1Interim Rep
| CONTENTS |
| PAGE |
| CORPORATE INFORMATION 2 |
| MANAGEMENT DISCUSSION AND ANALYSIS 3 |
| CONDENSED CONSOLIDATED INCOME STATEMENT 9 |
| CONDENSED CONSOLIDATED BALANCE SHEET 10 |
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 12 |
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT 13 |
| NOTES TO THE CONDENSED FINANCIAL STATEMENTS 14 |
| REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION 27 |
| OTHER INFORMATION 29 |
Daido Group Limited
CORPORATE INFORMATION
2
BOARD OF DIRECTORS
Executive Directors
Mr. Fung Wa Ko (Chairman)
Mr. Tang Tsz Man, Philip
Independent Non-Executive Directors
Mr. Leung Chi Hung
Mr. Leung, Tsz Fung David Ferreira
Mr. Tse Yuen Ming
COMMITTEES
Audit Committee
Mr. Leung Chi Hung (Chairman)
Mr. Leung, Tsz Fung David Ferreira
Mr. Tse Yuen Ming
Remuneration Committee
Mr. Leung, Tsz Fung David Ferreira
(Chairman)
Mr. Leung Chi Hung
Mr. Tse Yuen Ming
Nomination Committee
Mr. Tse Yuen Ming (Chairman)
Mr. Leung Chi Hung
Mr. Leung, Tsz Fung David Ferreira
COMPANY SECRETARY
Mr. Choy Kai Sing
STOCK CODE
0544
WEBSITE
www.irasia.com/listco/hk/daido/index.htm
www.daidohk.com
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
HEAD OFFICE AND PRINCIPAL
PLACE OF BUSINESS
Unit No. 1906, 19th Floor
West Tower, Shun Tak Centre
168–200 Connaught Road Central
Hong Kong
AUDITOR
Deloitte Touche Tohmatsu
Certifi ed Public Accountants
35th Floor, One Pacifi c Place
88 Queensway
Hong Kong
PRINCIPAL BANKERS
DBS Bank (Hong Kong) Limited
The Hongkong and Shanghai
Banking Corporation Limited
Nanyang Commercial Bank, Limited
Standard Chartered Bank
(Hong Kong) Limited
HONG KONG BRANCH SHARE
REGISTRAR AND TRANSFER
OFFICE
Union Registrars Limited
Room 1803
Fook Lee Commercial Centre
Town Place, 33 Lockhart Road
Wanchai, Hong Kong
3Interim Report 2007
MANAGEMENT DISCUSSION AND ANALYSIS
OVERALL RESULTS
Currently, the Group continues to run three business divisions, which are (i) Cold Storage
and Logistics Services, (ii) Manufacturing & Trading of Ice and (iii) Properties Investment. For
the six months ended 30th June, 2007, turnover of the Group amounted to approximately
HK$70 million (2006: HK$77 million), representing a decrease of 9.7% over the same period
last year. Net loss attributable to shareholders amounted to approximately HK$17.7 million,
as compared to approximately HK$0.6 million net profi t in the same period last year. Basic
loss per share was HK0.50 cents (2006: earning per share: HK0.02 cents). The loss was mainly
attributable to impairment loss on goodwill and impairment loss on available-for-sale
investments total HK$14.8 million.
BUSINESS REVIEW
Cold Storage and Logistics Services
The Group is one of the cold storage operators in Hong Kong operating two whole blocks
of warehouses, located strategically near the Kwai Chung container terminals.
According to the Census and Statistics Department, imports of food and live animals
in the fi rst quarter of 2007 increased by 4% compared to last quarter and increased by
17% compared to fi rst quarter of 2006. Albeit a slightly decrease in imports of beverages
and tobacco in the fi rst quarter of 2007, it still recorded an increase of 12% compared
to fi rst quarter of 2006. Benefi ting from such favourable environments, demand in cold
storage and logistic services also increases. Nevertheless, the Group’s core business faces a
challenging environment as one new competitor located at Kowloon Bay has emerged. Due
to the keen market competition during the period, turnover of this line of business declined
5% and recorded a loss for the fi rst time.
Daido Group Limited
MANAGEMENT DISCUSSION AND ANALYSIS
4
BUSINESS REVIEW (CONTINUED)
Cold Storage and Logistics Services (continued)
In order to enhance the Group’s competitiveness, we would focus on the control over
costs effectively, and also we would concentrate on product delivery and customer
service leading to uplift customer loyalty. Moreover, as the Hong Kong economy improves,
consumption demand is also increasing continuously and that will benefi t our cold storage
warehousing and logistics services business. Anticipating continuous growth in demand for
our core business, the management expects a higher performance of this segment in the
second half year.
Manufacturing and Trading of Ice
To manufacture of high quality ice cubes and ice bars in Hong Kong is the other core
business of the Group. Ice bars are mainly applied in construction industry while that of ice
cubes is for use in food and beverages trades.
During the period under review, this division still generated a stable return, even though
sale of its ice bars has shrunk due to construction industry was inactive and also under an
intensifi ed competition in ice cubes market.
The property market in Hong Kong is expected to be stabilized with steady growth in
coming years, and thus the demand of our ice bar products will increase and will constitute
an acceptable profi t to the Group in the future.
Property Investment
The Group’s only property investment, the commercial property in Hunghom Commercial
Centre, remains vacant.
5Interim Report 2007
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW (CONTINUED)
Property Investment (continued)
According to the Hong Kong Property Review 2007 released by Hong Kong Rating and
Valuation Department, the rents of retail premises in 2006 increased by 4% in general and
few completions of that kind of properties are expected in the following two years. Besides,
the Government invited the two railway corporations to submit the proposal of Shatin to
Central Link, which comprises new stations at Hunghom and Ma Tau Wai, and the planning
study for Hunghom district was commenced in December 2006 by Planning Department. If
such plans were materialized, the property in the surrounding area will defi nitely benefi t.
Property Investment outside Hong Kong
For the six months ended 30th June, 2007, this investment project was still in a preliminary
investment stage and had yet to have any profi t contribution. Affecting by the weaker
performance of the spa business and unsatisfactory occupancy and room rates of the hotel,
the overall results of Grand Waldo Hotel was far below expectation.
Anticipating continuous growth strongly in Macau tourism industry and the grand opening
of Venetian Macao-Resort-Hotel in late August 2007, we expect visitors to Cotai area will
increase and the impact to Grand Waldo Hotel will be closely monitored. Furthermore,
Grand Waldo Hotel will continue launching various promotional activities with the aim of
attracting more visitors. Our management is still optimistic in this investment.
PLEDGE OF ASSETS
As at 30th June, 2007, banking facilities to the extent of approximately HK$3.3 million (31st
December, 2006: HK$3.3 million) of the Group were secured by all assets of a wholly-owned
subsidiary of the Company with aggregate carrying amount of the total assets amounting
to approximately HK$62.2 million as at 30th June, 2007 (31st December, 2006: HK$64
million).
Daido Group Limited
MANAGEMENT DISCUSSION AND ANALYSIS
6
PLEDGE OF ASSETS (CONTINUED)
As at 30th June, 2007, fi xed deposits of approximately HK$56.9 million (31st December,
2006: HK$56.9 million) were pledged to a bank which provides bank guarantee in favour of
two landlords for a sum equivalent to 12 months rent payable by the Group under tenancy
agreements.
LIQUIDITY AND FINANCIAL RESOURCES
As at 30th June, 2007, the Group had cash and bank balances of approximately HK$139
million (31st December, 2006: HK$41 million). The gearing ratio, measured as non-current
borrowings over shareholder’s equity, was 21% as at 30th June, 2007 (31st December,
2006: 40%), the decrease was attributable to the conversion of convertible bonds into new
ordinary shares of the Company.
With regard to foreign currency exposure, the monetary assets and liabilities of the Group
are principally denominated in Hong Kong dollars. The directors consider that the Group’s
exposure to the exchange rate risk is not signifi cant.
The Group’s capital expenditure and investments were financed by internal cash
generation, share placement and issue of debt instrument.
SHARE CAPITAL STRUCTURE
During the period under review, the Company has issued 516 million new ordinary shares
upon the conversion of convertible bonds.
As at 30th June 2007, the total issued share capital of the Company was approximately
HK$40 million divided into approximately 4 billion ordinary shares with a par value of
HK$0.01 each.
7Interim Report 2007
MANAGEMENT DISCUSSION AND ANALYSIS
EMPLOYMENT AND REMUNERATION POLICY
As at 30th June, 2007, the total number of employees of the Group in Hong Kong was
approximately 260 (31st December, 2006: 280 employees). Remuneration is reviewed
annually and in addition to the basic salaries, the Group also provides staff benefi ts
including discretionary bonuses, Mandatory Provident Fund and professional tuition/
training subsidies in order to retain and refi ne competent employees.
PROSPECT
Cold Storage and Logistics Services
Despite the undesirability result of the fi rst half of this year in terms of overall performance,
we are still conservatively confi dent about the future prospect of the Group. Management
as a whole believes continues to invest in information systems development is the
important driver of quality performance, cost effi ciency and customer satisfaction, that lead
to more fl exibility and more personalized service to our customer.
Recently, the storage and logistics industry has benefi ted from Hong Kong’s leading freight
infrastructure, such as the Hong Kong Shenzhen Western Corridor across Deep Bay was
offi cially opened on 1st July, 2007, thereby doubling the capacity of Hong Kong’s boundary
crossing facilities. Also, the government is planning to build the Tuen Mun-Chek Lap Kok
Link to further enhance the inland connectivity and to provide additional access to Hong
Kong International Airport and linking to the Hong Kong Shenzhen Western Corridor.
Besides, according to Jones Lang Lasalle, China logistics market will increase at an annual
growth rate of 27% to 30% from 2007 to 2009.
The Hong Kong storage and logistics industry will continue to be supported by those
positive factors, thus the Group keeps a close eye on the developments in the market and
will well equip itself to grasp new opportunities and will endeavor to expand its business in
order to create the sustained and steady growth of return to its shareholders.
Daido Group Limited
MANAGEMENT DISCUSSION AND ANALYSIS
8
PROSPECT (CONTINUED)
Hotel Investment
Macau’s tourism industry is booming and continuously growing. According to Macau
Government Tourist Offi ce (“MGTO”) announced, the total visitor arrivals of fi rst half year
of 2007 is already exceeded 12 million and represented an increase of 21.28%. At present,
there are direct fl ights between Macau and Singapore, Malaysia, Thailand, the Philippines,
Chinese Taiwan and MGTO will further strengthen promotions in Asian region and to
further diversify the source markets, it will refl ect that the number of visitors to Macau and
the related travel spending shall grow to a great extent.
Following the grand opening of Venetian Macao-Resort-Hotel (the largest building in Asia
and the second largest in the world, that have 350 stores favourite retailers, 20 leading
restaurants and 1 million square feet of fl exible convention and exhibition facilities) in Cotai,
more shoppers, conventioneers and tourists will be attracted to Cotai. In addition, following
the reopening of the checkpoint at Cotai (Lotus Bridge) in April this year, more tour groups,
under the coordination of MGTO and the support of the travel trade, will use the Cotai
checkpoint in future.
Facing the enormous changes in Macau, Grand Waldo Hotel is seriously assessing the
opportunity, challenges and competition ahead.
By order of the Board
Fung Wa Ko
Chairman
Hong Kong, 19th September, 2007
9Interim Report 2007
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30TH JUNE, 2007
Continuing operations Discontinued operations Total
Six months ended Six months ended Six months ended
30.6.2007 30.6.2006 30.6.2007 30.6.2006 30.6.2007 30.6.2006
NOTES HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 69,971 73,430 – 4,022 69,971 77,452
Direct costs (62,288) (64,895) – (3,488) (62,288) (68,383)
Gross profi t 7,683 8,535 – 534 7,683 9,069
Other income 4 8,196 3,475 – 15 8,196 3,490
Selling and distribution costs (1,740) (1,791) – (465) (1,740) (2,256)
Administrative expenses (11,446) (9,742) – (928) (11,446) (10,670)
Impairment loss on goodwill 5 (3,200) – – – (3,200) –
Impairment loss on
available-for-sale investments 13 (11,600) – – – (11,600) –
Gain on disposal of subsidiaries – – – 879 – 879
Finance costs 6 (5,546) (14) – – (5,546) (14)
(Loss) profi t before tax (17,653) 463 – 35 (17,653) 498
Tax credit 7 – 100 – – – 100
(Loss) profi t for the period 8 (17,653) 563 – 35 (17,653) 598
(Loss) earnings per share – basic 10
– from continuing and
discontinued operations (0.5) HK cents 0.02 HK cents
– from continuing operations (0.5) HK cents 0.02 HK cents
Daido Group Limited
CONDENSED CONSOLIDATED BALANCE SHEET
AT 30TH JUNE, 2007
10
30.6.2007 31.12.2006
NOTES HK$’000 HK$’000
(unaudited) (audited)
NON-CURRENT ASSETS
Investment property 11 17,000 17,000
Property, plant and equipment 20,858 21,862
Goodwill 11,713 14,913
Interest in an associate 12 – –
Available-for-sale investments 13 137,520 149,120
Loans to an investee 14 110,537 232,479
Rental deposits paid 14,415 14,415
Pledged bank deposits 56,875 56,875
368,918 506,664
CURRENT ASSETS
Inventories 94 –
Trade and other receivables 15 28,691 31,797
Tax recoverable 958 1,155
Bank balances and cash 139,521 41,156
169,264 74,108
CURRENT LIABILITIES
Trade and other payables 16 12,341 11,878
Obligations under a fi nance lease 139 135
Promissory notes 4,940 4,766
Tax payable 20 –
17,440 16,779
NET CURRENT ASSETS 151,824 57,329
520,742 563,993
11Interim Report 2007
CONDENSED CONSOLIDATED BALANCE SHEET
AT 30TH JUNE, 2007
30.6.2007 31.12.2006
NOTES HK$’000 HK$’000
(unaudited) (audited)
CAPITAL AND RESERVES
Share capital 17 39,960 34,800
Reserves 388,595 369,027
428,555 403,827
Minority interest 2 2
428,557 403,829
NON-CURRENT LIABILITIES
Obligations under a fi nance lease 160 231
Amount due to a minority shareholder of a subsidiary 27,632 56,864
Convertible bonds 31,605 71,380
Promissory notes 31,515 30,416
Deferred tax liabilities 1,273 1,273
92,185 160,164
520,742 563,993
Daido Group Limited
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30TH JUNE, 2007
12
Attributable to equity holders of the Company
Convertible
bond
Share Share Retained equity Minority
capital premium profi ts reserve Total interest Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1st January, 2006 30,000 – 284,706 – 314,706 – 314,706
Profi t for the period representing
total recognised income for
the period – – 598 – 598 – 598
Placement of new shares 4,800 50,880 – – 55,680 – 55,680
Expenses incurred in relation to
placement of new shares – (1,732) – – (1,732) – (1,732)
At 30th June, 2006 34,800 49,148 285,304 – 369,252 – 369,252
Loss for the period representing
total recognised expense for
the period – – (285) – (285) – (285)
Acquisition of subsidiaries – – – – – 2 2
Recognition of equity component
of convertible bond – – – 34,860 34,860 – 34,860
At 31st December, 2006 34,800 49,148 285,019 34,860 403,827 2 403,829
Loss for the period representing
total recognised expense for
the period – – (17,653) – (17,653) – (17,653)
Conversion of convertible bonds
into ordinary shares 5,160 57,255 – (20,034) 42,381 – 42,381
At 30th June, 2007 39,960 106,403 267,366 14,826 428,555 2 428,557
13Interim Report 2007
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30TH JUNE, 2007
Six months ended
30.6.2007 30.6.2006
HK$’000 HK$’000
(unaudited) (unaudited)
NET CASH FROM OPERATING ACTIVITIES 1,430 40,842
NET CASH FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of subsidiaries, net of cash and
cash equivalents acquired – (46,447)
Disposal of subsidiaries, net of cash and
cash equivalents disposed of – 19,664
Additions of property, plant and equipment (2,036) (1,535)
Repayment from loans receivable – 3,000
Repayment of loans to an investee 128,000 –
Deposit paid for acquisition of a subsidiary – (100,000)
Increase in pledged deposits – (56,875)
Other investing activities 3,190 3,287
129,154 (178,906)
NET CASH (USED IN) FROM FINANCING ACTIVITIES:
Issue of shares, net of expenses – 53,948
Repayment of loan from a minority shareholder
of a subsidiary (32,000) –
Other fi nancing activities (219) (62)
(32,219) 53,886
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 98,365 (84,178)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD 41,156 205,781
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
– represented by bank balances and cash 139,521 121,603
Daido Group Limited
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30TH JUNE, 2007
14
1. BASIS OF PREPARATION
The condensed consolidated fi nancial statements have been prepared in accordance with the
applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities
on
Scope of review
We conducted our review in accordance with Hong Kong Standard on Review
Engagements 2410 “Review of Interim Financial Information Performed by the Independent
Auditor of the Entity” issued by the Hong Kong Institute of Certifi ed Public Accountants. A
review of interim fi nancial information consists of making enquiries, primarily of persons
responsible for fi nancial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance
with Hong Kong Standards on Auditing and consequently does not enable us to obtain
assurance that we would become aware of all signifi cant matters that might be identifi ed in
an audit. Accordingly we do not express an audit opinion.
Daido Group Limited
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
28
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
interim fi nancial information is not prepared, in all material respects, in accordance with
HKAS 34.
Deloitte Touche Tohmatsu
Certifi ed Public Accountants
Hong Kong, 19th September, 2007
29Interim Report 2007
OTHER INFORMATION
DISCLOSURE OF INTERESTS
Interests of Directors
As at 30th June, 2007, none of the directors and the chief executive of the Company and
their respective associates had any interests or short positions in any shares, underlying
shares or debentures of the Company or any of its associated corporations (within the
meaning of Part XV of the Securities and Futures Ordinance (“SFO”), which were required
to be notifi ed to the Company and the Stock Exchange of Hong Kong Limited (“Stock
Exchange”) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short
positions which they are taken or deemed to have under such provision of the SFO), or
which were required, pursuant to Section 352 of the SFO, to be entered in the register kept
by the Company; or which were required to be notifi ed to the Company and the Stock
Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed
Issuers contained in the Listing Rules.
Interests of Substantial Shareholders
As at 30th June, 2007, to the best knowledge of the directors of the Company, the following
parties (other than the directors or chief executives of the Company), had interests or
short positions in the shares or underlying shares of the Company which would fall to be
disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or
which are recorded in the register of interests required to be kept by the Company under
Section 336 of the SFO are as follows:
Daido Group Limited
OTHER INFORMATION
30
DISCLOSURE OF INTERESTS (CONTINUED)
Interests of Substantial Shareholders (continued)
Long positions of the substantial shareholder in the shares and underlying shares of the
Company:
No. of Percentage of
No. of shares underlying total issued
Name of shareholder Capacity held shares held share capital
Ever Achieve Enterprises Benefi cial owner 1,011,615,665 – 25.31%
Limited
(Note 1)
China Star Entertainment Interest of controlled 700,000,000 – 17.51%
Limited
(Note 2)
corporation
Ever Apollo Limited
(Note 3)
Benefi cial owner 95,000,000 382,758,621 11.95%
Fung Ho Sum
(Note 3)
Interest of controlled 95,000,000 382,758,621 11.95%
corporation
Wong Ka May
(Note 3)
Spouse interest 95,000,000 382,758,621 11.95%
Equity Capital Group Benefi cial owner 311,615,664 – 7.79%
Limited
(Note 4)
So Yiu Ming, Sunny
(Note 4)
Interest of controlled 311,615,664 – 7.79%
corporation
Lam Fung Yee, Venue
(Note 4)
Spouse interest 311,615,664 – 7.79%
31Interim Report 2007
OTHER INFORMATION
DISCLOSURE OF INTERESTS (CONTINUED)
Interests of Substantial Shareholders (continued)
Notes:
1. The entire issued share capital of Ever Achieve Enterprises Limited is owned by Mr. Chung Chiu Pui,
Ms. Foo Hang Luen, Monita, Ms. Lee Yun and Mr. Yuen Kin Wing in equal shares.
2. China Star Entertainment Limited is deemed to be interested in the 700,000,000 shares which are
held by its wholly-owned subsidiary, Classical Statue Limited.
3. Other than the interest in 95,000,000 shares, Ever Apollo Limited is also deemed to have interest in
the share capital of the Company in respect of the number of shares which may fall to be allotted
and issued to it upon exercise of the conversion right attaching to the convertible bond under the
SFO. Ms. Wong Ka May is the spouse of Mr. Fung Ho Sum who is the benefi cial owner of Ever Apollo
Limited.
4. Ms. Lam Fung Yee, Venue is the spouse of Mr. So Yiu Ming, Sunny who is the benefi cial owner of
Equity Capital Group Limited.
Save as disclosed above, as at 30th June, 2007, the directors of the Company are not aware
of any other person (other than a director or chief executive of the Company), who had
interests or short positions in the shares or underlying shares of the Company which would
fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV
of the SFO, or which are recorded in the register of interests required to be kept by the
Company under Section 336 of the SFO.
Share Option Scheme
The Company has a share option scheme which enables the Company to grant options to
the eligible participants as incentives or rewards for their contribution to the Group.
No share option was outstanding as at 1st January, 2007 and 30th June, 2007 and no share
option was granted under the share option scheme during the period.
Daido Group Limited
OTHER INFORMATION
32
CORPORATE GOVERNANCE
Code on Corporate Governance Practices
The Board believes that a good corporate governance is not only in the interest of the
Company and its shareholders as a whole, but also increasingly important for maintaining
and promoting investor confi dence. The Board is responsible for ensuring a high quality of
corporate governance maintained. For the fi rst half of 2007, the Board of the Directors are
of the view that the Company has complied with the code provisions set out in the Code
on Corporate Governance Practices (the “CG Code”) contained in Appendix 14 to the Rules
Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange, except for
code provision A.2.1 concerning the requirements to separate the roles of the chairman
and chief executive offi cer.
Pursuant to code provision A.2.1, the roles of the chairman and chief executive offi cer
should be separate and should not be performed by the same individual. The division
of responsibilities between the chairman and chief executive offi cer should be clearly
established and set out in writing. During the period, the Chairman and Chief Executive
Offi cer of the Company are currently performed by Mr. Fung Wa Ko. Taking to account Mr.
Fung has strong expertise and excellent insight of the business development, corporate
management and budget control, this structure will lead to more effective implementation
of the overall strategy and ensure smooth operation of the Company. The Board believed
that this structure will not impair the balance of power and authority between the Board
and the management of the business of the Company as the structure of the Company has
strong and independent non-executive directors element on the Board.
In order to maintain the high quality of the corporate governance and comply with the CG
Code requirement, the Board and Nomination Committee will regularly review the need of
appointment of different individuals to perform the roles of Chairman and Chief Executive
Offi cer separately.
33Interim Report 2007
OTHER INFORMATION
CORPORATE GOVERNANCE (CONTINUED)
Code on Corporate Governance Practices (continued)
In respect of the code provision C.2.1 on internal controls, the Group has conducted reviews
of the internal control system of the main subsidiaries during the period under review.
Through our review, a number of control defi ciencies principally in relation to segregation
of duties for cash handling and invoicing were identifi ed, mainly at logistic business
segment. Accordingly, those defi ciencies have been rectifi ed and all related controls of
those defi ciencies have also been retested. Besides, we are not aware of any situation where
these have been made a great impact on our fi nancial position or results of operations. We
will continue to conduct reviews and tests of the other remaining segments and expect
those works will be completed by the year ended of 2007.
Model Code for Securities Transactions by Directors
The Company has adopted a set of code of conduct for securities transactions by directors,
the terms of which are not less exacting than the required standard set out in the Model
Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10
to the Listing Rules (the “Company’s Model Code”). Having made specifi c enquiry of all
directors of the Company, all directors have confi rmed that they had complied with the
required standard set out in the Company’s Model Code during the period under review.
To enhance the corporate governance of the Group as a whole, all relevant employees who
are likely to be in possession of unpublished price sensitive information in relation to the
Group or securities of the Company are subject to full compliance with the Company’s
Model Code. No incident of non-compliance was noted by the Company during the period
under review.
Daido Group Limited
OTHER INFORMATION
34
CORPORATE GOVERNANCE (CONTINUED)
Audit Committee
The Audit Committee has reviewed with the management the accounting principles and
practices adopted by the Group and discussed internal controls and fi nancial reporting
matters including a review of the unaudited interim accounts for the six months ended
30th June, 2007 with the Directors. At the request of Audit Committee, the Group’s external
auditors have carried out a review of the unaudited interim accounts in accordance with
Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of
Certifi ed Public Accountants.
The Audit Committee comprises all of the three Independent Non-executive Directors,
namely Mr. Leung Chi Hung, Mr. Leung, Tsz Fung David Ferreira and Mr. Tse Yuen Ming.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the
Company’s listed securities during the six months ended 30th June, 2007.
