Stock Code: 524
Looking ahead
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Board of Directors
Executive Directors
Richard John Siemens (Chairman)
Lim Shyang Guey
Non-executive Director
William Bruce Hicks
Independent Non-executive Directors
Shane Frederick Weir
John William Crawford J.P.
Gerald Clive Dobby
Company Secretary
Lau Wai Ming Raymond
Auditors
Mazars CPA Limited
Certified Public Accountants
Legal Advisers
Deacons
Lily Fenn & Partners
Conyers Dill & Pearman
Principal Bankers
The Hongkong and Shanghai Banking
Corporation Limited
Bank of China (Hong Kong) Limited
DBS Bank Limited
The Bancorp Bank
Registered Office
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Page
Corporate Information front cover
Condensed Consolidated Income Statement 1
Condensed Consolidated Balance Sheet 2
Condensed Consolidated Statement
of Changes in Equity 3
Condensed Consolidated Cash Flow Statement 4
| Table of Contents |
| e-KONG GROUP LIMITED |
| Corporate Information |
| Principal Office |
| 3705 Gloucester Tower |
| The Landmark |
| 15 Queen’s Road Central |
| Hong Kong |
| Tel: +852 2801 7188 |
| Fax: +852 2801 7238 |
| Stock Codes |
| Hong Kong Stock Exchange: 524 |
| Ticker Symbol for ADR: EKONY |
| CUSIP Reference Number: 26856N109 |
| Website Address |
| www.e-kong.com |
| Share Registrar |
| Butterfield Fund Services (Bermuda) Limited |
| Rosebank Centre |
| 11 Bermudiana Road |
| Pembroke |
| Bermuda |
| Hong Kong Branch Share Registrar |
| Tricor Secretaries Limited |
| 26th Floor, Tesbury Centre |
| 28 Queen’s Road East |
| Wanchai |
| Hong Kong |
| ADR Depositary |
| BNY Mellon Shareowner Services |
| P.O. Box 11258 |
| Church Street Station |
| New York, NY 10286-1258 |
| USA |
| Notes to the Condensed Consolidated |
| Financial Statements 5 |
| Report on Review of Interim Financial |
| Statements 11 |
| Business Review and Outlook 12 |
| Financial Review 14 |
| Additional Information 15 |
1
e-KONG GROUP LIMITED
Condensed Consolidated Income Statement
For the six months ended 30 June 2007
The board of directors (the “Board”) of e-Kong Group Limited (the “Company”) herein presents the unaudited interim
results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 30 June 2007, together with
comparative figures for the corresponding period in 2006. The results were unaudited but have been reviewed by the Audit
Committee and the auditors of the Company.
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
Notes HK$’000 HK$’000
Turnover 2 397,956 330,709
Cost of sales (294,011) (234,882)
Gross profit 103,945 95,827
Other income 3 19,357 1,228
123,302 97,055
Selling and distribution expenses (29,100) (26,620)
Business promotion and marketing expenses (4,068) (2,760)
Operating and administrative expenses (51,613) (39,411)
Depreciation and amortisation (8,466) (2,688)
Profit from operations 30,055 25,576
Finance costs 4 (1,229) (1,379)
Profit before taxation 4 28,826 24,197
Taxation 5 (2,227) (1,423)
Profit for the period 26,599 22,774
Attributable to:
Equity holders of the Company 26,659 22,774
Minority interests (60) –
26,599 22,774
EBITDA 6 38,521 28,264
HK cents HK cents
Earnings per share 7
Basic 5.3 4.8
Diluted N/A N/A
e-KONG GROUP LIMITED
Condensed Consolidated Balance Sheet
2
As at 30 June 2007
As at As at
30 June 31 December
2007 2006
(Unaudited) (Audited)
Notes HK$’000 HK$’000
Non-current assets
Property, plant and equipment 8 15,914 17,117
Intangible assets 9 46,776 51,659
Deferred tax assets 10,866 10,866
73,556 79,642
Current assets
Trade and other receivables 10 104,275 86,630
Pledged bank deposits 2,050 1,547
Cash and bank balances 160,853 100,362
267,178 188,539
Current liabilities
Trade and other payables 11 104,603 99,686
Current portion of bank borrowings 9,513 9,188
Current portion of obligations under
finance leases 202 198
Taxation payable 3,142 3,996
117,460 113,068
Net current assets 149,718 75,471
Total assets less current liabilities 223,274 155,113
Non-current liabilities
Bank borrowings 17,748 22,577
Obligations under finance leases 317 419
NET ASSETS 205,209 132,117
Capital and reserves
Share capital 5,229 4,709
Reserves 198,952 127,408
Equity attributable to equity holders
of the Company 204,181 132,117
Minority interests 1,028 –
TOTAL EQUITY 205,209 132,117
3
e-KONG GROUP LIMITED
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2007
Attributable to equity holders of the Company
Capital Accumulated
Share Share Exchange redemption Contributed profits/ Minority Total
capital premium reserve reserve surplus (losses) Total interests equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
As at 1 January 2007 4,709 23,461 (598) 6 83,489 21,050 132,117 – 132,117
New shares issued 52046,280––––46,80 46,80
Shares issuance expenses – (1,395) (1,395) – (1,395)
Deemed partial disposal
of subsidiary –––––––1,088 1,088
Profit for the period – – – – – 26,659 26,659 (60) 26,599
As at 30 June 2007 5,229 68,346 (598) 6 83,489 47,709 204,181 1,028 205,209
As at 1 January 2006 4,709 23,461 (1,011) 6 607,462 (543,555) 91,072 – 91,072
Exchange difference on
translation of foreign
subsidiaries – – (20) – – – (20) – (20)
Profit for the period – – – – – 22,774 22,774 – 22,774
As at 30 June 2006 4,709 23,461 (1,031) 6 607,462 (520,781) 113,826 – 113,826
e-KONG GROUP LIMITED
Condensed Consolidated Cash Flow Statement
4
For the six months ended 30 June 2007
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
HK$’000 HK$’000
Net cash generated from / (used in) operating activities 5,205 (21,917)
Net cash generated from / (used in) investing activities 14,986 (3,771)
Net cash generated from financing activities 40,803 44,732
Net increase in cash and cash equivalents 60,994 19,044
Cash and cash equivalents as at 1 January 101,909 61,218
Cash and cash equivalents as at 30 June 162,903 80,262
Analysis of the balances of cash and cash equivalents
Pledged bank deposits 2,050 2,024
Cash and bank balances 160,853 78,238
162,903 80,262
5
e-KONG GROUP LIMITED
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2007
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated financial statements are unaudited and have been prepared in accordance with the Hong Kong
Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants
(“HKICPA”) and applicable disclosure requirements under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”). The accounting policies and bases of preparation adopted in these
interim financial statements are consistent with those adopted in the Company’s 2006 Annual Report.
The Group has not early adopted the new and revised standards or interpretations issued by HKICPA that are not yet
effective for the current period. The Group anticipates that the adoption of these standards or interpretations in the future
periods will have no material impact on the results of the Group.
2. TURNOVER AND SEGMENTAL INFORMATION
Analyses of the Group’s turnover and results by geographical and business segments during the period are as set out
below:
(a) By geographical segments:
Six months ended 30 June
2007 2006
North Asia North Asia
America Pacific Eliminations Consolidated America Pacific Consolidated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Turnover
External sales 349,476 48,480 – 397,956 276,158 54,551 330,709
Inter-segment sales – 664 (664) – –––
349,476 49,144 (664) 397,956 276,158 54,551 330,709
Results
Segment results 11,598 11,655 – 23,253 15,477 13,406 28,883
Finance costs (1,229) (1,379)
Other operating income
and expenses 6,802 (3,307)
Profit before taxation 28,826 24,197
Taxation (2,227) (1,423)
Profit for the period 26,599 22,774
Inter-segment sales are charged at prevailing market prices.
e-KONG GROUP LIMITED
Notes to the Condensed Consolidated Financial Statements (continued)
6
For the six months ended 30 June 2007
2. TURNOVER AND SEGMENTAL INFORMATION (continued)
(b) By business segments:
Six months ended 30 June
2007 2006
Telecom- Telecom-
munication munication
services Other Consolidated services Other Consolidated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Turnover
External sales 396,177 1,779 397,956 325,772 4,937 330,709
Results
Segment results 23,284 (31) 23,253 28,863 20 28,883
Finance costs (1,229) (1,379)
Other operating income
and expenses 6,802 (3,307)
Profit before taxation 28,826 24,197
Taxation (2,227) (1,423)
Profit for the period 26,599 22,774
3. OTHER INCOME
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
HK$’000 HK$’000
Interest income on bank deposits 1,955 1,220
Gain on the deemed partial disposal of subsidiary (Note) 17,402 –
Others – 8
19,357 1,228
Note: The gain on the deemed partial disposal of subsidiary arose from the subscription by an institutional investor for
5% of the share capital of a subsidiary.
7
4. PROFIT BEFORE TAXATION
This is stated after charging:
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
HK$’000 HK$’000
Finance costs:
Interest on bank loan and other borrowings (1,218) (1,365)
Finance charges on obligations under finance leases (11) (14)
5. TAXATION
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
HK$’000 HK$’000
Current tax
Hong Kong profits tax – –
Overseas income taxes (2,227) (1,138)
(2,227) (1,138)
Deferred tax
Origination and reversal of temporary differences – (285)
(2,227) (1,423)
Overseas taxation represents income taxes provided by certain subsidiaries, calculated at the tax rates prevailing in the
countries in which the subsidiaries operate.
6. EBITDA
EBITDA represents earnings before interest expenses, taxation, depreciation and amortisation.
7. EARNINGS PER SHARE
The calculation of basic earnings per share for the six months ended 30 June 2007 was based on the consolidated profit
attributable to equity holders of the Company of HK$26,659,000 (30 June 2006: HK$22,774,000) and on the weighted
average number of 506,518,509 (30 June 2006: 470,894,200) shares in issue during the period.
The diluted earnings per share for the six months ended 30 June 2007 and 2006 have not been presented as the exercise
prices of the share options were higher than the average market price of the shares.
e-KONG GROUP LIMITED
Notes to the Condensed Consolidated Financial Statements (continued)
8
For the six months ended 30 June 2007
8. ACQUISITIONS AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT
During the period, the Group acquired property, plant and equipment for an amount of HK$2,950,000 (31 December 2006:
HK$10,212,000) and disposals were HK$1,406,000 (31 December 2006: HK$124,000).
9. INTANGIBLE ASSETS
As at As at
30 June 31 December
2007 2006
(Unaudited) (Audited)
HK$’000 HK$’000
Development costs 3,547 3,137
Customer contracts 52,933 52,933
56,480 56,070
Less: amortisation (9,704) (4,411)
46,776 51,659
Development costs represent the costs incurred for the development of new IP-based communication products and
services.
Customer contracts represent intangible assets purchased pursuant to an asset purchase agreement with a third party to
acquire certain telecommunication service assets in connection with the provision of long distance telecommunication
services in the United States. The costs were capitalised and are being amortised under the straight-line method over 5
years.
9
10.TRADE AND OTHER RECEIVABLES
As at As at
30 June 31 December
2007 2006
(Unaudited) (Audited)
HK$’000 HK$’000
Trade receivables 93,785 76,119
Other receivables
Deposits, prepayments and other debtors 10,490 10,511
104,275 86,630
The Group’s credit terms on sales mainly range from 30 to 90 days. Included in trade and other receivables are trade
debtors (net of provision for bad and doubtful debts) with the following ageing analysis:
As at As at
30 June 31 December
2007 2006
(Unaudited) (Audited)
HK$’000 HK$’000
Current 86,737 68,042
1 to 3 months 6,836 7,858
More than 3 months but less than 12 months 212 219
93,785 76,119
e-KONG GROUP LIMITED
Notes to the Condensed Consolidated Financial Statements (continued)
10
For the six months ended 30 June 2007
11.TRADE AND OTHER PAYABLES
As at As at
30 June 31 December
2007 2006
(Unaudited) (Audited)
HK$’000 HK$’000
Trade payables 39,727 44,924
Other payables
Accrued charges and other creditors 64,876 54,762
104,603 99,686
Included in trade and other payables are trade creditors with the following ageing analysis:
As at As at
30 June 31 December
2007 2006
(Unaudited) (Audited)
HK$’000 HK$’000
Current 34,095 26,733
1 to 3 months 5,538 17,992
More than 3 months but less than 12 months 94 199
39,727 44,924
12.COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform to the current period presentation.
11
e-KONG GROUP LIMITED
Report on Review of Interim Financial Statements
To the Audit Committee of
e-Kong Group Limited
(incorporated in Bermuda with limited liability)
Introduction
We have reviewed the interim financial statements set out on pages 1 to 10, which comprised the condensed consolidated
balance sheet of e-Kong Group Limited (“the Company”) and its subsidiaries (collectively referred to as the “Group”) as at
30 June 2007 and the related condensed consolidated income statement, statement of changes in equity and cash flow statement
for the six-month period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited require the preparation of a report on interim financial statements to be in compliance with
the relevant provisions thereof and Hong Kong Accounting Standard 34 “Interim Financial Reporting” (“HKAS 34”) issued
by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation
and presentation of these interim financial statements in accordance with HKAS 34.
Our responsibility is to express a conclusion on these interim financial statements based on our review and report our
conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not
assume responsibility towards or accept liability to any other person for the contents of this report.
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 Certified
Public Accountants. A review of interim financial statements consists of making inquiries, primarily of persons responsible
for financial 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 significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are
not prepared, in all material respects, in accordance with HKAS 34.
Mazars CPA Limited
Certified Public Accountants
Hong Kong, 18 September 2007
Kwok Yuen Man
Practising Certificate number: P04604
MAZARS CPA LIMITED
34th Floor, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong
0_D833;?34}
Tele: (852) 2909 5555 FaxF: (852) 2810 0032
Emaile: info@mazars.com.hk Websitecg: www.mazars.com.hk
e-KONG GROUP LIMITED
Business Review and Outlook
12
During the period under review, the Group
continued to achieve an increase in turnover while
maintaining profitable results. Turnover of the Group
amounted to HK$398.0 million, up 20.3% from
HK$330.7 million for the previous corresponding
period. ZONE telecommunication operations in the
United States remained the key contributor towards the
Group’s revenue growth for this period. The Group’s
net profit increased by 16.8% from HK$22.8 million for
the corresponding period in 2006 to HK$26.6 million.
EBITDA increased 36.3% to HK$38.5 million when
compared to HK$28.3 million for the corresponding
period in the previous year. The Group further
strengthened its balance sheet position with total net
assets of HK$205.2 million, representing an increase of
55.3% over the prior year, while cash and bank balances
increased by 60.3% to HK$160.9 million.
ZONE operations in the United States (“ZONE
US”) achieved turnover of HK$349.5 million during the
first six months of 2007 which represented an increase
of HK$73.3 million over the same period of 2006. This
increased turnover was based primarily on growth in
sales to the wholesale segment of ZONE US’s customer
base which comprises one-third of independent local
exchange carriers (“ILECs”) located throughout the
United States and other carrier customers. This segment
of revenue increased from about one-third of the total
revenue of ZONE US for the previous corresponding
period and now accounts for more than half of total
revenue for the period under review. Over the course of
the first half of 2007, ZONE US has taken steps to
improve efficiencies in its existing facilities, and to add
suites of new products and services for its different
categories of customers. Increased utilisation of the
Company’s switch facilities and the implementation of
advanced routing capabilities have helped to improve
margins on telecom traffic. The use of Voice-over-
Internet Protocol (“VoIP”) technologies has presented
ZONE US with a multitude of new routing options,
including sending IP wholesale traffic to and from its
associates in Asia and business partners globally.
ZONE US has reached an agreement with a major
nationwide US wireless network provider which will
enable the Group to penetrate into the domestic US
mobile market as a Mobile Virtual Network Operator
(MVNO) before the end of 2007. ZONE will, as an
initial stage, offer cellular services to its ILEC
customers which will in turn render mobile voice and
data services to their end user customers under the
ILECs’ own brand names. This additional range of
services has been received by ZONE’s ILEC customers
with enthusiasm, as it provides them with a seamless
way to add a mobile product to their existing fixed line
offerings. It is expected to further solidify the
relationships between participating ILECs and ZONE
US.
Turnover from ZONE’s operations in Asia
(“ZONE Asia”) decreased by HK$2.9 million to
HK$46.7 million as compared to HK$49.6 million for
the previous period. Profit from ZONE Asia’s
operations for the period under review was HK$11.7
million compared to HK$13.4 million for the previous
period. These reductions in revenue and profit in Asia
are mainly due to a lower contribution from ZONE
operations in Hong Kong where the telecommunication
sector remains highly competitive with major fixed line
operators still aggressively pricing their services in
order to gain market share.
ZONE Hong Kong operations continue to move
forward with its strategic plan to expand into China.
After establishing a wholly foreign-owned enterprise
(WFOE) named "! in March
2007 and having set up its operating office in Shenzhen,
ZONE has successfully concluded business
management and consultancy arrangements in August
with two local Chinese enterprises, both of which are
reselling telecommunication products and services to
business customers in the Shenzhen area for the major
telecom operators in China. Under the arrangements,
ZONE utilises its key operational staff and management
systems from its Hong Kong office to work with
these enterprises in order to develop their
telecommunication-related businesses and receives the
economic benefits thereof while maintaining effective
control over the business and operations of the local
Chinese enterprises.
13
ZONE Singapore maintained its intense marketing
drive to grow its customer base, with particular focus
on acquiring high value corporate customers. It
continues to introduce innovative product packaging
and value-added services to differentiate itself from its
competitors. This strategy has contributed to
favourable results in terms of both revenue and
earnings during the first six months as compared to the
same period last year. With its deployment of VoIP
technologies, ZONE Singapore is now also providing
telecom services to an increasing number of customers
around the region as well as expanding into IP
wholesale voice traffic business, thus broadening its
revenue and customer base. ZONE Singapore will
continue to deploy new technologies to improve
efficient use of network resources. Lower operating
costs and healthier margins are expected with the use
of the new IP-based technologies.
ZONE Asia’s global VoIP offering “ZoiPPE”
(www.zoippe.com) continues to focus on increasing its
user base through viral marketing and co-branding/
white-labelling alliances and partnerships. To facilitate
its reach into other larger markets, besides English and
Chinese (both traditional and simplified) languages,
the ZoiPPE softphone interface is also available in
Japanese and it is in the pipeline to add other languages
including Thai, Korean and Hindi. Upgrades and other
enhancements are being incorporated into the
communication service platform to improve the system
robustness as well as to introduce new features and
increase the mix of product offerings.
In February 2007, the Group successfully
completed a placement of 52 million shares of the
Company, generating net proceeds of approximately
HK$45.4 million and recording share premium of
HK$44.9 million. At the same time, the Group raised
additional capital of US$2.5 million (approximately
HK$19.5 million) from an institutional investor for
development of the ZoiPPE business, realising a gain
of HK$17.4 million.
During the first six months, in addition to the
business development initiatives in the Shenzhen area,
the Group has been actively exploring various
opportunities to penetrate, by way of acquisition or
otherwise, into the telecommunication-related sector in
China.
During the period under review, the Group
delivered on its objectives to continue to grow both
revenue and profit, to establish a business presence in
China and to enhance the technology robustness and
scalability of the ZoiPPE platform and intensify its
promotion drive globally.
Looking ahead to the second half of 2007, the
Group anticipates that steady revenue growth will be
maintained, ZONE’s operations in China will begin to
contribute to the Group’s turnover and the ZoiPPE user
base will be further increased following the
introduction of new features and improvements in
system robustness while the Group will strive to create
new revenue stream opportunities. The Group is
excited about entering the domestic US mobile market
as an MVNO this period and is confident of the growth
potential for this latest service offering.
e-KONG GROUP LIMITED
Financial Review
14
Results
During the period under review, the Group’s
turnover recorded significant growth and reached
HK$398.0 million, representing an increase of 20.3%
when compared to HK$330.7 million for the
corresponding period in 2006.
The gross profit for this period increased by 8.5%
to HK$103.9 million, compared to HK$95.8 million for
the corresponding period in the previous year.
The Group’s EBITDA for the period under review
reached HK$38.5 million, representing an increase of
36.3% from HK$28.3 million for the same period last
year.
The operating profit for the period amounted to
HK$30.1 million, representing an increase of 17.5%
when compared to HK$25.6 million for the first six
months of 2006.
Consolidated net profit attributable to equity
holders of the Company increased by 17.1% to
HK$26.7 million when compared to HK$22.8 million
for the previous corresponding period.
Interim Dividend
The Board does not recommend the payment of a
dividend for the six months ended 30 June 2007 (30
June 2006: Nil).
Capital Structure, Liquidity and
Financing
The Group’s liquidity position was further
strengthened by the continuing growth of the ZONE
business around the world, as well as the private
placement of shares of the Company and the allotment
of 5% shareholding interest in a subsidiary in February
2007. The net assets of the Group improved to
HK$205.2 million as at 30 June 2007 (31 December
2006: HK$132.1 million).
With an enhanced capital structure and operating
cash flow, cash and bank balances (excluding pledged
bank deposits) amounted to HK$160.9 million as at 30
June 2007 (31 December 2006: HK$100.4 million). The
Group had pledged bank deposits amounting to
HK$2.1 million as at 30 June 2007 (31 December
2006: HK$1.5 million) to banks for guarantees made
by them to certain telecommunication carriers for
payments due by the Group.
As at 30 June 2007, the Group’s bank borrowings,
represented by the bank loan advanced to a subsidiary
for the purpose of the WRLD Alliance transaction,
reduced to HK$27.3 million (31 December 2006:
HK$31.8 million) as a result of partial repayment of
principal during the period. The Group’s bank
borrowings are in United States dollars at a fixed
interest rate and secured through, among others, a
pledge of the trade receivables of the subsidiary.
As at 30 June 2007, the Group’s liabilities under
equipment lease financing amounted to HK$0.5
million (31 December 2006: HK$0.6 million).
The Group’s gearing ratio, measured on the basis
of total borrowings as a percentage of net assets,
improved to 13.5% (31 December 2006: 24.5%)
mainly due to the enhanced capital structure and profits
for the period.
Foreign Exchange Exposure
Since most of the Group’s assets and liabilities,
revenue and payments are denominated in Hong Kong
and United States dollars, the Group considers there is
no significant exposure to foreign exchange
fluctuations so long as the Hong Kong-United States
dollar exchange rate remains pegged. As cash
contributions from the Singapore operations continue
to grow, the Group will closely monitor the Singapore-
United States dollar exchange rate and, whenever
appropriate, take any necessary action to reduce such
exchange risks.
Contingent Liabilities and
Commitments
As at 30 June 2007, there were no material
contingent liabilities and commitments.
Save as aforesaid, the directors are not aware of
any other material changes from information disclosed
in the Company’s 2006 Annual Report.
e-KONG GROUP LIMITED
Additional Information
15
Directors’ interests in securities
As at 30 June 2007, the directors and the chief
executive of the Company and their respective
associates had the following interests and short
positions (if any) in the shares, underlying shares and
debentures of the Company or any of its associated
corporations (within the meaning of Part XV of the
Securities and Futures Ordinance (the “SFO”)) which
were required to be notified to the Company and The
Stock Exchange of Hong Kong Limited (the “Stock
Exchange”) pursuant to Divisions 7 and 8 of Part XV
of the SFO (including interests and short positions
which they were taken or deemed to have under such
provisions of the SFO), or which were required
pursuant to section 352 of the SFO to be recorded in the
register maintained by the Company, or as otherwise
notified to the Company and the Stock Exchange
pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers (the “Model Code”) as
set out in Appendix 10 to the Listing Rules:
Approximate
Number of percentage
Name of director Capacity Shares held of shareholding
Richard John Siemens Held by controlled 108,500,200 20.7%
corporations (Note 1)
Kuldeep Saran, deceased Personal 341,200 0.1%
(Note 2)
Held by a controlled 74,676,461 14.3%
corporation (Note 2)
William Bruce Hicks Personal 3,949,914 0.8%
Held by a controlled 67,962,428 13.0%
corporation (Note 3)
Lim Shyang Guey Personal 1,320,000 0.3%
Shane Frederick Weir Personal 10,000 0.0%
“Shares” means ordinary shares of HK$0.01 each in the share capital of the Company.
Notes:
1. 8,500,000 Shares are beneficially owned by Siemens Enterprises Limited and 100,000,200 Shares are beneficially owned by
Goldstone Trading Limited, both companies being controlled by Mr. Richard John Siemens.
2. Mr. Kuldeep Saran held 341,200 Shares before his passing away on 16 June 2007. In addition, 74,676,461 Shares are beneficially
owned by Future (Holdings) Limited, a company controlled by Mr. Saran before his passing away. So far as the Company is aware
of, probate has not been granted and the executor(s) thereof have not yet registered as holders of shares in the Company or Future
(Holdings) Limited.
3. 67,962,428 Shares are beneficially owned by Great Wall Holdings Limited, a company controlled by Mr. William Bruce Hicks.
e-KONG GROUP LIMITED
Additional Information (continued)
16
All interests disclosed above represent long
positions in the shares of the Company and there were
no underlying shares held by the directors as at 30 June
2007.
Save as disclosed above, as at 30 June 2007, none
of the directors, the chief executive of the Company or
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
SFO) which are required to be notified to the Company
and the Stock Exchange pursuant to Divisions 7 and 8
of Part XV of the SFO (including interests and short
positions which are deemed or taken to have been
under such provisions of the SFO), or which are
required pursuant to section 352 of the SFO to be
recorded in the register referred to therein, or which are
required pursuant to the Model Code to be notified to
the Company and the Stock Exchange.
Arrangement to enable directors to acquire
shares or debentures
Apart from the share option schemes that are
adopted or may be adopted by the Company or any of
its subsidiaries and referred to in the paragraph below
entitled “Share option schemes”, at no time during the
period was the Company or any of its subsidiaries a
party to any arrangements to enable any director or the
chief executive of the Company to acquire benefits, by
means of the acquisition of shares in, or debentures of,
the Company or any other body corporate, and neither
the directors, the chief executive of the Company nor
any of their spouses or children under the age of 18 had
any interests in, or had been granted, any rights to
subscribe for shares in or debentures of the Company
or its associated corporations (within the meaning of
Part XV of the SFO), or had exercised any such rights
during the period.
Substantial shareholders
As at 30 June 2007, according to the register kept
by the Company pursuant to section 336 of the SFO
and so far as is known to the directors or the chief
executive of the Company, the following persons
(other than the directors or the chief executive of the
Company) had interests and short positions (if any) in
the shares and underlying shares of the Company
which are required to be disclosed to the Company
under the provisions of Divisions 2 and 3 of Party XV
of the SFO or, who were, directly or indirectly,
interested in 10% or more of the nominal value of any
class of shares carrying rights to vote in all
circumstances at general meetings of the Company:
Approximate
Name of shareholder Number of Shares held percentage of shareholding
Goldstone Trading Limited 100,000,200 19.1%
Future (Holdings) Limited 74,676,461 14.3%
Great Wall Holdings Limited 67,962,428 13.0%
Cannizaro Asia Master Fund Limited 34,600,000 6.6%
These interests represent the same interests as the corporate interests of Mr. Richard John Siemens (being held through Goldstone
Trading Limited), Mr. Kuldeep Saran, deceased (being held through Future (Holdings) Limited) and Mr. William Bruce Hicks
(being held through Great Wall Holdings Limited) as disclosed in the notes to the description under the heading of “Directors’
interests in securities” above.
All interests disclosed above represent long
positions in the shares of the Company.
Save as disclosed above, as at 30 June 2007,
according to the register kept by the Company pursuant
to section 336 of the SFO and so far as is known to the
directors and the chief executive of the Company, no
other person (not being a director or the chief executive
of the Company) had any interests or short positions in
the shares, underlying shares or debentures of the
Company which are required to be disclosed to the
Company under the provisions of Divisions 2 and 3 of
Part XV of the SFO, nor were there any persons,
directly or indirectly, interested in 10% or more of the
nominal value of any class of shares carrying rights to
vote in all circumstances at general meetings of the
Company.
17
Share option schemes
The Company
Pursuant to an employee share option scheme of
the Company (the “Old Share Option Scheme”)
adopted in a special general meeting held on 25
October 1999, the directors of the Company might, at
their discretion, invite eligible employees of the Group,
including executive directors of the Company, to take
up options to subscribe for shares in the Company
under the terms and conditions stipulated therein. The
Old Share Option Scheme was subsequently
terminated in a special general meeting held on 28 June
2002 but the share options granted that were not yet
exercised thereunder remain effective and are bound
by the scheme terms.
On 28 June 2002, the Company adopted a new
share option scheme (the “New Share Option
Scheme”). Under the New Share Option Scheme, the
directors of the Company may at their discretion grant
share options to (i) any director, employee, consultant,
customer, supplier, business introduction agent, or
legal, financial or marketing adviser of or contractor to
any company in the Group or any affiliate and/or (ii)
any discretionary trust the discretionary objects of
which include any of the foregoing, under the terms
and conditions stipulated therein. No share options
have been granted by the Company under the New
Share Option Scheme since adoption.
Subsidiaries
On 28 June 2002, the Company adopted scheme
rules and procedures for share option schemes for its
subsidiaries (the “Subsidiary Scheme Rules and
Procedures”). In accordance with the Subsidiary
Scheme Rules and Procedures, the subsidiaries may
adopt their own respective share option schemes in line
with the terms and conditions of the Subsidiary
Scheme Rules and Procedures, pursuant to which the
board of directors of each of the relevant subsidiaries
may at its discretion grant share options to (i) any
director, employee, consultant, customer, supplier,
business introduction agent, or legal, financial or
marketing adviser of or contractor to the subsidiaries
and their subsidiaries, any of their holding companies
or any affiliate and/or (ii) any discretionary trust the
discretionary objects of which include any of the
foregoing. No subsidiaries have activated their share
option scheme powers pursuant to the terms and
conditions of the Subsidiary Scheme Rules and
Procedures since adoption.
During the period, no share options were held by
the directors, the chief executive or substantial
shareholders of the Company, suppliers of goods or
services or other participants, other than eligible
employees under the Old Share Option Scheme.
Details of the share options granted and remaining
outstanding as at 30 June 2007 were as follows:
Number of share options
As at Lapsed As at Lapsed As at
Exercise 1 January during 31 December during 30 June
Date of grant Exercisable period price 2006 the year 2006 the period 2007
HK$
25.10.1999 25.10.2000 – 24.10.2009 1.40 15,000 – 15,000 – 15,000
16.11.1999 16.11.2000 – 24.10.2009 1.60 7,500 – 7,500 – 7,500
23.12.1999 23.12.2000 – 24.10.2009 2.00 35,000 – 35,000 – 35,000
28.04.2000 28.04.2001 – 24.10.2009 3.30 40,000 – 40,000 (15,000) 25,000
09.08.2000 09.08.2001 – 24.10.2009 2.30 30,000 – 30,000 – 30,000
25.10.2000 25.10.2001 – 24.10.2009 1.20 20,000 – 20,000 – 20,000
Total 147,500 – 147,500 (15,000) 132,500
e-KONG GROUP LIMITED
Additional Information (continued)
18
Corporate governance
The Company is committed to maintaining high
standards of corporate governance. Except for a
deviation described below, no director of the Company
is aware of any information which would reasonably
indicate that the Company is not, or was not, at any
time during the six months ended 30 June 2007, acting
in compliance with the Code on Corporate Governance
Practices (“CG Code”) as set out in Appendix 14 to the
Listing Rules.
CG Code A.2.1 stipulates that the roles of
chairman and chief executive officer should be
separate and should not be performed by the same
individual. Nevertheless, Mr. Richard John Siemens,
the Chairman of the Company, assumed the role of the
chief executive officer of the Company following the
passing away of Mr. Kuldeep Saran, the then Deputy
Chairman and Managing Director, on 16 June 2007.
The Board anticipates that the role of the chief
executive officer by Mr. Siemens is only an interim
measure.
Model code for securities transactions
by directors
The Company has adopted the Model Code as its
own securities code. All directors have confirmed,
following specific enquiries by the Company, that they
have fully complied with the required standards set out
in the Model Code throughout the six months ended 30
June 2007.
Audit committee
The Audit Committee has reviewed, with the
management and the auditors of the Company, the
accounting principles and practices adopted by the
Group and discussed auditing, internal control and
financial reporting matters, including a review of the
unaudited consolidated financial statements of the
Company for the six months ended 30 June 2007. The
review conducted by the auditors of the Company were
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
Certified Public Accountants.
Change of auditors
The Company announced on 5 June 2007 that
Messrs. Moores Rowland Mazars resigned as auditors
of the Group following the reorganisation of the firm
and Mazars CPA Limited was appointed as auditors of
the Group on 1 June 2007.
Purchase, sale or redemption of the
Company’s listed securities
During the period, neither the Company nor any of
its subsidiaries purchased, sold or redeemed any of the
Company’s listed securities.
Employee remuneration policies
As at 30 June 2007, the Group employed,
altogether, 146 employees (31 December 2006: 145
employees) in Hong Kong and overseas. The Group’s
total staff costs for the six months ended 30 June 2007
amounted to HK$40.2 million (30 June 2006: HK$34.9
million).
The Group’s remuneration policies are formulated
on the basis of the performance and experience of
individual employees and are in line with local market
practices where the Group operates. The Group has
established incentive bonus schemes to motivate and
reward employees at all levels to achieve its objectives.
In addition to salary and bonus payments, the Group
also offers other fringe benefits, including provident
fund and medical benefits, to its employees.
Appreciation
The Board wishes to express its sincere
appreciation to Mr. Kuldeep Saran, the Deputy
Chairman and Managing Director of the Company who
passed away on 16 June 2007, for his invaluable
leadership and contribution to the Group in the past.
The Board would also like to thank the customers,
shareholders, business associates and professional
advisers for their support and extend its appreciation to
all employees for their hard work, dedication and
commitment to the Group during the period.
By Order of the Board
Lau Wai Ming Raymond
Company Secretary
18 September 2007
