the interim
period:
Six months
ended 30th September,
2007 2006
HK$’000 HK$’000
(Unaudited) (Unaudited)
Depreciation of property, plant and equipment 73,697 77,470
Amortisation of leasehold land and land use rights 3,219 3,000
Amortisation of trademarks and franchise rights
(including in administrative expense) 5,631 5,180
(Gain)/loss on disposal of property, plant and
equipment (2,083) 2,129
Fair value gains of financial assets at fair value
through profit or loss (2,787) (628)
Gain on disposal of financial assets at fair value
through profit or loss (514) (1,146)
Provision for impairment of property, plant and
equipment - 1,000
Provision for impairment on trade and other
receivables - 242
═══════ ═══════
15
7 Finance income and costs
Six months
ended 30th September,
2007 2006
HK$’000 HK$’000
(Unaudited) (Unaudited)
Finance income – interest income 17,687 17,277
Finance costs – interest expense on bank loans (134) (803)
─────── ───────
17,553 16,474
═══════ ═══════
8 Income tax expense
The Company is exempted from taxation in Bermuda until 2016. Hong Kong profits tax has
been provided at the rate of 17.5% (2007: 17.5%) on the estimated assessable profit for the
period. Taxation on overseas profits has been calculated on the estimated assessable profit
for the period at the rates of taxation prevailing in the countries in which the Group
operates.
The amount of taxation charged to the condensed consolidated income statement represents:
Six months
ended 30th September,
2007 2006
HK$’000 HK$’000
(Unaudited) (Unaudited)
Current income tax:
- Hong Kong profits tax 31,352 24,598
- Overseas taxation 5,380 5,769
Deferred income tax charged relating to the
origination and reversal of temporary differences 991 2,847
─────── ───────
37,723 33,214
═══════ ═══════
9 Earnings per share
Basic
Basic earning per share is calculated by dividing the profit attributable to equity holders of
the Company by the weighted average number of ordinary shares in issue during the period.
Six months
ended 30th September,
2007 2006
‘000 ‘000
(Unaudited) (Unaudited)
Profit attributable to equity holders of the Company HK$175,098 HK$151,472
Weighted average number of ordinary shares in issue 549,267 541,002
Basic earnings per share (HK cents per share) 31.88 28.00
══════════ ══════════
16
9 Earnings per share (Continued)
Diluted
Diluted earning per share is calculated adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential ordinary shares. The
Company has dilutive potential ordinary shares - share options. For the share options, a
calculation is done to determine the number of shares that could have been acquired at fair
value (determined as the average annual market share price of the Company’s shares) based
on the monetary value of the subscription rights attached to shares that would have been
issued assuming the exercise of the share options.
Six months
ended 30th September,
2007 2006
‘000 ‘000
(Unaudited) (Unaudited)
Profit attributable to equity holders of the Company HK$175,098 HK$151,472
------------------ ------------------
Weighted average number of ordinary shares in issue 549,267 541,002
Adjustments for – share options 5,989 7,561
────────── ──────────
Weighted average number of ordinary shares for
diluted earnings per share 555,256 548,563
----------------- -----------------
Diluted earnings per share (HK cents per share) 31.53 27.61
══════════ ══════════
10 Dividends
Six months
Ended 30th September,
2007 2006
HK$’000 HK$’000
(Unaudited) (Unaudited)
Dividends proposed
- Interim, 15 HK cents (2006: 12 HK cents) per share 82,622 65,390
═══════ ═══════
17
11 Trade and other receivables
30th September,
2007
31st March,
2007
HK$’000 HK$’000
(Unaudited) (Audited)
Trade receivables 32,148 23,991
Less: provision for impairment of receivables (3,347) (3,347)
─────── ───────
Trade receivables - net 28,801 20,644
Other receivables 21,780 23,501
─────── ───────
50,581 44,145
═══════ ═══════
The carrying values of trade and other receivables approximate their fair values.
The Group’s sales to customers are mainly on a cash basis. The Group also grants a credit
period between 30 to 90 days to certain customers for the provision of the Group’s
institutional catering services, sale of merchandise for the Group’s food manufacturing
businesses and receivables of royalty income from franchisees.
30th September,
2007
31st March,
2007
HK$’000 HK$’000
(Unaudited) (Audited)
0 - 30 days 17,927 12,010
31 - 60 days 7,922 4,705
61 - 90 days 811 992
Over 90 days 5,488 6,284
────── ──────
32,148 23,991
══════ ══════
There is no concentration of credit risk with respect to trade receivables as the Group has a
large number of dispersed customers.
12 Trade payables
The aging analysis of the trade payables is as follows:
30th September,
2007
31st March,
2007
HK$’000 HK$’000
(Unaudited) (Audited)
0 - 30 days 107,980 83,489
31 - 60 days 5,531 4,441
61 - 90 days 82 1,810
Over 90 days 1,817 5,001
────── ──────
115,410 94,741
══════ ══════
18
------ --1,
-------
--------15,
-----
13 Reserves
Share
premium
Capital
redemption
reserve
Exchange
translation
reserve
Share based
compensation
reserve
Capital
reserve
Contributed
surplus
Investment
reserve
Revaluation
reserves
Retained
earnings Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
At 1st April, 2006 57,505 152,034 2,432 3,449 21,079 85,197 (8,875) - 1,497,172 1,809,993
Proceeds from shares issued 11,656 656
Exchange differences arising on consolidation - - (2,727) - - - - - - (2,727)
Changes in fair market value of available-for- sale
financial assets - - - - - - 5,813 - - 5,813
Employees shares option scheme-value of
employee services - - - 3,758 - - -
-
- 3,758
Profit attributable to equity holders of the
Company - - - - - - - 151,472 151,472
Dividends - (245,205) (245,205)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ──────── ────────
At 30th September, 2006 69,161 152,034 (295) 7,207 21,079 85,197 (3,062) - 1,403,439 1,734,760
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ════════ ════════
At 1st April, 2007 79,243 152,034 8,195 9,547 21,079 85,197 (1,467) 180 1,587,866 1,941,874
Proceeds from shares issued 15,537 537
Exchange differences arising on consolidation - - 23,647 - - - - - - 23,647
Changes in fair market value of available-for- sale
financial assets - 195,281 - - 195,281
Employees shares option scheme-value of
employee services - - - 2,367 - - - - - 2,367
Release of share based compensation reserve to
share premium upon share option exercise 1,894 - - (1,894) - - - - - -
Profit attributable to equity holders of the
Company - - - - - - - - 175,098 175,098
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ──────── ────────
At 30th September, 2007 96,674 152,034 31,842 10,020 21,079 85,197 193,814 180 1,762,964 2,353,804
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ════════ ════════
19
INTERIM DIVIDEND
In acknowledging continuous supports from our shareholders, the Directors have declared the
payment of an interim dividend of 15 HK cents (2006: 12 HK cents) per share in respect of the
year ending 31st March, 2008, payable on 11th January, 2008 to those persons registered as
shareholders on 3rd January, 2008.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members of the Company will be closed from 3rd January, 2008 (Thursday) to 4th
January, 2008 (Friday), both days inclusive, during which period no transfer of shares will be
effected. In order to qualify for the interim dividend, all completed transfer forms accompanied by
the relevant share certificates, must be lodged with the Company’s Hong Kong Branch Registrars,
Computershare Hong Kong Investor Services Limited, at Rooms 1712-1716, 17th Floor, Hopewell
Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on
2nd January, 2008.
HUMAN RESOURCES
As at 30th September, 2007, the Group (other than associated companies and jointly controlled
entities) employed approximately 13,000 employees. Remuneration packages are generally
structured by reference to market terms and individual qualifications and experience. With a
unique Share Option Scheme together with profit sharing bonus and performance incentive system,
employees were entitled to share in the growth of the Group.
During the period, various training activities have been conducted to improve the front-end quality
of services as well as to ensure the smooth and effective installation of the Group’s business
systems.
FINANCIAL REVIEW
The Group’s financial position, as at 30th September, 2007, continues to be very strong, with a net
cash of close to about HK$661 million and available banking facilities of HK$836 million.
As at 30th September, 2007, the Group did not have any external borrowing (31st March, 2007:
Nil) and maintained a healthy gearing (being total borrowings over shareholders’ funds) of Nil%
(31st March, 2007: Nil). There has been no material change in contingent liabilities or charges on
assets since 31st March, 2007.
As at 30th September, 2007, the Company has given guarantees totaling approximately
HK$836,000,000 (31st March, 2007: HK$836,000,000) to financial institutions in connection with
the banking facilities granted to its subsidiaries.
Regarding foreign exchange fluctuations, for the six months’ period under review, the Group
earned revenue and incurred costs and expenses are mainly denominated in Hong Kong dollars,
while those of our North America and PRC subsidiaries and jointly controlled entities are
denominated in United States dollars, Canadian dollars and Renminbi respectively. While foreign
currency exposure did not pose significant risk for the Group, we will continue to take proactive
measures and monitor closely of our exposure to such currency movement.
20
COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES
UNDER APPENDIX 14 OF THE LISTING RULES
During the six months period ended 30th September, 2007, the Company has complied with all the
code provisions of the Code on Corporate Governance Practices (the “Code Provisions”) as set out
in Appendix 14 of the Listing Rules, except for the deviation from the Code Provision A.2.1:
Code Provision A.2.1
Code Provision A.2.1 provides that the roles of chairman and chief executive officer should be
separate and should not be performed by the same individual.
Mr. Chan Yue Kwong, Michael assumes the roles of Chairman and Chief Executive Officer of the
Group. The Board considers that, given the current corporate structure, there is no separation
between the roles of Chairman and Chief Executive Officer. Although the roles and
responsibilities for Chairman and Chief Executive Officer are vested in one person, all major
decisions are made in consultation with the Board and appropriate Board committees. There are
three independent non-executive directors in the Board with sufficient independent element.
Therefore, the Board is of the view that there are adequate impartiality and safeguards in place.
Management has taken note of the external consultant’s recommendations made in the year
2006/07, aiming at further strengthening the Group’s internal control on continual process.
Actions are in progress in accordance with the established timelines in the year 2007/08.
AUDIT COMMITTEE
The Company has established an audit committee which currently consists of three independent
non-executive directors of the Company with written terms of reference which deal clearly with its
authority and duties. Amongst the committee’s principal duties is to review and supervise the
Company’s financial reporting process and internal controls (including the review of the unaudited
interim financial statements for the six months ended 30th September, 2007).
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the six months ended 30th September, 2007, neither the Company nor any of its
subsidiaries had purchased, sold or redeemed the Company’s listed securities.
As at the date of this announcement, the Board of Directors of the Company comprises Mr. Chan Yue
Kwong, Michael, Mr. Lo Hoi Kwong, Sunny, Ms. Lo Pik Ling, Anita and Mr. Lo Tak Shing, Peter as
executive directors; Mr. Lo Tang Seong, Victor, Mr. Lo Hoi Chun and Mr. Hui Tung Wah, Samuel as
non-executive directors; Mr. Choi Ngai Min, Michael, Mr. Li Kwok Sing, Aubrey and Mr. Kwok Lam Kwong,
Larry as independent non-executive directors.
INTERIM REPORT TO SHAREHOLDERS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER, 2007 |
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