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PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT
| 1 |
| CONTENTS |
| Review of operations 2 |
| Independent review report 8 |
| Condensed consolidated income statement 9 |
| Condensed consolidated balance sheet 10 |
| Condensed consolidated statement of changes in equity 11 |
| Condensed consolidated cash flow statement 12 |
| Notes to the condensed financial information 13 |
2
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
REVIEW OF OPERATIONS
Business Review
The board of directors (the “Directors”) of Pak Tak International Limited (the “Company”) has
the pleasure of presenting the interim report and the unaudited consolidated results of the
Company and its subsidiaries (together the “Group”) for the six months ended 30 September
2007.
The Directors are pleased to report a profitable period of operations for the six months ended
30 September 2007. The positive result is a reflection of the Group’s strategic approach to
maintain its image as a strong producer of high quality, high value, and complex knitwear
products as well as its stringent cost control measures. The Group increased its turnover to
HK$229 million, representing an increase of 6% as compared to the same period in the
previous year. The result in turnover can be attributed to the Group’s strategic push for its
computerized machine made knitwear. More impressively, the Group’s gross profit and net
profit attributable to shareholders also increased by 16% and 7% respectively over the same
period of the previous year, a success that reflects the Group’s automated production capacity.
Fully 49% of the Group’s turnover in this six month period ended 30 September 2007 was for
products made by the Group’s automated machinery. The computerized knitting machinery
enables the Group to divert more of its resources to produce high-end products with higher
unit prices while at the same time control labor costs which have substantially increased with
the labor shortages in southern China and the appreciation of the Renminbi. The Group is
confident that its strategy of expanding its automation process division is a sensible one and
allows the Group to focus its sales on higher-end products while remaining competitive in an
industry where production costs continue to rise.
Turnover
The Group’s consolidated turnover for the six months ended 30 September 2007 increased
by 6% to approximately HK$229 million, from HK$215 million for the corresponding period in
2006.
In the current period under review, the Group’s sales to the United States increased by 21%
from HK$176 million for the period ended 30 September 2006 to HK$212 million for the
current period. The United States remained the Group’s core market, representing 93% of the
Group’s total consolidated turnover.
Profitability
The Group reported a net profit attributable to shareholders of HK$14 million for the period
ended 30 September 2007 (30 September 2006: HK$13 million). In comparison to the same
period in 2006, the Group’s production costs in the six months ended 30 September 2007
increased by 5%, from HK$186 million to HK$195 million. However, with a higher percentage
increase in turnover, the Group’s gross profit increased by 16%, to HK$34 million. This
improvement in gross profit is a direct result of the extensive use of the computerized knitting
machinery as well as stringent cost control measures that the Group has introduced in recent
years. The imperative to control cost cannot be emphasized enough given the labor shortage
in southern China and the increase in raw material cost and utilizes. The Group strongly
believes in the need to closely monitor its cost in order to remain competitive.
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
3
Profit before tax for the six months ended 30 September 2007 has also increased by 12%
from HK$14 million for the same period of the previous year to HK$16 million of the current
period. The increase in profitability in this six month period over the comparative period of
the year came despite an increase in various expenditures. These include an increase in air
freight expenses by HK$3 million due to the fact that with the automated machinery working
in full capacity and the shortage of labor in southern China, the Group had to deliver by air
freight in order to complete its shipments on time under the tight timetable. The Group further
made a provision for stock depreciation of HK$4 million (30 September 2006: HK$ Nil) along
with the provision of bad debt of HK$2 million (30 September 2006: HK$ Nil) in this six month
period in order to prudently write-off assets that have lost value. During the period, quota for
Chinese products was re-introduced, resulting in the increase in selling expenses. Another
expenditure that went up during the six month ended 30 September 2007 was bank interest
charges as the Group incurred more interest charges for the computerized knitting machinery.
The Group remains a firm believer that over the long run, profits will continue to widen due to
lower staff count and better management of its sub-contracting charges as the Group further
develops and invests in its automated production division.
Liquidity and Financial Resources
As at 30 September 2007, total amount of cash and bank balance of the Group were
approximately HK$8 million, representing an decrease of approximately 30% over 31 March
2007. Most of the funds were held in Hong Kong dollars and US dollars. As at 30 September
2007, the Group was in a net current liabilities position of HK$15 million (31 March 2007: net
current assets of HK$3 million). The reason for the drop in the Group’s working capital
position was that during the six months period ended 30 September 2007, for the Group’s
acquisition of the computerized knitting machinery, the Group had made immediate payments
or made provision of current liabilities. As the Group re-negotiates with bank and financial
institution to arrange for long term leasing contracts, the net current liabilities position is
expected to improve.
The Group will continue to finance its operations with its operating cashflow and available
banking facilities of over HK$110 million (31 March 2007: HK$113 million), out of which
HK$60 million has been utilized as at 30 September 2007. The banking facilities were secured
by corporate guarantees given by the Company. The Group’s gearing ratio computed as total
borrowings over shareholders’ funds was 53% as at 30 September 2007 (31 March 2007:
49%).
The Group’s sales were predominately denominated in US dollars while purchases were
transacted in Hong Kong dollars. The Group’s expenditures in China, the location of its
production facilities, are denominated in Chinese Renminbi (“RMB”). Notwithstanding the rise
of exchange rate for the RMB relative to the US dollar, the Group believes that its currency
exposure is minimal and immaterial given its relatively low expenditures made in RMB in
comparison to the expenditures made in Hong Kong dollars and US dollars.
The Group’s borrowings and cash balances were principally denominated in Hong Kong
dollars. No financial instruments were used for hedging purposes.
4
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
Interim Dividend
The Directors have resolved not to recommend the payment of any interim dividend for the
six months ended 30 September 2007 (30 September 2006: HK$ Nil).
Charge on Group Assets
As at 30 September 2007, certain machinery of the Group with a net book value of
approximately HK$2 million (31 March 2007: approximately HK$3 million), leasehold buildings
with a net book value of approximately HK$67 million (31 March 2007: HK$ Nil), interest in
leasehold land with a carrying amount of approximately HK$2 million (31 March 2007: HK$
Nil) and fixed deposit of approximately HK$3 million (31 March 2007: HK$ Nil) were pledged
to secure the banking facilities utilized by the Group.
Contingent Liabilities
As at 30 September 2007, the Group had contingent liabilities in respect of bank guarantees
of approximately HK$1.5 million (31 March 2007: approximately HK$1.7 million issued in
favour of third parties).
Capital Expenditures and Commitments
For the six month period ended 30 September 2007, the Group incurred capital expenditures
of HK$38 million (31 March 2007: HK$23 million). There was a further capital commitment of
HK$6 million outstanding as at 30 September 2007 (31 March 2007: HK$ Nil).
Employees and Remuneration Policies
As at 30 September 2007, the Group had approximately 413 employees (30 September 2006:
1,052 employees). The Group’s remuneration package is structured to commensurate with
individual responsibilities, qualification, experience and performance.
FUTURE PROSPECTS
The Group’s current management is dedicated to upholding the overall business principles
and strategies as set down by its former Chairman, the late Mr. Cheng Chi Tai. One of the
primary strategies that has served the Group well in the last few years is automating its
production process. The Directors will ensure that this strategy continues. The Group believes
that in this competitive market of more manufacturers in China vying for sales to global
customers, with ever changing business circumstances such as increase in cost of raw materials
and labor, the Group must tread cautiously in order not to over-extend itself.
The Group is committed to consolidate its brand image as a strong producer of high quality,
high value, complex knitwear products and build on its strength as a leader in this field.
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
5
DIRECTORS
The following persons were Directors of the Company as at the date of this report:
Executive Directors
Mr. Cheng Kwai Chun, John
Mr. Lin Chick Kwan
Mr. Lin Wing Chau
Non-executive Director
Mr. Victor Robert Lew
Independent Non-executive Directors
Mr. Chow Chan Lum
Ms. Ko Hay Yin, Karen
Ms. Ho Man Yee, Esther
DIRECTORS’ INTERESTS IN SECURITIES
As at 30 September 2007, the interests and short positions of the Directors and chief executives
of the Company and their respective associates in the shares, underlying shares and debentures
of the Company or any of its associated corporations (within the meaning of Part XV of the
Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong (the “SFO”)) which
would have to be notified to the Company and Cheng Kwai Chun, John 120,840,000 Discretionary 51.11%
(Note 1) Object
40,314,280 Controlled 17.05%
(Note 2) Corporation
Notes:
1. These shares are held by HSBC International Trustee Limited, the trustee of The Brighton Trust,
the discretionary beneficiaries of which include Mr. Cheng Kwai Chun, John. HSBC International
Trustee Limited is incorporated in the British Virgin Islands.
2. These shares are held by Best Ahead Limited (“Best Ahead”), a company incorporated in the
British Virgin Islands. Mr. Cheng Kwai Chun, John is the sole director of Best Ahead and Best
Ahead acts in accordance with his directions or instructions. As such, Mr. Cheng Kwai Chun,
John is taken or deemed to be interested in the shares of the Company held by Best Ahead.
6
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
SUBSTANTIAL SHAREHOLDERS
As at 30 September 2007, so far as was known to the Directors or chief executives of the
Company, the following persons had an interest or short position, other than the interests
disclosed above in respect of Directors and chief executives, in the shares or the underlying
shares of the Company as recorded in the register required to be kept under section 336 of
the SFO and which would fall to be disclosed to the Company under the provisions of
Divisions 2 and 3 of Part XV of the SFO, or were directly or indirectly interested in 10% or
more of the nominal value of any class of share capital carrying rights to vote in all
circumstances at general meeting of any members of the Group:
Name of Number of
Name Company shares held Percentage held
HSBC International Pak Tak International 120,840,000 approximately
Trustee Limited Limited 51.11%
(Note 1)
Best Ahead Limited Pak Tak International 40,314,280 approximately
Limited 17.05%
(Note 2)
Ms. Amy Pik Sin Pak Tak Knitting & 1,000 10%
Garment Factory
(Thailand) Company
Limited
Mr. Nakorn Phisitchoowong Pak Tak Knitting & 1,000 10%
Garment Factory
(Thailand) Company
Limited
Miss Janphen Pak Tak Knitting & 1,000 10%
Phisitchoowong Garment Factory
(Thailand) Company
Limited
Notes:
1. HSBC International Trustee Limited is incorporated in the British Virgin Islands and is the trustee
of The Brighton Trust, a discretionary trust, the beneficiaries of which are Mr. Cheng Kwai Chun,
John, a Director, and other family members of Mr. Cheng Kwai Chun, John.
2. Best Ahead Limited is incorporated in the British Virgin Islands, the entire issued share capital of
which is beneficially owned by Mr. Cheng Chi Tai. Such shares now form part of the estates of Mr.
Cheng Chi Tai following his decease and are pending distribution by the executor. The sole
director of Best Ahead Limited is Mr. Cheng Kwai Chun, John. Save as disclosed above, no
Director is a director or employee of a company which has an interest or short position in the
shares and underlying shares of the Company which would fall to be disclosed to the Company
under the provisions of Divisions 2 and 3 of Part XV of the SFO.
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
7
PURCHASE, SALE AND REDEMPTION OF THE COMPANY’S LISTED SECURITIES
Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the
Company’s listed securities during the six months ended 30 September 2007.
CORPORATE GOVERNANCE REPORT
The Directors are pleased to report that throughout the six months period ended 30 September
2007, the Company was in substantial compliance with the Code of Corporate Governance
Practices (the “Code”) as set out in Appendix 14 of the Listing Rules. In particular, the
Company has ensured that:
• the appointment to and the composition and operation of the Board of Directors;
• the remuneration of Directors and senior management;
• accountability and audit;
• delegation by the Board; and
• communication with shareholders,
are in compliance with the Code.
The Board will continuously review the corporate governance structure of the Company and
effect changes whenever necessary.
DIRECTORS’ SECURITIES TRANSACTIONS
The Company has adopted a code of conduct rules (the “Model Code”) regarding securities
transactions by Directors on terms no less exacting than the required standard set out in the
Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix
10 of the Listing Rules. Having made specific enquiry of all Directors, the Company confirms
that all the Directors have complied with the Model Code in the six months period ended 30
September 2007.
COMMITTEES
The Directors have caused three committees to be formed pursuant to the Code: The Audit
Committee, the Nomination Committee and the Remuneration Committee. The Audit Committee,
comprising the three independent non-executive Directors, namely Mr. Chow Chan Lum, Ms.
Ko Hay Yin, Karen and Ms. Ho Man Yee, Esther, has reviewed with the management and the
auditors of the accounting principles and practices adopted by the Group and discussed and
reviewed the unaudited consolidated financial statements for the six months ended 30
September 2007.
The interim results for the six months ended 30 September 2007 have been reviewed by the
Company’s auditors.
On behalf of the Board
Victor Robert Lew
Chairman
Hong Kong, 7 December 2007
8
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
INDEPENDENT REVIEW REPORT
TO THE BOARD OF DIRECTORS OF PAK TAK INTERNATIONAL LIMITED
(Incorporated in the Bermuda with limited liability)
Introduction
We have reviewed the interim financial information set out on pages 9 to 18 which comprises
the condensed consolidated balance sheet of Pak Tak International Limited as at 30 September
2007 and the related condensed consolidated statements of income, changes in equity and
cash flows for the six-month period then ended, and a summary of significant accounting
policies and other explanatory notes. The Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial
information to be in compliance with the relevant provisions thereof and Hong Kong Accounting
Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified
Public Accountants. The directors are responsible for the preparation and presentation of this
interim financial information in accordance with this Hong Kong Accounting Standard 34. Our
responsibility is to express a conclusion on this interim financial information based on our
review.
Scope of Review
We conducted our review in accordance with Hong Kong Standard on Review Engagements
2410, “Review of Interim Financial Information Performed by the Independent Auditor of the
Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of interim
financial information consists of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Hong Kong Standards
on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
interim financial information is not prepared, in all material respects, in accordance with Hong
Kong Accounting Standard 34.
BAKER TILLY HONG KONG LIMITED
Certified Public Accountants
Hong Kong, 7 December 2007
Andrew David Ross
Practising Certificate number P01183
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
9
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2007
Six months ended
30 September
2007 2006
Note HK$’000 HK$’000
(unaudited) (unaudited)
Turnover 3 229,010 215,472
Cost of sales (194,613) (185,694)
Gross profit 34,397 29,778
Other operating income 4 1,636 2,479
Administrative expenses (15,581) (14,406)
Selling expenses (3,932) (2,046)
Profit from operations 5 16,520 15,805
Finance costs 6 (2,514) (2,368)
Share of results of an associate 1,997 893
Profit before taxation 16,003 14,330
Income tax 7 (1,768) (1,046)
Profit attributable to shareholders 14,235 13,284
Dividend 8 – –
HK cents HK cents
Earnings per share 9 6 6
The accompanying notes form an integral part of these financial statements.
10
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
CONDENSED CONSOLIDATED BALANCE SHEET
At 30 September 2007
At At
30 September 31 March
2007 2007
Note HK$’000 HK$’000
(unaudited) (audited)
Non-current assets
Property, plant and equipment 10 203,431 175,202
Prepaid land premiums 7,600 7,622
Investment properties 3,870 3,855
Interest in an associate 5,538 3,541
220,439 190,220
Current assets
Inventories 43,595 34,146
Trade debtors 11 50,794 8,470
Other debtors, prepayments and deposits 5,040 3,951
Amount due from an associate 3,467 4,581
Bank balances and cash 9,419 11,163
112,315 62,311
Current liabilities
Trade creditors 12 33,724 10,899
Bills payable 612 5,095
Other creditors and accrued charges 13 40,424 12,376
Amounts due to minority shareholders
of a subsidiary 3,324 3,314
Bank borrowings 35,214 23,074
Obligations under finance leases 4,155 4,136
Other short term loan 14 8,500 –
Bank overdrafts 1,570 –
127,523 58,894
Net current (liabilities)/assets (15,208) 3,417
Total assets less current liabilities 205,231 193,637
Non-current liabilities
Bank borrowings 13,946 19,631
Obligations under finance leases 3,935 6,001
Amounts due to a director 15 8,500 8,500
Other long term creditor 11,470 –
Other long term loan 14 – 8,500
Deferred tax liabilities 1,944 176
Provision for long service payments 885 885
40,680 43,693
164,551 149,944
Capital and reserves
Share capital 23,640 23,640
Reserves 140,911 126,304
164,551 149,944
The accompanying notes form an integral part of these financial statements.
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
11
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2007
Share Share Special Exchange Retained
capital premium reserve reserve profits Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 April 2006 23,640 5,987 32,680 549 81,888 144,744
Exchange differences arising on translation
of overseas operations not recognised in
consolidated income statement - – – (217) – (217)
Profit for the period – – – – 13,284 13,284
At 30 September 2006 23,640 5,987 32,680 332 95,172 157,811
At 1 April 2007 23,640 5,987 32,680 4,713 82,924 149,944
Exchange differences arising on translation
of overseas operations not recognised in
consolidated income statement – – – 372 – 372
Profit for the period – – – – 14,235 14,235
At 30 September 2007 23,640 5,987 32,680 5,085 97,159 164,551
12
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2007
Six months ended
30 September
2007 2006
HK$’000 HK$’000
(unaudited) (unaudited)
Net cash generated from operating activities 20,367 6,981
Investing activities
Purchase of property, plant and equipment (37,826) (1,287)
Other investing cash flows 387 5
Net cash used in investing activities (37,439) (1,282)
Financing activities
Bank borrowings raised, net 23,942 1,375
Other financing cash flows (10,184) (4,277)
Net cash generated from/(used in) financing activities 13,758 (2,902)
Net (decrease)/increase in cash and cash equivalents (3,314) 2,797
Cash and cash equivalents at beginning of the period 11,163 10,372
Cash and cash equivalents at end of the period 7,849 13,169
Cash and cash equivalents at end of the period,
represented by:
Bank balances and cash 9,419 13,169
Bank overdrafts (1,570) –
7,849 13,169
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
13
NOTES TO THE CONDENSED FINANCIAL INFORMATION
For the six months ended 30 September 2007
1. GENERAL
The Company was incorporated in Bermuda as an exempted company with limited liability and its
shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The address of the Company’s registered office is Clarendon House, 2 Church Street, Hamilton HM
11, Bermuda. The principal office in Hong Kong is located at Units 404-411, 4th Floor, Fanling
Industrial Centre, 21 On Kui Street, On Lok Tsuen, Fanling, New Territories, Hong Kong.
The Company is an investment holding company. Its subsidiaries are principally engaged in the
manufacture of and trading in knit-to-shape garments.
2. BASIS OF PRESENTATION
The unaudited condensed financial information has 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 and with Hong Kong Accounting Standard 34 “Interim Financial
Reporting” issued by the Hong Kong Institute of Certified Public Accountants (HKICPA).
This unaudited condensed consolidated financial information has been prepared under the historical
cost convention, and should be read in conjunction with the Group’s annual financial statements for
the year ended 31 March 2007. The accounting policies and methods of computation adopted are
consistent with those followed in preparation of the Group’s annual financial statements for the year
ended 31 March 2007.
During the period, the Group adopted the following new and revised Hong Kong Financial Reporting
Standards (“HKFRSs”), Hong Kong Accounting Standards (“HKASs”) and Interpretations (“HK(IFRIC)
– Ints”) (collectively the “new HKFRSs”) issued by the HKICPA.
HKAS 1 (Amendment) Presentation of Financial Statements – Capital Disclosures
HKFRS 7 Financial Instruments – Disclosures
HK(IFRIC) – Int 8 Scope of HKFRS 2
HK(IFRIC) – Int 9 Restatement 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 HKFRSs did not result in substantial changes to the accounting policies and
the methods of computation used in the condensed consolidated financial information. As there is
no material effect on the results for the current or prior accounting periods, no prior period adjustment
is required.
As at the date of this report, the following standards and interpretations were in issue but not yet
effective:
HKFRS 8 (Note a) Operating Segments
HKAS 23 (revised) (Note a) Borrowing Costs
HK(IFRIC) – Int 12 (Note b) Service Concession Arrangements
HK(IFRIC) – Int 13 (Note c) Customer Loyalty Programme
HK(IFRIC) – Int 14 (Note b) HKAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction
Note a: effective for annual periods beginning on or after 1 January 2009
Note b: effective for annual periods beginning on or after 1 January 2008
Note c: effective for annual periods beginning on or after 1 July 2008
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PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
2. BASIS OF PRESENTATION (Continued)
The Group has commenced considering the potential impact of the above new HKFRSs but is not
yet in a position to determine whether these HKFRSs would have a significant impact on how its
result of operations and financial position are prepared and presented. These HKFRSs may result in
changes in the future as to how the results and financial position are prepared and presented.
3. TURNOVER AND PROFIT FOR THE PERIOD
The Group’s turnover and profit for the six months ended 30 September 2007 by business segment
(primary segment) are as follows:
Turnover for the Profit for the
six months ended six months ended
30 September 30 September
2007 2006 2007 2006
HK$’000 HK$’000 HK$’000 HK$’000
(unaudited) (unaudited) (unaudited) (unaudited)
Sales of knit-to-shape garments 227,411 212,458 13,430 14,331
Subcontracting income 38,814 11,209 3,419 196
Less: Inter-segment transactions (37,215) (8,195) (1,965) (1,201)
229,010 215,472 14,884 13,326
Other operating income 1,636 2,479
Profit from operations 16,520 15,805
Finance costs (2,514) (2,368)
Share of results of an associate 1,997 893
Profit before taxation 16,003 14,330
Income tax (1,768) (1,046)
Profit attributable to shareholders 14,235 13,284
Inter-segment sales for the six months ended 30 September 2007 from sub-contracting segment to
sales of knit-to-shape garments segment were charged at cost plus a percentage profit markup.
The Group’s turnover for the six months ended 30 September 2007 by geographical market is as
follows:
Turnover
Six months ended
30 September
2007 2006
HK$’000 HK$’000
(unaudited) (unaudited)
United States of America 212,484 175,575
Asia 5,695 19,410
Europe 5,405 16,751
Australia 747 393
Others 4,679 3,343
229,010 215,472
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
15
4. OTHER OPERATING INCOME
Six months ended
30 September
2007 2006
HK$’000 HK$’000
(unaudited) (unaudited)
Exchange gains 581 1,386
Gain on disposal of fixed assets 350 –
Interest income 62 130
Sundry income 643 963
1,636 2,479
5. PROFIT FROM OPERATIONS
Six months ended
30 September
2007 2006
HK$’000 HK$’000
(unaudited) (unaudited)
Profit from operations has been arrived at after charging:
Allowance on inventories 3,767 –
Amortisation of prepaid land premiums 91 90
Depreciation and amortisation of property, plant and equipment 9,841 7,779
6. FINANCE COSTS
The finance costs represent interest on amount due to a director, interest on other short term loan,
implied interest on financing the acquisition of property, plant and equipment, interest on bank
borrowings wholly repayable within five years and charges on finance leases.
7. INCOME TAX
The charge represents deferred tax charge of approximately HK$1,768,000 (six months ended 30
September 2006: HK$1,046,000).
No provision for Hong Kong profits tax has been made (six months ended 30 September 2006: HK$
Nil) as the estimated assessable profit for the period is wholly absorbed by tax losses brought
forward.
8. DIVIDEND
The directors do not recommend the payment of any interim dividend for the six months ended 30
September 2007 (six months ended 30 September 2006: HK$ Nil).
9. EARNINGS PER SHARE
The calculation of earnings per share is based on the Group’s profit of HK$14,235,000 for the period
(six months ended 30 September 2006: HK$13,284,000) and on 236,402,000 ordinary shares in issue
(six months ended 30 September 2006: 236,402,000 ordinary shares in issue).
Diluted earnings per share is not presented for either period because the Company does not have
any dilutive potential ordinary shares.
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PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
10. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 September 2007, the Group acquired property, plant and equipment
at a cost of approximately HK$37,826,000 (six months ended 30 September 2006: HK$1,287,000).
The net book value of property, plant and equipment includes an amount of HK$10,905,000 (31
March 2007: HK$12,125,000) in respect of assets held under finance leases.
11. TRADE DEBTORS
The Group allows an average credit period of 30 days to its trade customers.
The following is an aging analysis of trade debtors:
At At
30 September 31 March
2007 2007
HK$’000 HK$’000
(unaudited) (audited)
0 – 30 days 43,238 1,386
31 – 60 days 6,021 3,192
61 – 90 days 1,213 1,101
> 90 days 4,678 4,802
55,150 10,481
Less: Impairment loss (4,356) (2,011)
50,794 8,470
12. TRADE CREDITORS
The following is an aging analysis of trade creditors:
At At
30 September 31 March
2007 2007
HK$’000 HK$’000
(unaudited) (audited)
0 – 30 days 16,234 5,929
31 – 60 days 11,728 1,881
61 – 90 days 2,954 1,461
> 90 days 2,808 1,628
33,724 10,899
13. OTHER CREDITORS AND ACCRUED CHARGES
Included in other creditors and accrued charges as at 30 September 2007 was an amount of
HK$25,827,000 (31 March 2007: HK$5,163,000) being payable for plant and machinery.
14. OTHER SHORT/LONG TERM LOAN
The loan is unsecured and has no fixed terms of repayment. Interest is charged at the interest rate
for 6-month fixed deposits as quoted by the Hong Kong Monetary Authority from time to time.
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
17
15. AMOUNT DUE TO A DIRECTOR
The amount due to a director is unsecured and has no fixed terms of repayment. Interest is charged
at the interest rate for 6-month fixed deposits as quoted by the Hong Kong Monetary Authority from
time to time. The Group has an understanding with the director that it will not be required to repay
any part of the amount due in the next 12 months.
16. PLEDGE OF ASSETS
At 30 September 2007, certain machinery with a net book value of approximately HK$2,254,000 (31
March 2007: HK$2,512,000), leasehold buildings with a net book value of approximately
HK$67,447,000 (31 March 2007: HK$ Nil), interest in leasehold land with a carrying amount of
approximately HK$2,120,000 (31 March 2007: HK$ Nil) and fixed deposit of approximately
HK$3,495,000 (31 March 2007: HK$ Nil) were pledged to secure the banking facilities utilised by the
Group.
17. CAPITAL COMMITMENTS
At At
30 September 31 March
2007 2007
HK$’000 HK$’000
(unaudited) (audited)
Capital expenditure in respect of the acquisition of property,
plant and equipment:
Contracted but not provided for 6,350 –
Authorised but not contracted for – –
6,350 –
18. CONTINGENT LIABILITIES
At 30 September 2007, the Group had contingent liabilities in respect of bank guarantees of
approximately HK$1,492,000 (31 March 2007: HK$1,648,000) issued in favour of third parties.
In the opinion of the Directors, the fair values of the financial guarantee contracts of the Group are
insignificant at initial recognition and the directors consider the possibilities of the default of the
parties involved is remote, accordingly, no value has been recognised in the balance sheet.
18
PAK TAK INTERNATIONAL LIMITED
INTERIM REPORT 2007
19. RELATED PARTY TRANSACTIONS
Six months ended
30 September
Name of related party Nature of transaction 2007 2006
HK$’000 HK$’000
(unaudited) (unaudited)
Pak Tak (Kwong Tai) Sub-contracting income (Note b) 294 3
Knitting Factory Limited Sales of goods (Note b) 314 7,456
(“Pak Tak Kwong Tai”) Sample sales income (Note b) 232 323
(Note a) Interest income received (Note c) – 86
Rental income (Note d) 46 18
Commission paid (Note e) – 194
Letters of credit issued on behalf
(Note f) 161 –
Cheng Chi Tai (Note g) Interest expenses (Note 14) 120 88
Cheng Kwai Chun, John Interest expenses (Note 15) 120 89
Notes:
(a) Pak Tak Kwong Tai is an associate company of the Company.
(b) The transactions were carried out at cost plus a percentage of profit mark-up.
(c) Interest income received was calculated with reference to the prevailing market rate.
(d) Rental income received was calculated at the agreed rate.
(e) Commission paid was calculated at the agreed rate on sales amount.
(f) No service fee has been charged to the associate company for letters of credit issued on its
behalf.
(g) Interest expenses were payable to the estate of Cheng Chi Tai.
