1
(Stock Code: 1382)
pCj1382
ANNOUNCEMENT OF INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
2007930H
86S
69
2
Financial
Information
The Board of Directors (the “Board”) of Pacific Textiles Holdings Limited
(the “Company”) has pleasure in presenting the unaudited condensed
consolidated results of the Company and its subsidiaries (the “Group”) for the
six months ended 30 September 2007 together with the comparative figures
for the corresponding period in 2006.
The interim results have been reviewed by the Company’s auditor 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
(“HKICPA”). The interim results have also been reviewed by the Company’s
audit committee.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2007
Unaudited
Six months ended 30 September
930H
J2
2007 2006
2007
Note HK$’000 HK$’000
W w w
Revenue ] 2 2,305,298 2,106,032
Cost of sales V/I (1,866,892 ) (1,628,128 )
Gross profit ;438,406 477,904
Other revenue I] 3 30,566 25,190
Other gains – net IB 3 7,434 631
Distribution and selling expenses VV/ (90,971 ) (71,813 )
General and administrative expenses SA (86,007 ) (86,562 )
Operating profit P; 4 299,428 345,350
Finance income ] 24,754 2,079
Finance costs I (17,782 ) (21,344 )
Share of loss of associates &L!f& (465 ) (520 )
Profit before income tax {P;305,935 325,565
Income tax expense { 5 (38,870 ) (45,395 )
Profit for the period 8P; 267,065 280,170
Attributable to: h[{&j
Equity holders of the Company I!B5[ 263,663 276,228
Minority interests ppB 3,402 3,942
267,065 280,170
Earnings per share – p;
basic and diluted (HK$) ?I[ 7 0.20 0.26
kp"! I! +
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2007 9 30HJ2
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2007 9 30H
3
Financial Information
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 September 2007
]
2007 9 30
30 September 31 March
2007 2007
2007
930
HK$’000 HK$’000
w w
(Unaudited) (Audited)
Note J2 2
W
ASSETS
Non-current assets t
Leasehold land and land use rights a#zz4\ 8 22,157 22,050
Property, plant and equipment J8e@ 9 1,325,256 1,197,086
Interest in associates L!B 12,899 13,070
Deferred taxation 4,860 3,760
Available-for-sale financial assets 6/D 1,834 1,824
1,367,006 1,237,790
Current assets t
Inventories 899,036 953,335
Trade and bills receivables C 10 668,729 579,621
Deposits, prepayments and other receivables 2ekI 28,700 35,391
Derivative financial instruments [DH 11,775 8,618
Cash and bank balances $q 1,340,759 226,156
2,948,999 1,803,121
Total assets <= 4,316,005 3,040,911
EQUITY B
Capital and reserves attributable to I!B5[&
equity holders of the Company I
Share capital pI 11 1,433 11
Reserves 12 2,761,966 1,440,734
2,763,399 1,440,745
Minority interests ppB 54,150 50,748
Total equity B<X 2,817,549 1,491,493
LIABILITIES
Non-current liabilities t
Borrowings >r 13 491,140 415,773
Finance lease obligations Da# 1,083 814
492,223 416,587
Current liabilities t
Trade and bills payables C 14 542,942 464,574
Accruals and other payables fI 164,807 140,806
Borrowings >r 13 267,072 513,628
Finance lease obligations Da# 1,126 3,090
Derivative financial instruments [DH 5,648 234
Current income tax liabilities I{ 24,638 10,499
1,006,233 1,132,831
Total liabilities <X 1,498,456 1,549,418
Total equity and liabilities <B4,316,005 3,040,911
Net current assets t= 1,942,766 670,290
Total assets less current liabilities <=t 3,309,772 1,908,080
4
Financial Information
Unaudited
J2
Attributable to equity holders of
the Company
I!B5[&
Share Minority
capital Reserves Total interests Total
pI < ppB B<X
Note HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
W w w w w w
Balance at 1 April 2006 200641q 11 1,044,485 1,044,496 42,800 1,087,296
Profit for the period P; – 276,228 276,228 3,942 280,170
Currency translation differences .lQX – 23,206 23,206 – 23,206
Dividends p 6 – (234,000 ) (234,000 ) – (234,000 )
Balance at 30 September 2006 2006930q 11 1,109,919 1,109,930 46,742 1,156,672
Balance at 1 April 2007 200741q 11 1,440,734 1,440,745 50,748 1,491,493
Profit for the period P; – 263,663 263,663 3,402 267,065
Issuance of share capital by global offering "/p 11 358 1,916,194 1,916,552 – 1,916,552
Global offering expenses "/ 12 – (120,597 ) (120,597 ) – (120,597)
Shares issued by capitalisation from pP I
share premium account p 11 1,064 (1,064 ) – – –
Currency translation differences .lQX – 41,136 41,136 – 41,136
Share-based compensation expenses pG – 1,899 1,899 – 1,899
Dividends p 6 – (779,999 ) (779,999 ) – (779,999)
Balance at 30 September 2007 2007930q 1,433 2,761,966 2,763,399 54,150 2,817,549
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the six months ended 30 September 2007
]B
2007 9 30H
5
Financial Information
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2007
]$t
2007 9 30H
Unaudited
Six months ended 30 September
930H
J2
2007 2006
2007
Note HK$’000 HK$’000
W w w
Net cash generated from operating activities 8[$X 439,644 307,361
Net cash used in investing activities z\$X (182,554 ) (231,998 )
Net cash inflow before financing activities Dz$t]X 257,090 75,363
Net cash generated from/(used in) Dz[J \
financing activities $X 870,464 (80,802 )
Net increase/(decrease) in cash and $$=f#J
cash equivalents X 1,127,554 (5,439 )
Cash and cash equivalents at 1 April 4 1$$=f 186,445 93,611
Foreign exchange adjustment .lQ 15,647 5,888
Cash and cash equivalents 9 30$
at 30 September $=f 1,329,646 94,060
Analysis of cash and cash equivalents $$=f
Cash and bank balances $q 1,340,759 147,448
Bank overdrafts 13 (11,113 ) (53,388 )
1,329,646 94,060
6
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
1 GENERAL INFORMATION, BASIS OF PREPARATION
AND ACCOUNTING POLICIES
Pacific Textiles Holdings Limited (the “Company”) and its subsidiaries
(together the “Group”) are principally engaged in the manufacture and
trading of textile products. Its production bases are primarily located
in the People’s Republic of China (the “PRC”) and Sri Lanka.
The Company is a limited liability company incorporated in the
Cayman Islands. The address of its registered office is P.O. Box
309GT, Ugland House, South Church Street, George Town, Grand
Cayman, Cayman Islands.
The Company’s shares were listed on
The condensed consolidated financial information is presented in
thousands of units of HK dollars (HK$’000), unless otherwise stated.
The condensed consolidated financial information has been approved
for issue by the Board of Directors on 14 December 2007.
The unaudited condensed consolidated interim financial information
has been prepared in accordance with Hong Kong Accounting
Standard (“HKAS”) 34 “Interim Financial Reporting” issued by
the HKICPA. This interim financial information should be read in
conjunction with the annual financial statements for the year ended 31
March 2007.
The accounting policies adopted in this interim financial information
are consistent with those of the annual financial statements for the
year ended 31 March 2007, as described in the annual financial
statements for the year ended 31 March 2007.
The following new standards, amendments to standards and
interpretations are relevant to the Group and are mandatory for the
year ending 31 March 2008:
HKAS 1 Amendments to Capital Disclosures
HKFRS 7 Financial Instruments: Disclosures
HK(IFRIC)-Int 8 Scope of HKFRS 2
HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives
HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment
HK(IFRIC)-Int 11 HKFRS 2 – Group and Treasury Share
Transactions
The adoption of these new standards, amendments to standards and
interpretations has no significant impact on the Group’s interim results
and financial position.
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Ugland House, South Church Street,
George Town, Grand Cayman, Cayman
Islandsf
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Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
1 GENERAL INFORMATION, BASIS OF PREPARATION
AND ACCOUNTING POLICIES (Continued)
The following new standard and interpretation, which are relevant to
the Group, have been issued but are not effective for the year ending
31 March 2008 and have not been early adopted by the Group:
HKFRS 8 Operating Segments
HKAS 23 (Revised) Borrowing Costs
The adoption of these new standards or interpretations will have no
material impact on the financial statements of the Group and will not
result in substantial changes to the Group’s accounting policies.
2 SEGMENT INFORMATION
(a) Primary reporting format – business segments
No business segment analysis is shown as more than 90% of
the Group’s principal activity is manufacturing and trading of
textile products.
(b) Secondary reporting format – geographical
segments
The Group primarily operates in China and Hong Kong.
The Group’s sales by geographical locations are determined
by the final destination where the products are delivered:
Unaudited
Six months ended
30 September
930H
J2
2007 2006
2007
HK$’000 HK$’000
w w
China 7 628,167 548,399
South East Asia - 542,895 351,993
Hong Kong 0 416,001 440,692
Sri Lanka v" 365,178 355,971
Others I 353,057 408,977
2,305,298 2,106,032
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Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
2 SEGMENT INFORMATION (Continued)
(b) Secondary reporting format – geographical
segments (Continued)
The Group’s assets are located in the following geographical
areas:
As at
30 September 31 March
2007 2007
2007
930
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
China 7 1,931,352 1,866,278
Hong Kong 0 1,897,931 770,772
Sri Lanka v" 367,406 286,718
Others I 119,316 117,143
4,316,005 3,040,911
The Group’s capital expenditure, based on where the assets
are located, is allocated as follows:
Unaudited
Six months ended
30 September
930H
J2
2007 2006
2007
HK$’000 HK$’000
w w
China 7 172,777 222,239
Hong Kong 0 1,848 3,461
Sri Lanka v" 41,594 4,966
Others I 42 222
216,261 230,888
]W
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9
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
3 OTHER REVENUE AND GAINS – NET
Unaudited
Six months ended
30 September
930H
J2
2007 2006
2007
HK$’000 HK$’000
w w
Other revenue: I]
Sub-contracting income ] 12,503 6,526
Sale of residual materials /qJ 11,930 12,080
Sundry income O] 6,133 6,584
30,566 25,190
Other gains – net: IB{
Derivative financial instruments [DH{
– forward contracts 3,995 344
Net foreign exchange gains .lQB 3,439 287
7,434 631
4 OPERATING PROFIT
The following items have been charged/(credited) to the operating
profit during the period:
Unaudited
Six months ended
30 September
930H
J2
2007 2006
2007
HK$’000 HK$’000
w w
Depreciation of property, J8e@
plant and equipment 110,283 92,931
Amortisation of leasehold land a#zz4\V
and land use rights 277 264
Provision for/(reversal of) bad and LxaJ a
doubtful debts 1,334 (573 )
Write-off of bad and doubtful debts LxV 586 349
Share-based compensation expenses pG 1,899 –
(Gain)/loss on disposal of property, /J8e@
plant and equipment B Jf& (5,129 ) 481
Provision for slow-moving and Va
obsolete inventories 2,289 –
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10
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
5 INCOME TAX EXPENSE
Hong Kong profits tax has been provided at the rate of 17.5% for the
six months ended 30 September 2006 and 2007 on the estimated
assessable profits for the respective periods.
The subsidiary established in Mainland China as a wholly-owned
foreign enterprise is entitled to full exemption from enterprise income
tax for the first two years and 50% reduction in enterprise income tax
for the next three years, commencing from the first profitable year after
offsetting all unexpired tax losses carried forward from previous years.
Thereafter the subsidiary is entitled to a 50% reduction in enterprise
income tax in accordance with the applicable tax regulations. The
subsidiary established and operated in Mainland China is subject to
enterprise income tax at rate of 12%, after the 50% reduction, for the
six months ended 30 September 2006 and 2007. On 16 March 2007,
National People’s Congress approved the Corporate Income Tax Law
of the People’s Republic of China (the “new CIT Law”). The new CIT
Law standardises the corporate income tax rate to 25% with effect
from 1 January 2008. The new CIT Law provides that further detailed
measures and regulations on the determination of taxable profit, tax
incentives and grandfathering provisions will be issued by the State
Council in due course. As and when the State Council announces the
additional regulations, the Group will assess their impact, if any, and
account for any change in accounting estimate.
The subsidiary established and operated in Sri Lanka, Textured
Jersey Lanka (Private) Limited, is exempted from income tax on its
profits for a period of 12 years from the first year of commencement
of commercial operations in September 2001.
The amount of taxation charged to the condensed consolidated
income statement represents:
Unaudited
Six months ended
30 September
J2
930H
2007 2006
2007
HK$’000 HK$’000
w w
Current income tax C
– Hong Kong profits tax 0;{ 26,712 31,911
– Mainland China income tax 7{ 13,258 13,772
Over provision tXa – (288 )
Deferred taxation (1,100 ) –
38,870 45,395
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2001 9] 86/H 12
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11
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
5 INCOME TAX EXPENSE (Continued)
The taxation on the Group’s profit before income tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the group companies as follows:
Unaudited
Six months ended
30 September
J2
930H
2007 2006
2007
HK$’000 HK$’000
w w
Profit before income tax {P; 305,935 325,565
Tax calculated at weighted average 2G\J7
domestic tax rate applicable to ;iQ
profits in the respective
places/countries 35,587 40,698
Income not subject to tax B (547 ) (279 )
Expenses not deductible for
tax purposes 3,736 5,264
Others I 94 (288 )
38,870 45,395
The weighted average applicable tax rate was:
2007 2006
2007
Weighted average domestic ;iG\
applicable tax rate 11.6% 12.5%
6 DIVIDENDS
Unaudited
Six months ended
30 September
J2
930H
2007 2006
2007
HK$’000 HK$’000
w w
Dividends declared and paid I!||p
by the Company 779,999 234,000
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Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
6 DIVIDENDS (Continued)
On 26 April 2007, the Board of Directors of the Company declared a
special dividend of approximately HK$780 million payable to the then
equity holders of the Company. This dividend has been reflected as
an appropriation of retained earnings and other reserves for the six
months ended 30 September 2007.
On 6 June 2006, the Board of Directors of the Company declared a
dividend of HK$234 million for the year ended 31 March 2007. This
dividend has been reflected as an appropriation of retained earnings
for the six months ended 30 September 2006.
The Board of Directors of the Company has declared an interim
dividend of HK6.5 cents per share for the six months ended 30
September 2007. The interim dividend will be paid on or around 25
January 2008 to shareholders whose names appear on the Register
of Members at the close of business on 3 January 2008.
7 EARNINGS PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of shares in issue during the period under
review. In determining the weighted average number of shares
in issue, a total of 1,074,702,000 shares were deemed to be
in issue since 1 April 2006 after taking into consideration of
the effect of the capitalisation issue as detailed on Note 11(c).
Unaudited
Six months ended
30 September
J2
930H
2007 2006
2007
HK$’000 HK$’000
w w
Profit attributable to equity I!B5[&P;
holders of the Company 263,663 276,228
Weighted average number of p;ip wp
shares in issue
(thousands) 1,343,378 1,074,702
Basic earnings per share p?I; p
(HK$ per share) 0.20 0.26
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2007 4 26dI!+|
$9p 780B5
[fp 2007 9 30
H5;Iaf
2006 6 6dI!+|
2007 3 31p 234
fp 2006 9 30
H5;af
I!+| 2007 9 30
pdp 6.5fp
Z 2008 1 25| 2008
1 3lp
pf
7 p;
(a) ?I
p?I;2I!B5[
&P;Ip
;ipQfQ
p;ipdG
W 11(c)IY
d<p 1,074,702,000p
2006 4 1f
13
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
7 EARNINGS PER SHARE (Continued)
(b) Diluted
There was no dilutive effect on earnings per share since
all outstanding share options were anti-dilutive. As at 30
September 2007, outstanding options that could potentially
dilute earnings per share amounted to 22,820,000 shares
(2006: Nil).
8 LEASEHOLD LAND AND LAND USE RIGHTS
The Group’s interests in leasehold land and land use rights represent
prepaid operating lease payments and their net book value are
analysed as follows:
As at
30 September 31 March
2007 2007
2007
930
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
Opening balances q 22,050 21,775
Amortisation V (277 ) (535 )
Currency translation differences .lQX 384 810
22,157 22,050
In Hong Kong held on: 05j
Leases of between 10 to 50 years 10 50a 3,839 3,888
In China held on: 75j
Land use rights of between 10 50
10 to 50 years z4\ 16,512 16,334
In Sri Lanka held on: v"5j
Leases of between 10 to 50 years 10 50a 1,806 1,828
22,157 22,050
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f 2007 9 30dH
[p;YJ4p
22,820,000p 2006j f
8 a#zz4\
Ia#zz4\B
kadI&=
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14
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
9 CAPITAL EXPENDITURE
Property,
plant and
equipment
HK$’000
(Unaudited)
J8e@
w
J2
Six months ended 30 September 2006 2006930H
Opening net book amount 2006 4 1&=
at 1 April 2006 917,363
Currency translation differences .lQX 16,894
Additions 230,888
Disposals / (481 )
Depreciation (92,931 )
Closing net book amount 2006 9 30&=
at 30 September 2006 1,071,733
Six months ended 30 September 2007 2007930H
Opening net book amount 2007 4 1&=
at 1 April 2007 1,197,086
Currency translation differences .lQX 24,801
Additions 216,261
Disposals / (2,609 )
Depreciation (110,283 )
Closing net book amount at 2007 9 30&=
30 September 2007 1,325,256
The carrying amount of property, plant and equipment pledged
to secure bank facilities of the Group amounted to approximately
HK$95,865,000.
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9 I
I_DJ
8e@Y&= 95,865,000
f
15
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
10 TRADE AND BILLS RECEIVABLES
As at
30 September 31 March
2007 2007
2007
930
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
Trade receivables 544,731 461,611
Bills receivables C 140,332 133,010
685,063 594,621
Less: provision for impairment j=a
of trade receivables (16,334 ) (15,000 )
668,729 579,621
The Group has policies in place to ensure that sales are made to
customers with an appropriate credit history. Majority of the Group’s
sales are with credit terms of 30 to 60 days and overdue balances are
regularly reviewed by directors.
The ageing analysis of the trade and bills receivables were as follows:
As at
30 September 31 March
2007 2007
2007
930
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
0 – 60 days 0 60 550,147 449,994
61 – 120 days 61 120 103,267 121,118
Over 120 days t@ 120 31,649 23,509
685,063 594,621
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f
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16
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
11 SHARE CAPITAL
Number of Nominal value
shares of shares
ppf p&=
HK$’000
w
Authorised: ,
Shares of HK$0.001 each 2006 4 1
at 1 April 2006 2007 3 31
and 31 March 2007 p&= 0.001p 50,000,000 50
Increase in authorised share capital #p&= 0.001
of HK$0.001 each (Note (a)) ,pI W (a) 4,950,000,000 4,950
At 30 September 2007 2007 9 30 5,000,000,000 5,000
Issued and fully paid: j
Shares of HK$0.001 each 2006 4 1
at 1 April 2006 2007 3 31
and 31 March 2007 p&= 0.001p 10,747,020 11
Shares issued to the then equity B5[
shareholders of the Company Y
credited as fully paid p&= 0.001
of HK$0.001 each (Note (c)) p W (c) 1,063,954,980 1,064
Share issued by global offering "/Y
as fully paid of HK$0.001 p&= 0.001
each (Note (d)) p W (d) 358,234,000 358
At 30 September 2007 2007 9 30 1,432,936,000 1,433
(a) On 27 April 2007, the Company’s authorised share capital was
increased by HK$4,950,000 by the creation of 4,950,000,000 shares
of HK$0.001 each.
(b) Pursuant to the written resolution of shareholder of the Company
passed on 27 April 2007, the Company adopted a share option
scheme (the “Share Option Scheme”) subject to the terms and
conditions therein. The Board of Directors may, under the Share
Option Scheme, grant options to eligible full-time employees,
directors or non-executive directors of the Group. On 18 July 2007,
the Company granted options to 88 eligible full-time employees to
subscribe for a total of 22,820,000 shares of the Company at an
exercise price of HK$5.04 per share.
(c) On 17 May 2007, 1,063,954,980 shares of HK$0.001 each were
allotted and issued to the then equity shareholders of the Company
in proportion to their respective shareholdings, by the capitalisation of
HK$1,063,955 from the share premium account as payment in full of
par value.
(d) On 18 May 2007, the Company completed a global offering of
358,234,000 shares of HK$0.001 each at a price of HK$5.35 per
share.
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11 pI
(a) 2007 4 27dI!@-#
4,950,000,000pp&= 0.001
pdZI!WpI#
4,950,000f
(b) I!p 2007 4 27@
S&DdI!vp
p
fpd+I
pe+B
+pf 2007 7 18dI
!p 88
pdp 5.04 22,820,000
pI!pf
(c) 2007 5 17Ip7d
1,063,954,980pp&= 0.001
pB5[dp
PI 1,063,955
pf
(d) 2007 5 18I!p
5.35"/ 358,234,000pp
&= 0.001pf
17
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
12 RESERVES
Foreign
currency
Share Capital Legal Statutory translation Share-based Retained
premium reserves reserve reserves reserves reserves earnings Total
.lQ
pP I , , p 5P; <
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
w w w w w w w w
Note (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
W J2 J2 J2 J2 J2 J2 J2 J2
At 1 April 2006 2006 4 1 177,314 11,299 500 14,299 9,573 – 831,500 1,044,485
Profit attributable to equity I!B5[
holders of the Company &P; – – – – – – 276,228 276,228
Transfer to statutory reserves 7a, – – – – – – – –
Currency translation differences .lQX – – – – 23,206 – – 23,206
Dividends p – – – – – – (234,000 ) (234,000 )
At 30 September 2006 2006 9 30 177,314 11,299 500 14,299 32,779 – 873,728 1,109,919
At 1 April 2007 2007 4 1 177,314 11,299 500 34,902 84,124 – 1,132,595 1,440,734
Profit attributable to equity holders I!B5[
of the Company &P; – – – – – – 263,663 263,663
Transfer to statutory reserves 7a, – – – – – – – –
Currency translation differences .lQX – – – – 41,136 – – 41,136
Dividends p (177,314 ) (10,299 ) – – – – (592,386 ) (779,999)
Premium from issuance for "/
share capital by p[P
global offering (Note) W 11 1,916,194 – – – – – – 1,916,194
Global offering expenses "/ (120,597 ) – – – – – – (120,597)
Shares issued by capitalisation }pPI
from share premium account [p 11 (1,064 ) – – – – – – (1,064)
Share-based compensation pG
expenses – – – – – 1,899 – 1,899
At 30 September 2007 2007 9 30 1,794,533 1,000 500 34,902 125,260 1,899 803,872 2,761,966
Note:
On 17 and 18 May 2007, the Company issued a total of 358,234,000 shares
with a par value of HK$0.001 each at a price of HK$5.35 per share and raised
an amount of approximately HK$1,916,552,000. All these shares rank pari
passu with the then existing shares. The Company’s shares commenced
trading on the Hong Kong Stock Exchange on 18 May 2007. The proceeds of
the aforementioned shares, net of listing expenses amounted to approximately
HK$1,795,955,000. The resulting share premium amounted to approximately
HK$1,795,597,000.
]W
12
Wj
2007 5 17 18dI!p 5.35
358,234,000pp&= 0.001
pd( 1,916,552,000f
/p~p.Bf
I!p 2007 5 180Lt
o-fj9l\djp/{
1,795,955,000f/[p
P 1,795,597,000f
18
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
13 BORROWINGS
Bank and other borrowings
As at
30 September 31 March
2007 2007
2007 2007
930 3 31
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
Non-current C
Long-term bank loans r 621,785 638,640
Loan from a minority Sppd6r
shareholder (Note (a)) W (a) 67,230 30,443
689,015 669,083
Less: Current portion jr
of long-term bank loans C (197,875 ) (253,310 )
491,140 415,773
Current C
Current portion of long-term r
bank loans C 197,875 253,310
Short-term bank loans r 58,084 220,607
Bank overdrafts 11,113 39,711
267,072 513,628
Total borrowings >r<X 758,212 929,401
Note (a):
Effective from 24 August 2007, Brandix Lanka Limited (“Brandix”) become
the 48% minority shareholder of Textured Jersey Lanka (Private) Limited as a
result of the acquisition of 48% shareholding in Textured Jersey Lanka (Private)
Limited from Linea Clothing (Private) Limited (“Linea”). Following the acquisition,
Brandix owned 48% shareholding in Textured Jersey Lanka (Private) Limited.
The loan granted by Linea was assigned to Brandix and is unsecured, interest-
free and has no fixed repayment terms.
]W
13 >r
I>r
W (a):
Brandix Lanka Limited ( Brandix )@ Linea
Clothing (Private) Limited ( Linea ) I
Textured Jersey Lanka (Private) Limited 48% p
d5 Textured Jersey Lanka (Private)
Limited 48%pppd 2007 8 24
[f1d Brandix Textured
Jersey Lanka (Private) Limited 48%pf Linea
r7+ Brandixdr
d;(xf
19
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
14 TRADE AND BILLS PAYABLES
The credit period granted by the creditors generally ranges from 30 to
60 days.
The ageing analysis of the trade and bills payables were as follows:
As at
30 September 31 March
2007 2007
2007 2007
930 3 31
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
0 – 60 days 0 60 355,350 374,190
61 – 120 days 61 120 150,084 87,568
Over 120 days t@ 120 37,508 2,816
542,942 464,574
Trade and bills payables approximate their fair value.
15 CAPITAL COMMITMENTS
Capital expenditure at the balance sheet date but not yet incurred is as
follows:
As at
30 September 31 March
2007 2007
2007 2007
930 3 31
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
Property, plant and equipment (JaJ8e
Contracted but not provided for c@ 99,852 72,320
As at 30 September 2007, the Group had authorised the injection of
capital into an associate to be established in China with Guangzhou
Nansha Assets Operation Co., Limited totalling approximately
HK$22,648,000 to provide steam generated by the Group to the
potential users in the vicinity.
]W
14 C
rrS 30 60f
Cghj
C&=~I;=
f
15 I
qJ[I
hj
2007 9 30dIXS
Z7mYL!!
22,648,000dd6I[
L4\kf
20
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
16 RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability,
directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating
decisions. Parties are also considered to be related if they are subject
to common control or common significant influence.
The following transactions were carried out with related parties:
(a) Sales of goods
Unaudited
Six months ended 30 September
930H
J2
2007 2006
2007
HK$’000 HK$’000
w w
A minority shareholder and SppI[{
its related parties (Note (i)) W (i) 127,483 158,557
A related party (Note (ii)) S[{ W (ii) 5,891 9,133
133,374 167,690
Goods are sold at prices mutually agreed by both parties.
(b) Management charges
Unaudited
Six months ended 30 September
930H
J2
2007 2006
2007
HK$’000 HK$’000
w w
A minority shareholder and SppI[{
its related parties (Note (i)) W (i) 224 217
]W
16 [{t
JSb\S$S
d$SA64
}Bbd[{VfJ
[{aS }Bd
uVf
~[{thj
(a) V/
W2PXV/f
(b) M#l\
21
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
16 RELATED PARTY TRANSACTIONS (Continued)
(c) Period-end balances (included in trade
receivables and trade payables) arising from
sales/purchases of goods:
As at
30 September 31 March
2007 2007
2007 2007
930 3 31
HK$’000 HK$’000
w w
(Unaudited) (Audited)
J2 2
Receivables from related [{j
parties
A minority shareholder and SppI[{
its related parties (Note (i)) W (i) 24,871 38,597
A related party (Note (ii)) S[{ W (ii) 2,962 1,337
27,833 39,934
Payables to related parties [{j
A minority shareholder Spp
(Note (i)) W (i) – 2,021
Note:
(i) Effective from 24 August 2007, Brandix Lanka Limited
(“Brandix”) become the 48% minority shareholder of Textured
Jersey Lanka (Private) Limited as a result of the acquisition
of 48% shareholding in Textured Jersey Lanka (Private)
Limited from Linea Clothing (Private) Limited. Following the
acquisition, Brandix owned 48% shareholding in Textured
Jersey Lanka (Private) Limited. The related parties of Brandix
include its holding company and fellow subsidiaries.
(ii) Companies controlled by Mr. Henry Choi Wing Kong, son of
Mr. Choi Kin Chung, a director of the Company, is a related
party of the Company.
]W
16 [{t
(c) V/J[
Kq]
j
Wj
(i) Brandix Lanka Limited
( Brandix ) @ Linea
Clothing (Private) Limited
( Linea ) I Textured
Jersey Lanka (Private) Limited
48% pd Textured
Jersey Lanka (Private) Limited
48%pppd 2007
8 24[f1
d Brandix Textured
Jersey Lanka (Private) Limited
48%pf Brandix
[{<Ip!
n!f
(ii) _I!+[E
][S!I
![{f
22
Financial Information
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL INFORMATION (Continued)
16 RELATED PARTY TRANSACTIONS (Continued)
(d) Key management compensation
Unaudited
Six months ended 30 September
930H
J2
2007 2006
2007
HK$’000 HK$’000
w w
Wages, salaries, bonus and eZeuh
allowances 16,143 20,620
Retirement benefits – defined ~E;X6
contribution schemes 33 42
16,176 20,662
]W
16 [{t
(d) M#[pG
Management
M#4
Discussion and Analysis
23
BUSINESS REVIEW
For the period under review, Pacific Textiles Holdings Limited (the “Company”)
and its subsidiaries (the “Group”) sustained growth and high margin
operations, riding on the back of the Group’s core strengths, despite a
number of challenges in the market and in operations.
Hard impact from the subprime crisis and worries over a US economic
downturn have adversely affected both consumer confidence and
discretionary spending. With over 70% of our fabrics bound for the US
market, purchase orders for our knitted fabric products began to slow down
since late August this year.
Nevertheless, the Group’s capacity expansion delivered a modest turnover
increase of 9.5% to HK$2,305.3 million as compared with the corresponding
period last year of HK$2,106.0 million. Our blended average selling price
(“ASP”) recorded a 2.9% year on year increase during the period under
review. Our focus on high-end fabrics enables us to continue to deliver
higher-than-industry ASP.
Surging crude oil prices have raised the costs of synthetic yarn and other raw
materials used in our production process. We experienced a 6.1% increase
in yarn cost per pound during the period under review which has directly
impacted our operations. In addition, the Group faced increased labour costs
amid growing demand for labour in the Pearl River Delta Region. Along with
high inflation in China and appreciation of the Renminbi, our cost of sales as a
percentage of revenue recorded an increase to 81.0% from 77.3% compared
with the corresponding period last year. Gross profit was HK$438.4 million, a
decrease of 8.3% from that of last year. Gross margin for the period recorded
a decrease to 19.0% (2006: 22.7%).
During the interim period ended 30 September 2007, profit attributable to
equity holders of the Company decreased by 4.5% to HK$263.7 million. The
net profit margin attributable to equity holders of the Company for the period
under review was 11.4% (2006: 13.1%).
Distribution and selling expenses for the period under review were HK$91.0
million (2006: HK$71.8 million), representing an increase of 26.7%. The
rise was due mainly to higher freight charges resulted from increase
in oil price and higher customer claims due to a temporary production
adjustment caused by the installation of new production equipment. The
technical problems have now been successfully resolved and the increase in
operational efficiency as a result of the equipment upgrade will be reflected in
the second half of this financial year.
For the interim period ended 30 September 2007, general and administrative
expenses were HK$86.0 million (2006: HK$86.6 million), representing a
decrease of 0.7%. A HK$5.1 million gain on disposal of aged equipment and
replacement of more advanced model to improve efficiency was included in
the period under review. The Group maintained an efficient cost structure and
will continue to exercise a tight cost control.
8
dkp"! I!
In! I &89
jYG?d9IYd
j5#;6;f
aQ2 B7h^YJ
GhdilkolYN
;BfI:t@ 70%i79
d:I^O$
f
d_Idd8XG
Yj 9.5% 2,305.3d
2,106.0fdI];
iV/ ;iV/ 0}{
2.9%7fY![:4I1
}{8Y;iV/f
_a0"jdI[
\lIau#f
dlY;iIj 6.1%d\B
I6f.dI&.g
r#YIjB
dj7[O=jdI
V/I&]d_ 77.3%
j 81.0%f; 438.4d0
h{ 8.3%f;{ 19.0%f 2006j
22.7% f
2007 9 30dI!B5
[&P;h{ 4.5% 263.7f
dI!B5[&; 11.4%
2006j 13.1% f
dVV/ 91.0
2006j 71.8 dj 26.7%fj
_0j6il\d_-
[r[0dp#d
Z${f[D
@d6{dd(ZHI
Ah86f
2007 9 30dSAl\
86.0 2006j 86.6 dh{
0.7%f0Yl
d/}{ 5.1Bv]
fIj5HBYIV(Z1
a9IDf
Management Discussion and Analysis M#4
24
BUSINESS REVIEW (Continued)
As a result of increased cash balance due to listing on the Main Board of
the Stock Exchange in May this year and positive cash flow generated from
operations, finance income for the interim period ended 30 September
2007 was HK$24.8 million (2006: HK$2.1 million), an increase of 10.8 times
compared to the same period last year. The reduction of borrowings and
interest rates has contributed to a decrease of finance costs by 16.4% to
HK$17.8 million (2006: HK$21.3 million) for the interim period ended 30
September 2007.
Customers and Products
During the period under review, sales volume increased 6.2% to reach 81.8
million pounds (2006: 77.0 million pounds). The Group achieved higher
blended ASP as a result of increasing orders for higher-valued fabrics which
command higher margins. ASP grew by 2.9% to HK$28.2 per pound (2006:
HK$27.4 per pound). During the period under review, our top five customers
accounted for approximately 30.6% (2006: 33.7%) of the Group’s turnover
and approximately 49.6% (2006: 52.2%) of our overall sales revenue was
derived from our top five brand owners.
Our value-added printing design continued to play a part in our sales growth.
Through our partnership with Pubblicentro S.r.L., an Italian design house, the
Group marketed its first series of print design for swimwear during the period
under review. Initial feedback from customers was very positive and we are
confident this will generate additional purchase orders.
With the increasing demand for quality and high value-added products,
Mainland China’s domestic market has become an important market for our
business growth. The Group has expanded its China’s domestic sales team
during the period under review and will continue to put more resources to
develop this market segment.
Strategic Partnerships
Our automotive fabric manufacturing joint venture partnership, SPM
Automotive Textile Co., Ltd., has made satisfactory progress during the
period under review. Initial product development was completed and sales
began to take off. Progress of our 50/50 joint venture with Fillattice S.p.A.
was also satisfactory and sales have begun recently in the third quarter which
will help us to access new markets and new customers. These partnerships
are expected to achieve full year breakeven in this financial year and begin to
contribute to our profitability beginning next year.
Capacity Expansion
The Group has expanded its production capacity in accordance with
the market situation and is on track with plans to upgrade its plant and
equipment. The completion of critical supporting facilities such as the power
plant, water treatment facilities and the new water recycling plant at our
Panyu plant at the beginning of this year have put in place the necessary
infrastructure to meet the Group’s expansion in the next two to three years.
During the period under review, the Group upgraded a number of production
equipment such as dyeing machines which are more cost efficient and
environmentally friendly. The Group will closely monitor the market situation
and fine-tune our capacity expansion accordingly.
8
2007 9 30d] 24.8
2006j 2.1 d0j
10.84d]#_ILt
j9dj 2007 9 30
d8[$t]f>rX
;h%I 2007 9 30
16.4% 17.8 2006j 21.3
f
~
dV/# 6.2% 81.8
2006j 77.0 f_H0=~;
:#;jdI
}{0;iV/d;iV/# 2.9%
28.2 2006j 27.4 f
dI/V/&IV
/X: 30.6% (2006: 33.7%)d8I/
[]&V/]:
49.6% 2006j 52.2% f
I#=81}{V/#
f@~};! Pubblicentro S.r.L.
ddI9?I/
"ddI
Z6m8X.f
9/~#=#d7V9
I8#Y 9f
dIu7VYV/d(5
YU9f
+
dIk8
? k"!_{
fd$M}{
V/dI~ Fillattice S.p.A.&SBY
8udKg}{V
/dZI-9-Uf
8ZIA:;Ed(k8
Im8; f
u
I91uId(1k
2d@[DfId@
Y [?De@e@-
[@dIJ8Gg
"?fdIdY
[DQiIB0
0#YfIZaW991d
1uf
Management Discussion and Analysis M#4
25
BUSINESS REVIEW (Continued)
Capacity Expansion (Continued)
Expansion plans at the Group’s Sri Lanka plant have proceeded as planned
and operations continue to improve, reflected by production efficiency. With
the approval to increase treatment of discharged waste water, the plant has
completed expansion of the water treatment facility and other infrastructure.
We are meeting our target of doubling our capacity by March 2008.
FINANCIAL REVIEW
Liquidity and Financial Information
As at 30 September 2007, the Group had total bank and cash balances
and time deposits of HK$1,340.8 million, an increase of approximately
HK$1,114.6 million over the balance of 31 March 2007. Bank and cash
balances and time deposits finance our working capital and part of our capital
expenditure plans and future expansion projects.
As at 30 September 2007, the current ratio was 2.9 (31 March 2007: 1.6).
The gearing ratio, the ratio of total debts (including current and non-current
borrowings and finance lease obligations) to total assets, was 17.6% (31
March 2007: 30.7%). Such decrease was attributable mainly to a reduction of
borrowings and an increased level of cash and bank balances resulted from
positive operating cash flow and the initial public offering in May this year. As
at 30 September 2007, the Group was in a net cash position of HK$580.3
million as opposed to a net debt position of HK$707.1 million as at 31 March
2007.
Foreign Exchange Risk Management
The Group is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the United States dollar and Renminbi.
The Group will continue to enter into forward currency contracts to manage
and reduce the risk involved in the net position in each foreign currency.
Employees and Remuneration Policies
As at 30 September 2007, the Group had a total of 6,817 full-time employees
(31 March 2007: 6,715). There is no significant change in the Group’s
remuneration policy. The Group has adopted a share option scheme to
provide the Company with a flexible means of retaining, incentivising,
rewarding and providing benefits to eligible participants. In July 2007, the
Company granted options to 88 eligible full-time employees to subscribe for
a total of 22,820,000 shares of the Company which represent about 1.6% of
total issued shares. The amortised fair value of share options granted totalling
approximately HK$1.9 million was charged to the income statement for the
six months ended 30 September 2007.
Outlook and Prospects
We expect the uncertainty surrounding the subprime situation is far from over
and may continue to have a lingering impact, leading to volatility in purchase
order flow from our customers. We also expect the Renminbi appreciation,
high inflation and labour cost increase in China will continue for some time,
exerting pressure on our margins. We predict that a tough and fluctuating
operating environment in the fabric manufacturing sector will persist and a
wave of consolidation in the industry will ensue.
8
u
Iv"@d
@[{QdHI6{Q
f1{v#YXd@
@I?DdI
[M 2008 3#:G4fz
f
t
2007 9 30dIY$q<
X 1,340.8d0 2007
3 31qj 1,114.6dI
@$qD6
IJ8Yff
2007 9 30dt 2.9 2007 3
31j 1.6 dC<X <t
t>rDa# ~<=
17.6% 2007 3 31j 30.7% fh
_>r5~8[$t]I
//$q;j
f 2007 9 30dI}{$
; 580.3d 2007 3 31}{
707.1f
,M#
I&@j,d
[OdIZ5@M
#-.5QX,f
pZGA
2007 9 30dI\ 6,817
p 2007 3 31j 6,715 fIZG
A( }fIvSp
dHA5eG}d62;
kf 2007 7dI!
p 88pI!
22,820,000ppd&<pI 1.6%f
pV;=<p 1.9
2007 9 30HB]
f
{
Ik2Y1Jd(
1m8BdIp
fIuk7Y[O=je
&I#1Z5d
I;bfA:
8YZ5Yd(Z
8;f
Management Discussion and Analysis M#4
26
FINANCIAL REVIEW (Continued)
Outlook and Prospects (Continued)
However, our core competencies remain intact. Solid infrastructure, efficient
production base and advanced technology allow the Group to adapt rapidly
to changing operating conditions. Our established clientele, our niche product
offerings in high-end, value-added and complex fabric production allow us to
maintain competitiveness in the fabric manufacturing sector. The Group will
aim to achieve consistent, healthy operating margin and delivering maximum
shareholders’ return. Our healthy operating cash flow and strong balance
sheet with positive net cash position gives us the financial strength to explore
expansion while the Group remains open to opportunities for strategic
acquisitions and partnerships.
China is currently our manufacturing base and the Group is actively exploring
opportunities to diversify geographically, particularly into China’s domestic
market which holds huge potential. As demand for quality fabrics continues to
rise, the Group expanded its China’s domestic sales team during the period
under review and will target more resources towards this market segment.
The Group has successfully ventured into the automotive fabric segment and
if the opportunity arises, we will consider entering other non-apparel sectors
to capitalise on our core competence.
The Group will remain prudent in capital expenditure. While the existing site
and supporting facilities in Panyu are good enough for expansion over the
next two to three years, we are actively exploring potential production sites
both outside and within China for long-term development.
IPO Proceeds
The shares of the Company were listed on the Main Board of the Stock
Exchange on 18 May 2007 and raised net proceeds of approximately
HK$1,796 million. During the six months ended 30 September 2007,
approximately HK$762 million was used to repay a syndicated loan and
other bank loans. Approximately HK$187 million was used to fund capital
expenditures for the expansion and upgrade of our facilities and operations.
The balance of the net proceeds has been deposited into the interest-bearing
bank accounts with licensed commercial banks in Hong Kong.
Segmental Information
Details of segmental information are set out in Note 2 to the interim financial
information.
Material Acquisition and Disposal of Subsidiary and
Associated Company
There was no material acquisition or disposal of the Company’s subsidiaries
and associated companies during the six months ended 30 September 2007.
Contingent Liabilities
The Group has no material contingent liabilities as at 30 September 2007.
{
I)Fbj5f9I
x?DdH[?d4
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$7IY[?dI$M=
>9dIJH|}b
7I9f_/:5jd
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=7.7IzJ@
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//{
I!p 2007 5 18Ltj
9dX 1,796f 2007
9 30HdXI 762
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}/n!L!
2007 9 30 6HdI(
}/I!n!L
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2007 9 30dI!( }f
Management Discussion and Analysis M#4
27
FINANCIAL REVIEW (Continued)
Capital Commitment
As at 30 September 2007, the Group had outstanding capital commitment
in respect of purchase of property, plant and equipment amounted to
approximately HK$99.9 million (31 March 2007: HK$72.3 million). The
funding of the capital commitment will be from the net proceeds of initial
public offering and internal resources. In addition, the Group had authorised
the injection of capital into an associate to be established in China with
Guangzhou Nansha Assets Operation Co., Limited totalling approximately
HK$22.6 million to provide steam generated by the Group to the potential users
in the vicinity.
Pledge of Assets
As at 30 September 2007, the Group’s property, plant and equipment with
book value of approximately HK$95.9 million (31 March 2007: HK$96.9
million) were pledged to secure banking facilities of the Group.
I
2007 9 30dI1oJ8e@
IX 99.9 2007
3 31j 72.3 fZ6}
//{XUaf
.dIXS~?
"!Z7mL!!
22.6dd6I[
L4\kf
2007 9 30dI&= 95.9
2007 3 31j 96.9 J8e
@dIr
f
Supplemental
Information
28
INTERIM DIVIDEND
The Board has declared an interim dividend of HK6.5 cents per share for the
six months ended 30 September 2007. The interim dividend will be paid on
or around 25 January 2008 to shareholders whose names appear on the
Register of Members at the close of business on 3 January 2008.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members will be closed from 28 December 2007 to 3
January 2008 (both days inclusive), during which period no transfer of shares
can be registered. In order to qualify for the interim dividend, all transfers
accompanied by the relevant share certificates must be lodged with the
Company’s Hong Kong Branch Share Registrar, Computershare Hong Kong
Investor Services Limited not later than 4:30 p.m. on 27 December 2007.
Computershare Hong Kong Investor Services Limited is located at Shops
1712–1716, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong
Kong.
SHARE OPTION SCHEME
Pursuant to the written resolution of shareholder of the Company passed
on 27 April 2007, the Company adopted a share option scheme (the ‘Share
Option Scheme’) subject to the terms and conditions therein. The summary
of the Share Option Scheme is set out in the Annual Report of the Company
for the year ended 31 March 2007.
As at 30 September 2007, options to subscribe for an aggregate of
22,820,000 shares of the Company granted to 88 eligible full-time employees
pursuant to the terms of the Share Option Scheme remained outstanding,
details of which were as follows:
Number of share options
ppf
Outstanding as at
Outstanding as at 30 September
1 April 2007 Granted during Exercised during Lapsed during Cancelled during 2007
Date of grant 200741 the period the period the period the period 2007930
J4 4 0 WV J4
18 July 2007 – 22,820,000 – – – 22,820,000
The fair value of options granted is approximately at an average of HK$1.222
per share on the basis of binominal model. The significant inputs into the
model were the closing price of the share of the Company at the date of grant
of HK$4.8 per share, annual risk-free interest rate of approximately 4.8%,
an expected option life of approximate six years, expected volatility of 32%
and annual dividend yield of 4%. The amortised fair value of share options
for the six months ended 30 September 2007 amounting to approximately
HK$1,899,000 (2006: Nil) was charged to the income statement.
The options are exercisable from 18 July 2010 to 17 July 2017 (both days
inclusive) up to 100% of the options at an exercise price of HK$5.04 per
share. The closing price of the share of the Company immediately before the
date of grant was HK$4.86 per share.
No option had been granted to the Directors, chief executive or substantial
shareholders of the Company or their respective associates under the Share
Option Scheme since its adoption.
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Supplemental Information
29
USE OF PROCEEDS
The shares of the Company were listed on the Main Board of the Stock
Exchange on 18 May 2007 and raised net proceeds of approximately
HK$1,796 million. The Company intends to use the net proceeds as set out
in the Prospectus as follows:
Amount
X
(HK$ million)
• Repayment of a syndicated loan and other bank loans rI4r 762
• Expansion and upgrading the facilities and operations dD6 873
• General working capital S6 161
1,796
During the six months ended 30 September 2007, approximately HK$762
million and HK$187 million were used from the net proceeds to repay a
syndicated loan and other bank loans and for the capital expenditures
respectively. The balance of the net proceeds has been deposited into
interest-bearing bank accounts with licensed commercial banks in Hong
Kong.
PURCHASE, SALE OR REDEMPTION 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
September 2007.
CORPORATE GOVERNANCE
The Board has reviewed the Company’s corporate governance practices
and is satisfied that the Company has been in compliance with the applicable
code provisions set out in the Code on Corporate Governance Practices
(the “Code”) contained in Appendix 14 of the Rules Governing the Listing
of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong
Limited (the “Stock Exchange”) throughout the six-month period ended 30
September 2007.
MODEL CODE FOR SECURITIES TRANSACTIONS BY
DIRECTORS
The Company has adopted the Model Code for Securities Transactions by
Directors of Listed Issuers set out in Appendix 10 to the Listing Rules (the
“Model Code”) as the Company’s code of conduct for dealings in securities of
the Company by the directors. Based on specific enquiry of the Company’s
directors, they have all complied with the required standards set out in the
Model Code, throughout the period for the six months ended 30 September
2007.
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Supplemental Information
30
AUDIT COMMITTEE
An audit committee has been established by the Company to review and to
approve the Group’s financial reporting process and internal control system.
The audit committee has reviewed the unaudited condensed consolidated
results of the Group for the six months ended 30 September 2007 in
conjunction with the external auditor and the management of the Company.
The interim results have been reviewed by the external auditor of the
Company 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 HKICPA.
The members of the audit committee are Mr. Sze Kwok Wing, Nigel; Mr. Ng
Ching Wah and Mr. Chan Yue Kwong, Michael (who are independent non-
executive directors). Mr. Sze Kwok Wing, Nigel, a Fellow of CPA Australia, is
the chairman of the audit committee.
REMUNERATION COMMITTEE
A remuneration committee has been established by the Company to review
and determine the terms of remuneration packages, bonuses and other
compensation payable to the Directors and senior management of the Group
with reference to the nature of their work, complexity of the responsibilities
and performance.
The members of the remuneration committee are Mr. Chan Yue Kwong,
Michael; Mr. Sze Kwok Wing, Nigel and Mr. Ng Ching Wah (who are
independent non-executive directors) and Mr. Lam Wing Tak and Mr. Tsang
Kang Po (who are executive directors). Mr. Chan Yue Kwong, Michael is the
chairman of the remuneration committee.
NOMINATION COMMITTEE
A nomination committee has been established by the Company to make
recommendations to the Board on the appointment of directors and the
management of the Board succession.
The members of the nomination committee are Mr. Ng Ching Wah; Mr. Chan
Yue Kwong, Michael and Mr. Sze Kwok Wing, Nigel (who are independent
non-executive directors) and Mr. Lam Wing Tak and Mr. Tsang Kang Po
(who are executive directors). Mr. Ng Ching Wah is the chairman of the
remuneration committee.
BOARD OF DIRECTORS
As at the date of this announcement, the executive Directors are Mr. WAN
Wai Loi (Chairman), Mr. TSANG Kang Po, Mr. LAM Wing Tak and Dr. LAM
King Man, the non-executive Directors are Mr. CHOI Kin Chung, Mr. IP Ping
Im, Mr. HO Hsiang Ming, James and Mr. LAU Yiu Tong, and the independent
non-executive Directors are Mr. NG Ching Wah, Mr. SZE Kwok Wing, Nigel
and Mr. CHAN Yue Kwong, Michael.
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