NAM FONG INTERNATIONAL HOLDINGS LIMITED
5P5P75P5P5Pp5P5P"5P5P!
5Z
(incorporated in Bermuda with limited liability)
(stock code: 1176)
INTERIM REP
| CONTENTS |
| (Financial figures in this interim report are expressed in HK$ unless otherwise stated) |
| 1 CORPORATE CALENDAR OF EVENTS |
| 2 FINANCIAL HIGHLIGHTS |
| MANAGEMENT DISCUSSION AND ANALYSIS |
| 2 BUSINESS REVIEW |
| 3 FINANCIAL REVIEW |
| 3 PROSPECTS |
| CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
| 4 CONDENSED CONSOLIDATED INCOME STATEMENT |
| 4 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
| 5 CONDENSED CONSOLIDATED BALANCE SHEET |
| 5 CONDENSED CONSOLIDATED CASH FLOW STATEMENT |
| 6 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
| 11 OTHER INFORMATION |
| CORPORATE CALENDAR OF EVENTS |
| 1 January 2007 |
| Rectified the previous non-compliance matters |
| 10 January 2007 |
| Completed the disposal of entire interest in a subsidiary |
| 27 January 2007 |
| Settled all overdue borrowings and gearing level was reduced |
| 29 March 2007 |
| Further extended the long stop date in relation to the subscription of new shares of 272,000,000 under the general mandate |
| 4 April 2007 |
| Changed company secretary and appointed qualified accountant with a view to strengthening the operational capability |
| 25 June 2007 |
| Established the Company’s website to ensure effective dissemination of the updated news and information to stakeholders |
| 28 June 2007 |
| Transferred 50% shareholding interest in a subsidiary to Hong Long Group to reduce future capital commitment and enhance working |
| capital position |
| 17 July 2007 |
| Fully and finally settled all indebtedness due to Nanyang Commercial Bank, Limited (“NCB”) and the relevant contingent liabilities were |
| discharged |
| 8 August 2007 |
| Disposed certain investment properties at Liwan Plaza |
| 14 September 2007 |
| Changed independent non-executive director to improve corporate governance and enhance internal control function |
| For identification purposes only |
2 NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
FINANCIAL HIGHLIGHTS
The board of Directors (“Board”) of Nam Fong International Holdings Limited (the “Company”) announces the unaudited consolidated
results of the Company and its subsidiaries (the “Group”) for the six months ended 30 June 2007 as follows:
Six months ended 30 June
2007 2006 Change
$’000 $’000 %
(Unaudited) (Unaudited)
RESULTS
Turnover — rental income 6,677 16,890 (60.5)
Gross profit 4,030 13,704 (70.6)
Operating expenses 4,554 5,697 20
Fair value loss on investment properties (20,400) (12,513) (63)
Gain on disposal of a subsidiary 7,599 — N/A
Net loss for the period (13,321) (4,598) (189.7)
Loss per share (0.98 cents) (0.34 cents) (1.32 cents)
At 30 June At 31 December
2007 2006 Change
$’000 $’000 %
(Unaudited) (Audited)
KEY BALANCE SHEET ITEMS
Total assets 494,031 645,653 (23.5)
Total liabilities 74,360 213,556 65.2
Total equity 419,671 432,097 (2.9)
As described in the “CORPORATE CALENDAR OF EVENTS” above, the Group has undertaken a series of actions to enhance the Group’s
financial position, including placing of shares, disposal of non-performing subsidiary, settlement of indebtedness and repayment of borrowings.
As a result of the disposal of a non-performing subsidiary, settlement of indebtedness and repayment of all outstanding borrowings, the
Group’s total liabilities dropped evidently by 65.2% from approximately HK$213.6 million to approximately HK$74.4 million. The Group
recorded a fall in turnover by 60.5% and an increase in net loss for the review period by 189.7% due to the disposal of the non-performing
subsidiary which held certain investment properties and a fair value loss of approximately HK$20.4 million was reported as employment of
fair value model for investment properties. Accordingly, if excluding the non-operating fair value loss, the Group would turn around from net
loss of approximately HK$13.3 million to net profit of approximately HK$7.1 million mainly attributable by the gain on disposal of a
subsidiary.
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
The Group is principally engaged in property development, property investment and property rental activities in the People’s Republic of
China (“PRC”).
Property Development
During the period under review, the Group completed the disposal of the entire interest in a then subsidiary, Nam Fong Guangzhou Plaza
Limited (“NF GZ Plaza”), the holding company of ?9"! Guangzhou Xiunan Property Development Company
Limited
(“Xiunan”) which sole asset is a development project, namely, the Yue Xiu Plaza with pending litigations.
As announced on 29 June 2007, the Group transferred to Hong Long Group 50% shareholding interest in a subsidiary, Trisum Investment
Limited (“Trisum”), the holding company of ?"! Guangzhou Jiannan House Property Development Company
Limited
(“Jiannan”) which only asset is Jiangnan Garden II. The completion took place in August 2007.
Jiangnan Garden II comprises four 30-storey towers including a 3-storey commercial podium, 27-storey residential units and a 3-storey car
park at basement level with an expected total gross floor area of approximately 105,766 sq.m.. Following completion of the transfer, the
Group could leverage on the expertise and experience of Hong Long Group and prioritize its every efforts on joint development of Jiangnan
Garden II as its primary development project. The Group believes that the construction shall be commenced in October 2007, after completion
for pre-sales at end of 2008, the Group will have increased its revenue and profits notably and will have a strong financial position to continue
as one of the leading property developers in the PRC market in the long run.
Property Investment
Apart from the property development project, the Group’s main property investment is certain units at Liwan Plaza, with a gross floor area
of about 29,408 sq.m.. During the period under review, such units generate a recurring rental income of approximately RMB1.1 million per
month.
On 8 August 2007, the Group entered into a disposal agreement with ?&"! Guangzhou Suinan Property Development
Company Limited (“Suinan”) to dispose of several units at Liwan Plaza, with a gross floor area of approximately 16,530 sq.m.. Such
disposal is expected to be completed by end of September 2007, details of which are described in note 8 to the condensed consolidated
financial statements. Thereafter, the Group will retain certain units of about 12,878 sq.m. for long term investment purposes and such units
will produce monthly rental income of approximately RMB0.5 million.
3NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
BUSINESS REVIEW (continued)
Outlook
Besides Liwan Plaza, the Group has continued to explore and evaluate certain property investment projects in the PRC with a view of
enhancing recurring revenue base and securing a firm and steady cash inflow position for the Group. The Board firmly believes that, subject
to further negotiations, should the Group identify any quality property investment project, disclosure and announcement shall be made in
accordance with the Listing Rules where appropriate.
FINANCIAL REVIEW
Turnover
The Group’s turnover represents rental income generated. For the period under review, rental income amounted to approximately HK$6.7
million (30 June 2006: approximately HK$16.9 million), a drop by 60.5% as a result of the disposal of Suinan which held certain investment
properties in the corresponding period in 2006.
Gross Profit
Gross profit decreased by 70.6% to approximately HK$4 million in the current period from approximately HK$13.7 million in the last period
mainly due to the fall in rental income received during the period.
Fair Value Loss on Investment Properties
The fair value model was adopted consistently when accounting for investment properties since the last period, whereby such properties
were recorded at their fair values as determined by an independent professional valuer and a fair value loss of approximately HK$20.4
million (30 June 2006: approximately HK$12.5 million) was reported.
Operating Expenses
A fall in operating expenses by 20% to approximately HK$4.6 million in the current period from approximately HK$5.7 million in the last
period was mainly due to the decrease in legal and professional fee during the period.
Disposal of a Subsidiary
Saved as described in the paragraph under “BUSINESS REVIEW” above, the subsidiary disposed of during the period under review contributed
about approximately HK$96.6 million to the Group’s net operating cash inflow and a gain on disposal of approximately HK$7.6 million was
recognised. Details of which are set out in note 14 to the condensed consolidated financial statements.
Liquidity and Financial Resources
Net current liabilities improved dramatically and reduced to approximately HK$10.9 million as at 30 June 2007 (31 December 2006:
approximately HK$17.5 million). The improvement was primarily due to the settlement of indebtedness and other borrowings during the
period under review. As at 30 June 2007, the Group’s bank and cash balances amounted to approximately HK$3.2 million (31 December
2006: approximately HK$8.2 million).
Employees and Remuneration Policies
The success of the Group heavily relies on the performance and commitment of all its employees. They are remunerated in accordance with
the job nature, market conditions, individual performance and qualifications. Other staff benefits include year end bonus. As at 30 June 2007,
the Group had approximately 40 employees (31 December 2006: 40 employees) in Hong Kong and the PRC.
Borrowings, Charges on Group’s Assets and Gearing Ratio
As at 30 June 2007, the Group had no borrowings and none of the Group’s assets were pledged (31 December 2006: the Group had short-
term borrowings together with accrued interest of approximately HK$10 million which was secured by the investment properties of the
Group with carrying amount of approximately HK$15.5 million). Accordingly, the gearing ratio as at 30 June 2007, as expressed as total
borrowings over the total equity, was NIL (31 December 2006: 2.31%).
Exposures to Foreign Exchange Rates Fluctuations
The Group conducts its business either in HK$, RMB or USD, as such, cash and cash equivalents, borrowings, revenue and expenses of the
Group are denominated in either HK$ or RMB or USD. The value of RMB against HK$ and other foreign currencies may fluctuate and is
affected by factors such as changes in the PRC’s political and economic conditions. However, the Group considers that the effect of the
exposure of the Group to foreign exchange risk is minimal and does not anticipate any material foreign exchange exposure. There was
neither foreign currency hedging activity nor financial instrument for hedging purposes during the period under review.
Contingent Liabilities
As at the close of business on 30 June 2007, the Group had outstanding unguaranteed and unsecured indebtedness of approximately HK$4.5
million representing the outstanding amount due to NCB under a settlement agreement entered into by the Group with NCB on 16 June 2006.
Details of which are set out in note 15 to the condensed consolidated financial statements.
PROSPECTS
As mentioned in “BUSINESS REVIEW” above, the Group entered into agreements to transfer 50% equity interest in Trisum and to dispose
of certain investment properties as set forth in the Company’s circulars dated 20 July and 29 August 2007 respectively. The aggregate net
proceeds from these transactions amounted to approximately HK$172.6 million, which will not only improve the Group’s liquidity position
but also equip the Group with readily available funds to invest in quality property investment projects once acquisition targets are identified.
Looking ahead, the Group believes that the PRC economy will continue to grow fast in the coming years and the standards of living of its people
will continue to improve, this would lead to higher levels of consumer spending and hence increases the demand for quality retail and residential
properties in prime areas with good transportation network and in large cities, particularly in the Guangdong Province. The property prices are
also expected to escalate further as a result of keen demand. The Group expects that, upon completion and sales of the properties in Jiangnan
Garden II together with an improvement in rental level, there will have a sustained growth in turnover in the near future.
The Group will exert great efforts in bracing up its role as one of the leading property developers in the PRC market and create value to
shareholders, and also improve corporate transparency and image of the Group.
4 NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2007
Six months ended 30 June
2007 2006
$’000 $’000
Note (Unaudited) (Unaudited)
Turnover 3,4 6,677 16,890
Rental outgoings (2,647) (3,186)
Gross profit 4,030 13,704
Other income 4 238
Fair value loss on investment properties (20,400) (12,513)
Operating expenses (4,554) (5,697)
Loss from operations (20,920) (4,268)
Finance costs — (330)
Gain on disposal of a subsidiary 7,599 —
Loss before tax 5 (13,321) (4,598)
Income tax 6 — —
Net loss for the period (13,321) (4,598)
Basic loss per share 7 (0.98 cents) (0.34 cents)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2007
(Unaudited)
Exchange
fluctuation
reserve
relating to a
Reserve Exchange disposal group
Share Share on merger fluctuation classified as Accumulated
capital premium accounting reserve held for sale losses Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 January 2006 136,000 906,000 (101,922) (47,633) — (564,087) 328,358
Translation differences ———3,510 ——3,510
Net loss for the period —————(4,598) (4,598)
At 30 June 2006 136,000 906,000 (101,922) (44,123) — (568,685) 327,270
At 1 January 2007 136,000 906,000 (101,922) (3,630) (332) (504,019) 432,097
Translation differences ———563 ——563
Released on disposal
of a subsidiary ————332 — 332
Net loss for the period —(13,321) (13,321)
At 30 June 2007 136,000 906,000 (101,922) (3,067) — (517,340) 419,671
Note:
(a) Reserve on merger accounting
The reserve on merger accounting was set up upon the share swap for the Company to acquire its subsidiaries.
(b) Exchange fluctuation reserve
The exchange fluctuation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations.
The reserve is dealt with in accordance with the accounting policies.
5NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2007
30 June 31 December
2007 2006
$’000 $’000
Note (Unaudited) (Audited)
Non-current assets
Property, plant and equipment 12 18
Investment properties 8 177,600 198,000
Properties under development 9 243,121 242,000
Prepayment for construction contract 9,855 9,600
Total non-current assets 430,588 449,618
Current assets
Prepayments, deposits and other receivables 60,199 3,805
Bank and cash balances 3,244 8,218
Assets of a disposal group classified as held for sale — 184,012
Total current assets 63,443 196,035
Current liabilities
Accounts payables 11 31,947 36,595
Accruals and other payables 42,413 72,312
Short-term borrowings 12 — 9,000
Current tax liabilities — 305
Liabilities associated with assets of a disposal group classified as held for sale — 95,344
Total current liabilities 74,360 213,556
-------------- --------------
Net current liabilities (10,917) (17,521)
NET ASSETS 419,671 432,097
Capital and reserves
Share capital 13 136,000 136,000
Reserves 283,671 296,097
TOTAL EQUITY 419,671 432,097
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2007
Six months ended 30 June
2007 2006
$’000 $’000
(Unaudited) (Unaudited)
Net cash outflow from operating activities (32,510) (553)
Net cash inflow/(outflow) from investing activities 35,973 (2,656)
Net cash outflow from financing activities (9,000) —
Decrease in cash and cash equivalents (5,537) (3,209)
Effect of foreign exchange rates 563 3,510
Cash and cash equivalents at 1 January 8,218 530
Cash and cash equivalents at 30 June 3,244 831
Analysis of the balances of cash and cash equivalents
Bank and cash balances 3,244 831
3,244 831
6 NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2007
1. GENERAL INFORMATION
The Company was incorporated in Bermuda as an exempted company with limited liability under the Companies Act of Bermuda. The
address of its registered office is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The address of its principal place of
business is Room 1901, 19th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong. The Company’s shares
are listed on the Main Board of
The principal activities of the Group are property development, property investment and property rental activities in the PRC.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
At 30 June 2007, the Group had net current liabilities of approximately HK$10.9 million (31 December 2006: approximately HK$17.5
million). The Directors have considered the liquidity of the Group in light of the above and funding requirements of the Group for the
foreseeable future. The Directors are of the opinion that the Group will have sufficient working capital for its present requirements
after completion of the transactions of transfer of 50% shareholding interest in Trisum and disposal of the investment properties.
Appropriately, the condensed consolidated financial statements have been prepared on a going concern basis.
The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of
Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) and
with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”).
The condensed consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation
of investment properties which are carried at their fair values. The accounting policies adopted are consistent with those followed in
the preparation of the Group’s consolidated financial statements for the year ended 31 December 2006, except as described below.
In the current period, the Group has applied, for the first time, a number of new standards, amendments and interpretations (“new
HKFRSs”) issued by the HKICPA which are either effective for accounting periods beginning on or after 1 January 2007. The adoption
of the new HKFRSs had no material effect on how the results and financial positions for the current or prior accounting periods have
been prepared and presented. Accordingly, no prior period adjustment has been required.
The interim financial statements should be read in conjunction with the annual audited financial statements for the year ended 31
December 2006.
The Group has not early applied the following new standards, amendments or interpretations that have been issued but are not yet
effective. The Group is in the process of making an assessment of the potential impact of these standards, amendments or interpretations.
The Directors of the Company concluded that the application of these standards, amendments or interpretations will have no material
impact on the financial statements of the Group.
HKAS 23 (Revised) Borrowing costs
1
HKFRS 8 Operating segments
1
HK(IFRIC) – INT 11 Group and treasury shares transaction
2
HK(IFRIC) – INT 12 Service concession arrangements
3
1
Effective for annual periods beginning on or after 1 January 2009
2
Effective for annual periods beginning on or after 1 March 2007
3
Effective for annual periods beginning on or after 1 January 2008
3. TURNOVER
Turnover represents rental income generated during the period.
4. SEGMENT INFORMATION
(i) Primary reporting format — business segments
The Group is organised into two main business segments:
Property sales — property development and sales
Property rental — property investment and property rental activities
7NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended 30 June 2007
4. SEGMENT INFORMATION (continued)
(ii) Secondary reporting format — geographical segments
Over 90% of the Group’s revenue and assets are derived from customers and operations based in the PRC and accordingly, no
further analysis of the Group’s geographical segments is disclosed.
A segmental analysis of the Group’s principal activities is as follows:
Corporate
Property sales Property rental and unallocated Total
Six months Six months Six months Six months
ended 30 June ended 30 June ended 30 June ended 30 June
2007 2006 2007 2006 2007 2006 2007 2006
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
TURNOVER
External revenue — — 6,677 16,890 — — 6,677 16,890
RESULT
Segment result — — 4,030 13,704 — — 4,030 13,704
Other income — — — — 4 238 4 238
Fair value loss
on investment properties — — (20,400) (12,513) — — (20,400) (12,513)
Operating expenses — — (920) (1,221) (3,634) (4,476) (4,554) (5,697)
Loss from operations (20,920) (4,268)
Finance costs — (330)
Gain on disposal
of a subsidiary — — 7,599 — — — 7,599 —
Loss before tax (13,321) (4,598)
Income tax — —
Net loss for the period (13,321) (4,598)
30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December
2007 2006 2007 2006 2007 2006 2007 2006
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
(Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)
ASSETS
Segment assets 254,855 260,937 183,905 198,875 55,271 1,829 494,031 461,641
Assets of a disposal group
classified as held for sale — 184,012 — — — — — 184,012
Consolidated total assets 494,031 645,653
LIABILITIES
Segment liabilities 33,198 37,841 8,409 7,489 32,753 72,882 74,360 118,212
Liabilities associated with
assets of a disposal group
classified as held for sale — 95,344 — — — — — 95,344
Consolidated total liabilities 74,360 213,556
OTHER INFORMATION
Capital expenditure — — — — — — — —
Depreciation — — — 5 8 24 8 29
Reversal of impairment
losses on properties
under development — 56,886 — — — — — 56,886
8 NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended 30 June 2007
5. LOSS BEFORE TAX
Loss before tax is arrived at after charging:
Six months ended 30 June
2007 2006
$’000 $’000
(Unaudited) (Unaudited)
Auditor’s remuneration
— Statutory audit 375 375
— Others 100 390
475 765
Depreciation 8 12
Interest on borrowings — 330
Operating lease rentals in respect of land and buildings 682 666
Staff costs (excluding directors’ emoluments)
— Salaries and allowances 517 522
— Retirement benefit scheme contribution 16 14
533 536
6. INCOME TAX
(a) No provision for Hong Kong profits tax is required since there is no assessable profit for the period and the Group’s income is
derived from sources outside Hong Kong, which is not liable to Hong Kong profits tax (30 June 2006: Nil).
(b) The Group is subject to the enterprise income tax rate of 33% on the assessable profit for the period in accordance with the
income tax law of the PRC.
(c) Based on the information available, the Directors considered that the taxation of the Group at 30 June 2007 was adequately
provided for in the financial statements.
7. LOSS PER SHARE
(a) Basic earnings per share
The calculation of the basic earnings per share is based on the net loss for the period of approximately HK$13.3 million (30 June
2006: loss of approximately HK$4.6 million) and on 1,360,000,000 (30 June 2006: 1,360,000,000) ordinary shares in issue
during the period.
(b) Diluted earnings per share
Diluted earnings per share is not presented because there were no dilutive potential ordinary shares in existence for the six
months ended 30 June 2007 and 2006 respectively.
8. INVESTMENT PROPERTIES
At 30 June 2007, all of the Group’s investment properties, situated in Guangzhou, the PRC, are held under medium-term lease. The
investment properties held under operating lease for rental purposes are measured using the fair value model. The fair value of the
Group’s investment properties at 30 June 2007 was based on the open market value basis, by reference to market evidence of recent
transactions for similar properties, appraised by an independent qualified professional valuer. A fair value loss of approximately
HK$20.4 million was recorded for the six months ended 30 June 2007.
During the period under review, certain investment properties amounted to approximately HK$102 million, the legal titles of which
were frozen by the PRC court in respect of Suinan’s financial disputes with the Taxation Bureau of Guangzhou City and a creditor.
After assessing the legal implications, the Group entered into a disposal agreement to dispose of these properties to Suinan for a cash
consideration of HK$70 million, details of which are set out in the Company’s circular dated 29 August 2007.
9NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended 30 June 2007
9. PROPERTIES UNDER DEVELOPMENT
The properties under development at 30 June 2007 are located in Guangzhou, the PRC. A land use rights certificate was granted
whereby the Group has the land use rights over the property for a term of 70 years for residential part and 40 years for commercial part
commencing from 15 August 1996. The construction work is expected to commence in October 2007. At 30 June 2007, the Group’s
outstanding land premium payable in relation to the land use rights amounted to approximately RMB27 million.
10. ACCOUNTS RECEIVABLE
The aging analysis of accounts receivable, based on the invoice date, is as follows:
At 30 June At 31 December
2007 2006
$’000 $’000
(Unaudited) (Audited)
Within 3 months — —
4 — 6 months — —
7 — 12 months — —
Over 1 year — —
— —
Less: Allowance for receivables — —
— —
11. ACCOUNTS PAYABLES
At 30 June At 31 December
2007 2006
$’000 $’000
(Unaudited) (Audited)
The amounts comprise:
— Current 31,947 36,595
— Non-current — —
31,947 36,595
The aging analysis of accounts payables, based on the invoice date, is as follows:
At 30 June At 31 December
2007 2006
$’000 $’000
(Unaudited) (Audited)
Over 1 year 31,947 36,595
12. SHORT-TERM BORROWINGS
Short-term borrowings comprise:
At 30 June At 31 December
2007 2006
$’000 $’000
(Unaudited) (Audited)
Other loan — 9,000
Analysed as:
Secured — 9,000
Unsecured — —
— 9,000
The short-term borrowings were fully repaid in January 2007.
10 NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended 30 June 2007
13. SHARE CAPITAL
At 30 June At 31 December
2007 2006
$’000 $’000
(Unaudited) (Audited)
Authorised:
2,000,000,000 ordinary shares
of HK$0.10 each 200,000 200,000
Issued and fully paid:
1,360,000,000 ordinary shares
of HK$0.10 each 136,000 136,000
On 7 April 2006, the Company and Zhang Suqian, an independent investor, entered into a subscription agreement in respect of the
subscription of 272,000,000 ordinary shares of HK$0.10 each. The subscription has not yet been completed at 30 June 2007. Pursuant
to a supplemental agreement dated on 29 March 2007, the long stop date was extended to 30 September 2007 and it is expected that a
further extension will be required.
14. DISPOSAL OF A SUBSIDIARY
During the period under review, the Group completed the disposal of entire interest in NF GZ Plaza.
Saved as disclosed above, the Group had no other material acquisitions or disposals of subsidiaries and associated companies during
the six months ended 30 June 2007.
15. CONTINGENT LIABILITIES
The Group executed guarantees to NCB for mortgage facilities granted to first buyers of certain properties developed and sold by the
Group in the PRC. The total amount of such facilities utilised by the first buyers and covered by the Group’s guarantees was approximately
HK$51.8 million.
On 16 June 2006, the Group and NCB entered into a settlement agreement pursuant to which NCB agreed to accept HK$21.5 million
as full and final settlement of the Group’s obligations under the guarantees. The sum is payable by 5 instalments up to 30 June 2007.
At 30 June 2007, the outstanding balance of the sum (included in accruals and other payables) was reduced to HK$4.5 million. The
outstanding balance was fully repaid subsequently in July 2007.
Save as aforesaid, apart from the intra-group liabilities and normal accounts payables, the Group did not have any outstanding mortgages,
charges, debentures, loan capital and overdraft, debt securities or other similar indebtedness, finance leases or hire purchase commitment,
liabilities under acceptances or acceptances credits or any guarantees or other material contingent liabilities as at 30 June 2007.
16. LEASE COMMITMENTS
At 30 June 2007, the total future minimum lease payments under non-cancellable operating leases are payable as follows:
At 30 June At 31 December
2007 2006
$’000 $’000
(Unaudited) (Audited)
Within one year 1,333 1,298
In the second to fifth years inclusive 1,576 1,026
2,909 2,324
Operating lease payments represent rentals payable by the Group for certain of its offices.
11NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended 30 June 2007
17. RELATED PARTY TRANSACTIONS
During the period, the Group had the following transactions and balances with its related parties:
(a) Key management personnel compensation
The key management personnel of the Group comprises all Directors and the emoluments of them amounted to approximately
HK$0.4 million (30 June 2006: approximately HK$0.5 million).
(b) Balances with related parties
Included in accruals and other payables are amounts in total of approximately HK$0.5 million (31 December 2006: approximately
HK$0.2 million) representing accrued Directors’ emoluments due to the Company’s Directors. The accrued Directors’ emoluments
are unsecured, interest-free and will be settled in cash.
18. EVENTS AFTER THE BALANCE SHEET DATE
On 29 June 2007, the Group entered into a share transfer agreement with Hong Long Group to dispose of its 50% shareholding interest
in a subsidiary, Trisum at a consideration of RMB100 million. Trisum and its subsidiary, Jiannan are engaged in the property development.
The transaction was completed after the period end.
On 8 August 2007, the Board announced that the Group entered into a disposal agreement with Suinan, pursuant to which the Group
agreed to sell and Suinan agreed to buy certain property units at Liwan Plaza of a gross floor area of 16,530 sq.m. for a total consideration
of HK$70 million. The disposal was expected to complete by the end of September 2007.
Saved as disclosed in notes 14 and 15 above, the Group did not have any other significant events took place subsequent to the balance
sheet date.
19. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to comply with the new and revised requirements of HKFRSs and conform to the
current period’s presentation. The new classification of the accounting items was considered to provide a more appropriate presentation
of the state of affairs of the Group.
OTHER INFORMATION
BOARD OF DIRECTORS
Mr. Zhao Lishen and Ms. Huang Ling were successfully re-elected by the shareholders at the 2007 annual general meeting. On 14 September
2007, Mr. Yuen Wai Ho was appointed as independent non-executive director for a term of two years in replacement of Ms. Wang Li Yun
who resigned from directorship. A list of Directors is available on the Company’s corporate website at www.ilinkfin.net/nam_fong.
COMMITTEES
Lists of committee members are available on the Company’s corporate website at www.ilinkfin.net/nam_fong.
INTERIM DIVIDEND
The Directors have resolved not to declare the payment of an interim dividend for the six months ended 30 June 2007 (30 June 2006: Nil).
DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS
As at 30 June 2007, none of the Directors and the chief executive of the Company had or was deemed to have any interests and short positions
in the shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures
Ordinance (“SFO”)), which (i) were 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 they were taken or deemed to have under such provisions of the SFO); or (ii) were
required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notified to the
Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”)
contained in Appendix 10 of the Listing Rules.
DIRECTORS’ INTERESTS IN CONTRACTS
No contracts of significance to which the Company or any of its subsidiaries was a party and in which a Director had a material interest
subsisted, either directly or indirectly at any time during the period under review.
12 NAM FONG INTERNATIONAL HOLDINGS LIMITED INTERIM REPORT 2007
PURCHASE, SALES OR REDEMPTION OF SHARES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s shares during the period under review.
SUBSTANTIAL SHAREHOLDERS
As at 30 June 2007, according to the register of interests kept by the Company under section 336 of the SFO, and so far as was known to the
Directors or chief executive of the Company, the following persons had an interest or short position in the shares or underlying shares which
would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:
Number of Percentage of
ordinary issued shares
Name of Shareholders shares held capital
Great Capital Holdings Limited (“GCH”) 429,162,000 Note (1) 31.56%
Sinowin Enterprises Limited (“Sinowin”) 405,280,000 Note (2) 29.80%
Campiche Management Limited 68,205,210 5.02%
Notes:
(1) GCH had pledged a total of 264,162,000 shares of the Company to secure banking facilities for the group companies of GCH.
(2) The entire issued share capital of Sinowin is beneficially owned by Mr. Hung Ka Faat.
Save as disclosed above, so far as are known to the Directors, the Company has not been notified of any interest in the issued share capital of
the Company required to be recorded under section 336 of the SFO as at 30 June 2007.
CORPORATE GOVERNANCE
The Company has Chairman to provide leadership to the Board in terms of establishing policies and business directions and monitor the daily
operation of the Group. The Company is currently looking for a suitable person to be responsible for the daily management of the Company’s
business as a whole as a remedy for such deviation. In addition, the chairman of the Company in his capacity as a Director is not subject to
retirement by rotation by shareholders as governed by section 87 (1) of the Bye-laws of the Company. Save as disclosed in this paragraph in
respect of non-compliance of the provisions A2.1 and A4.2, the Company fully complied with all the provisions set out in the Code on
Corporate Governance Practices contained in Appendix 14 to the Main Board Listing Rules, and where practicable, adopted the recommended
best practices throughout the review period.
COMPLIANCE WITH THE MODEL CODE
The Group has adopted the Model Code. Upon specific enquiry by the Company, all Directors confirmed 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 comprises three Independent Non-executive Directors of the Company. The audit committee has reviewed with
management, the accounting principles and practices adopted by the Group and discussed auditing, internal controls and financial reporting
matters, including a review of the unaudited condensed consolidated financial statements for the six months ended 30 June 2007, which is of
opinion that such statements comply with the applicable accounting standards and the Listing Rules and that adequate disclosures have been
made.
For and on behalf of the Board
Nam Fong International Holdings Limited
Tong Shi Jun
Chairman
Hong Kong, 24 September 2007
