E N M H o l d i n g s L i m i t e d ? ? ? ? ? ? ? ?
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ENM Holdings Limited
安寧控股有限公司
(Incorporated in Hong Kong with limited liability)
(Stock code: 128)
Interim Results Announcement
for the six months ended 30 June 2007
The Board of Directors (the “Board”) of ENM Holdings Limited (the “Company”) herein present
the unaudited condensed consolidated interim results of the Company and its subsidiaries
(collectively, the “Group”) for the six months ended 30 June 2007, together with the unaudited
comparative amounts for the corresponding period in 2006.
The interim financial report has not been audited, but has been reviewed by the Company’s audit
committee and the Company’s auditors.
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CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2007 - unaudited
(Expressed in Hong Kong dollars)
Six months ended 30 June
Notes 2007 2006
(Unaudited) (Unaudited)
$’000 $’000
Revenue 3 118,944 102,488
Cost of sales (48,998) (42,139)
Gross profit 69,946 60,349
Other income and gains 4 2,720 1,635
Selling and distribution costs (39,790) (33,326)
Administrative expenses (31,896) (33,982)
Other operating income, net 28,993 3,691
Fair value gains/(losses) and write-back of
deficits on revaluation of properties, net (3,986) 2,218
Finance costs 5 (627) (459)
Share of profits and losses of associates (2,495) (2,351)
Profit/(loss) before tax 6 22,865 (2,225)
Tax 7 － －
Profit/(loss) for the period 22,865 (2,225)
======= =======
Attributable to:
Equity holders of the Company 24,813 552
Minority interests (1,948) (2,777)
22,865 (2,225)
======= =======
Earnings per share attributable to
ordinary equity holders of the Company
8
－ Basic 1.50 cents 0.03 cents
======= =======
－ Diluted N/A N/A
======= =======
Dividend per share 9 Nil Nil
======= =======
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CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2007 - unaudited
(Expressed in Hong Kong dollars)
Notes
30 June
2007
31 December
2006
(Unaudited) (Audited)
$’000 $’000
Non-current assets
Property, plant and equipment 81,564 84,638
Investment properties 121,280 123,900
Prepaid land premiums 3,023 3,063
Goodwill 6,610 6,610
Interests in jointly-controlled entities － －
Interests in associates 19,017 20,511
Available-for-sale investments 35,503 35,503
Total non-current assets 266,997 274,225
Current assets
Inventories 42,727 37,481
Trade receivables 10 5,483 8,701
Prepayments, deposits and other receivables 51,208 33,267
Prepaid land premiums 77 77
Equity investments at fair value
through profit or loss 183,122 154,612
Derivative financial instruments － 104
Pledged deposits 342 342
Time deposits 470,699 495,074
Cash and bank balances 28,351 27,148
Total current assets 782,009 756,806
Current liabilities
Trade and other payables 11 39,199 47,662
Interest-bearing bank and other borrowings 11,220 9,268
Current portion of debentures 3,505 4,102
Other loans 5,276 5,304
Tax payable 5,497 5,497
Total current liabilities 64,697 71,833
Net current assets 717,312 684,973
Total assets less current liabilities 984,309 959,198
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30 June
2007
31 December
2006
(Unaudited) (Audited)
$’000 $’000
Total assets less current liabilities 984,309 959,198
Non-current liabilities
Debentures 3,781 3,754
Interest-bearing bank and other borrowings 160 206
Deferred income 24,385 25,821
Total non-current liabilities 28,326 29,781
Net assets 955,983 929,417
======= =======
EQUITY
Equity attributable to equity holders
of the Company
Issued capital 16,507 16,507
Reserves 913,911 885,397
930,418 901,904
Minority interests 25,565 27,513
Total equity 955,983 929,417
======= =======
Notes:
1 Basis of preparation and impact of new and revised Hong Kong Financial Reporting
Standards
The condensed consolidated interim financial statements have been prepared in accordance with
Hong Kong Accounting Standard (“HKAS”) 34 Interim Financial Reporting issued by the Hong
Kong Institute of Certified Public Accountants and Appendix 16 of the Rules Governing the Listing
of Securities on The accounting policies and basis of preparation adopted in the
preparation of the interim financial statements are the same as those followed in the preparation of
the Group’s annual financial statements for the year ended 31 December 2006, except for the
adoption of the following new Hong Kong Financial Reporting Standards (“HKFRSs”, which also
include HKASs and Interpretations) for the first time for the current period’s financial statements:
HKAS 1 Amendment Capital Disclosure
HKFRS 7 Financial Instruments: Disclosures
HK(IFRIC)-Int 7 Applying the Restatement Approach under HKAS 29
Financial Reporting in Hyperinflationary Economies
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
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HKAS 1 Amendment affects the disclosures about qualitative information about the Group’s
objectives, policies and processes for managing capital; quantitative data about what the Company
regards as capital; and compliance with any capital requirements and the consequences of any non-
compliance.
HKFRS 7 requires disclosures that enable users of the financial statements to evaluate the
significance of the Group’s financial instruments and the nature and extent of risks arising from
those financial instruments and also incorporates many of the disclosure requirements of HKAS 32
Financial Instruments: Disclosure and Presentation.
HK(IFRIC)-Int 7 addresses the requirements of HKAS 29 in a reporting period in which an entity
identifies the existence of hyperinflation in the economy of its functional currency, when that
economy was not hyperinflationary in the prior period, and requires an entity to restate its financial
statements in accordance with HKAS 29.
HK(IFRIC)-Int 8 addresses the application of HKFRS 2 Share-based Payments to particular
transactions in which the entity cannot identify specifically some or all of the goods or services
received.
HK(IFRIC)-Int 9 addresses the application of HKAS 39 Financial Instruments: Recognition and
Measurement that an entity shall assess whether an embedded derivative is required to be separated
from the host contract and accounted for as a derivative when the entity first becomes a party to the
contract, and prohibits subsequent reassessment throughout the life of the contract except for
exceptional circumstances.
HK(IFRIC)-Int 10 addresses the interaction between the requirements of HKAS 34 and the
recognition of impairment losses on goodwill in HKAS 36 Impairment of Assets and certain
financial assets in HKAS 39, and that an entity shall not reverse an impairment loss recognised in a
previous interim period in respect of goodwill or an investment in either an equity instrument or a
financial asset carried at cost.
The adoption of these new HKFRSs did not have any impact on the financial position or
performance of the Group. The full disclosures required under HKAS 1 and HKFRS 7 will be
made in the annual financial statements of the Company and the Group for the year ending 31
December 2007.
2 Impact of issued but not yet effective HKFRSs
The Group has not applied the following new and revised HKFRSs, which have been issued but are
not yet effective, in the interim financial statements:
HKFRS 8 Operating Segments
HKAS 23 (Revised) Borrowing Costs
HK(IFRIC)-Int 11 HKFRS 2 - Group and Treasury Share Transactions
HK(IFRIC)-Int 12 Service Concession Arrangements
HKFRS 8 shall be applied for annual periods beginning on or after 1 January 2009. The standard
requires the disclosure of information about the operating segments of the Group, the products and
services provided by the segments, the geographical areas in which the Group operates, and
revenues from the Group’s major customers. This standard will supersede HKAS 14 Segment
Report.
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HKAS 23 (Revised) shall be applied for annual periods beginning on or after 1 January 2009. The
revision to HKAS 23 removes the option of immediately recognising borrowing costs, that are
directly attributable to the acquisition, construction or production of a qualifying asset, as an
expense. A qualifying asset is one that takes a substantial period of time to get ready for use or sale.
An entity is, therefore, required to capitalise such borrowing costs as part of the cost of the asset.
HK(IFRIC)-Int 11 and HK(IFRIC)-Int 12 shall be applied for annual periods beginning on or after
1 March 2007 and 1 January 2008, respectively.
The Group expects that the adoption of the above pronouncements will not have significant impact
on the financial position or performance of the Group.
3 Revenue and segment information
An analysis of the Group’s revenue and results by business segment and an analysis of the Group’s
revenue by geographical segment are as follows:
(a) Business segments
Group revenue Contribution to profit/(loss)
Six months ended 30 June Six months ended 30 June
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
$’000 $’000 $’000 $’000
Wholesale and retail of fashion
wear and accessories 95,044 76,577 (4,442) (6,973)
Telecommunications
operations
635
1,595
2,089
(998)
Resort and recreational club
operations
8,733
9,939
(305)
(56)
Investments and treasury 14,532 14,377 34,209 7,845
118,944 102,488 31,551 (182)
======= =======
Unallocated gains and
expenses, net
(1,578)
(1,451)
Fair value gains/(losses) and write-back of
deficits on revaluation :
- Investment properties (6,355) 1,981
- Resort and recreational
club properties
2,369
237
Finance costs (627) (459)
Share of profits and losses of
associates
(2,495)
(2,351)
Tax g367 g367
Profit/(loss) for the period 22,865 (2,225)
======= =======
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(b) Geographical segments
Group revenue
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
$’000 $’000
Hong Kong 118,272 100,845
Mainland China 672 1,639
Other Asia Pacific regions g367 4
118,944 102,488
======== ========
4 Other income and gains
An analysis of other income and gains is as follows:
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
$’000 $’000
Rental income 428 28
Management fees 416 1,279
Amortisation of deferred income 1,512 g367
Others 364 328
2,720 1,635
======== ========
5 Finance costs
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
$’000 $’000
Interest on bank loans and overdrafts wholly
repayable within five years
449
273
Interest on a finance lease 7 7
Accretion of interest on debentures 171 179
627 459
======== ========
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6 Profit/(loss) before tax
The Group’s profit/(loss) before tax is arrived at after charging/(crediting):
Six months ended 30 June
2007 2006
(Unaudited) (Unaudited)
$’000 $’000
Cost of inventories sold 48,909 42,053
Amortisation of prepaid land premiums 40 39
Depreciation 5,629 4,046
Write-back of accrued payables (5,488) (4,931)
Dividend income# (1,440) (1,653)
Interest income# (13,092) (11,764)
Exchange gains, net (2,337) (2,555)
Gain on disposal of items of property,
plant and equipment
g367
(26)
Fair value (gains)/losses and (write-back of deficits)
on revaluation of properties, net
3,986
(2,218)
Net fair value gains for equity investments
at fair value through profit or loss
(27,518)
(1,276)
======= =======
The balances are included in “other operating income, net” on the face of the condensed
consolidated income statement.
# The balances are included in “revenue” on the face of the condensed consolidated income statement.
7 Tax
No provision for Hong Kong profits tax and overseas income tax has been made in the condensed
consolidated income statement for the six months ended 30 June 2007 (Six months ended 30 June
2006: Nil) as the Company and its subsidiaries either did not generate any assessable profits for the
period or had available tax losses brought forward from prior years to offset against any assessable
profits generated during the period.
As at 30 June 2007, deferred tax assets have been recognised in respect of the tax losses of certain
subsidiaries of the Group only to the extent to offset any deferred tax liabilities of the same
subsidiaries recognised in connection with depreciation allowance in excess of related depreciation.
Deferred tax assets have not been recognised for any other tax losses as such losses have arisen in
subsidiaries of the Group that have either been loss-making for some time or whose availability of
future taxable profits is unpredictable.
8 Earnings per share attributable to ordinary equity holders of the Company
(a) Basic earnings per share
The calculation of basic earnings per share amount is based on the profit attributable to
ordinary equity holders of the Company for the period of $24,813,000 (Six months ended 30
June 2006: $552,000) and the weighted average number of ordinary shares in issue during the
period of 1,650,658,676 (Six months ended 30 June 2006: 1,650,658,676).
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(b) Diluted earnings per share
Diluted earnings per share amounts for both six-month periods ended 30 June 2007 and 2006
have not been disclosed as no diluting events existed during these periods.
9 Dividend
The directors do not recommend the payment of any interim dividend to shareholders (Six months
ended 30 June 2006: Nil).
10 Trade Receivables
The Group maintains a defined credit policy for its trade customers and the credit terms given vary
according to the business activities. The financial strength of and the length of business
relationship with the customers, on an individual basis, are considered in arriving at the respective
credit terms. Overdue balances are reviewed regularly by management.
An aged analysis of trade receivables as at 30 June 2007, based on the invoice date and net of
provisions, is as follows:
30 June
2007
31 December
2006
(Unaudited) (Audited)
$’000 $’000
Within one month 2,864 5,847
Two to three months 298 290
Over three months 2,321 2,564
5,483 8,701
======== ========
11 Trade and other payables
All trade and other payables of the Group are unsecured, interest-free and repayable within one
month or on demand.
CHIEF EXECUTIVE’S STATEMENT
FINANCIAL REVIEW
For the period under review, the Group reported a turnover of HK$118,944,000 (2006:
HK$102,488,000) which represents an increase of 16% as compared to the corresponding period
in 2006. Consolidated profit attributable to equity holders of the Company amounted to
HK$24,813,000 (2006: HK$552,000) for the period ended 30 June 2007.
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LIQUIDITY AND FINANCIAL POSITION
The Group was in solid financial position with cash and deposit holdings of HK$499,050,000
(31 December 2006: HK$522,222,000). At 30 June 2007, total borrowings amount to
HK$23,942,000 (31 December 2006: HK$22,634,000) with HK$20,001,000 (31 December 2006:
HK$18,674,000) repayment falling due within one year. The Group’s gearing ratio (a
comparison of total borrowings with equity attributable to equity holders of the Company) was
2.6% at the interim period end date (31 December 2006: 2.5%). The current ratio at 30 June
2007 was 12.1 times (31 December 2006: 10.5 times).
At 30 June 2007, the Group’s borrowings and bank balances were primarily denominated in
Hong Kong dollars and United States dollars and exchange differences were reflected in the
interim financial report. All borrowings of the Group are either interest free or on a floating rate
basis.
The Group’s imported purchases are mainly denominated in Euros and United States dollars.
The Group will from time to time review its foreign exchange position and market conditions to
determine if any hedging is required.
BUSINESS REVIEW
Resort and Recreational Club Operations
VivaSha Club Resort (“VivaSha”)
VivaSha, comprising a 4-star Hotel with 320 rooms, a Clubhouse and an International
Convention Center, is located in the Putao district of Shanghai. Club Management has further
refined the facilities and strengthened staff training since the Club’s soft opening in 2006.
Overall performance of VivaSha has been satisfactory. Club Management plans to redesign
44,000 square feet of the Clubhouse into a spa which is expected to enhance Club membership
sales and help promote the Club’s group tourist and corporate conference business.
Hong Kong Hilltop Country Club
The 10th anniversary celebration of the establishment of HKSAR did not bring in as much
business as forecasted, and total turnover for the interim period is below that of last year.
Business has also been affected by a new supply of 4 to 5-star hotels in the Tsuen Wan area.
Despite these factors, club operations have remained steady. Management expects to take
advantage of the urban renewal of Tsuen Wan by focussing on the Club’s membership activities
and conferencing capabilities.
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Telecommunications & Technologies
SinoPay.com Holdings Limited (“SinoPay”)
SinoPay’s main business is providing B2C electronic payment and intra-bank fund transfer
solution services in the PRC through its Joint Venture with China UnionPay, Chinapay e-
Payment Service Ltd (“the JV”) in Shanghai. In order to diversify its income contribution
sources, the JV this year developed on-line mutual fund trading. In the first half of 2007, the JV
recorded profits of RMB16,855,000.
The proposed merger between Chinapay e-Payment Service Ltd and Easylink, a counterpart of
the JV in Guangdong, was suspended. All shareholders of SinoPay have instead signed a
Memorandum of Understanding to launch a restructuring of SinoPay. After the restructuring, all
JV shares held by SinoPay will be transferred to their ultimate shareholders.
Beijing Smartdot Technologies Co. Ltd. (“Smartdot”)
Smartdot is engaged in the development of software and solution projects in the PRC. Its core
businesses are e-government projects and office automation.
Standard industry practice is for the majority of new contracts and projects to be signed and
started during the second half of the year. This led to accounting losses during the first half of
the year although management believes that there will be a significant improvement in earnings
in the second half of the year.
Wireless Network Card Business
Apart from the wireless network card business with China Unicom and China Mobile, Shanghai
ENM Telecom & Technology Limited has started to expand its sales mix to include other
electronic and telecommunication products, such as the POS machine. With the sales of the new
products, management expects to expand the business’ customer base.
Retail Fashion
The Swank Shop Limited (“Swank”)
The relocation of a number of shops at the end of 2006, coupled with a strong retail environment,
has increased sales turnover from the same period last year. Gross profit has also shown
improvement. Although shop occupancy costs have increased with the market, overall
performance has improved since last year.
Swank is also revamping its marketing strategy, focussing both its advertising and promotion
activities on further enhancing the brand image.
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Bio-Medical
Genovate Biotechnology Company Limited (“Genovate”)
Genovate is a fully integrated pharmaceutical company which encompasses new drug
development and new formulation capabilities, clinical trials for local and international
pharmaceutical companies, drug manufacturing, drug marketing and distribution in Taiwan and
the region.
Genovate’s two major new drug products - Urotrol for the treatment of urinary incontinence and
Diabetrol Slow Release (“SR”) for the treatment of diabeties, have been well received by the
market. To increase its manufacturing output, Genovate filed an AFM (Accredit for Foreign
Manufacture) with the Japanese health authority in March 2007, which is expected to be
approved by the end of 2007 and will kick off OEM business with Japanese pharmaceutical
companies. Genovate is also exploring an OEM partnership with one of the largest drug
distributors in the US.
In the field of new drug development, Genovate has research programs in collaboration with
government institutes including the Industrial Technology Research Institute (ITRI) of Taiwan
and the National Health Research Institute (NHRI). These research programs focus on specialty
drugs for the treatment of gout, obesity and vomiting.
PURCHASE, REDEMPTION OR SALE OF LISTED
SECURITIES OF THE COMPANY
Neither the Company, nor any of its subsidiaries purchased, redeemed or sold any of the
Company’s listed securities during the six months ended 30 June 2007.
CODE ON CORPORATE GOVERNANCE PRACTICES
None of the directors of the Company are aware of any information that would reasonably
indicate that the Company is not or was not for any part of the six months ended 30 June 2007 in
compliance with the Code Provisions of the Code on Corporate Governance Practices (the “CG
Code”) as set out in Appendix 14 of the Listing Rules except for the deviation in respect of the
service term of directors under Code Provision A.4.1 of the CG Code.
Under Code Provision A.4.1 of the CG Code, non-executive directors should be appointed for a
specific term and subject to re-election. None of the existing non-executive and independent
non-executive directors of the Company is appointed for a specific term. However, all of the
non-executive and independent non-executive directors are subject to retirement by rotation in
accordance with the Company’s Articles of Association.
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BOARD OF DIRECTORS
As at the date of this announcement, the executive directors of the Company are Mr. Joseph
Wing Kong LEUNG (Chairman), Mr. James C. NG (Chief Executive Officer), Mr. Derek Wai
Choi LEUNG and Mr. Wing Tung YEUNG; the non-executive director of the Company is Mr.
Raymond Wai Pun LAU; and the independent non-executive directors of the Company are Dr.
Cecil Sze Tsung CHAO, Dr. Jen CHEN and Mr. Ian Grant ROBINSON.
By order of the Board
James C. Ng
Chief Executive
Hong Kong, 14 September 2007
Interim Results Announcement for the six months ended 30 June 2007 |
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