Tiande Chemical Holdings Limited
天德化工控股有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 609)
INTERIM RESULTS ANNOUNCEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
The board (the “Board”) of directors (the “Directors”) of Tiande Chemical Holdings Limited
(the “Company”) is pleased to announce the unaudited consolidated results of the Company
and its subsidiaries (the “Group”) for the six months ended 30 June 2007 together with the
comparative figures for the corresponding period in 2006 and selected notes as follows:
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended 30 June
2007 2006
Note RMB'000 RMB'000
(unaudited) (audited)
Turnover 4 262,710 233,999
Cost of goods sold (224,604) (189,265)
Gross profit 38,106 44,734
Other income 5 2,666 2,072
Selling expenses (9,317) (5,675)
Administrative expenses (11,100) (8,265)
Finance costs (1,634) (2,695)
Profit before tax 18,721 30,171
Income tax expense 6 (697) (3,107)
Profit for the period attributable to equity
holders of the Company
7 18,024 27,064
1
CONDENSED CONSOLIDATED INCOME STATEMENT(continued)
Six months ended 30 June
2007 2006
Note RMB'000 RMB'000
(unaudited) (audited)
Earnings per share – basic 9 RMB0.045 RMB0.090
2
CONDENSED CONSOLIDATED BALANCE SHEET
30 June 31 December
2007 2006
Note RMB'000 RMB'000
(unaudited) (audited)
(As restated)
Non-current assets
Property, plant and equipment 10 311,900 267,593
Prepaid lease payments 67,140 66,601
Investment properties 9,020 5,830
Deposit for acquisition of property, plant
and equipment
11,620 5,194
Deferred tax assets 829 524
400,509 345,742
Current assets
Inventories 28,196 28,612
Trade and other receivables 11 83,447 92,455
Pledged bank deposits 170 1,777
Bank and cash balances 23,825 36,899
135,638 159,743
Current liabilities
Trade and other payables 12 99,882 86,841
Current tax liabilities 1,263 1,869
Bank borrowings 13 37,740 20,140
138,885 108,850
Net current (liabilities)/assets (3,247) 50,893
Total assets less current liabilities 397,262 396,635
3
CONDENSED CONSOLIDATED BALANCE SHEET(continued)
30 June 31 December
2007 2006
Note RMB'000 RMB'000
(unaudited) (audited)
(As restated)
Non-current liabilities
Bank borrowings 13 54,640 62,160
Deferred tax liabilities 842 440
Deferred income 18,658 30,115
74,140 92,715
NET ASSETS 323,122 303,920
Capital and reserves
Share capital 4,031 4,031
Reserves 319,091 299,889
TOTAL EQUITY 323,122 303,920
SELECTED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
For the six months ended 30 June 2007
1. BASIS OF PREPARATION
The unaudited condensed consolidated interim financial statements have been
prepared in accordance with the applicable disclosure requirements of Appendix 16 to
the Rules Governing the Listing of Securities on
4
2. CHANGE IN ACCOUNTING POLICY
HKAS 40 “Investment Property” requires an investment property to be accounted for
using the cost model or the fair value model. The Group decided to change from the
cost model to the fair value model to account for its investment properties starting
from current interim period, which requires gains or losses arising from changes in
the fair value of investment properties to be recognised directly in the income
statement for the period in which they arise. In contrast, cost method requires
investment properties to be stated at cost less subsequent accumulated depreciation
and any accumulated impairment losses. The change in accounting policy has been
applied retrospectively to the Group’s financial statements.
The following is a summary of the impact to the Group’s financial statements in
respect of the above-mentioned change in accounting policy:
Increase/(Decrease) 30 June
2007
31 December
2006
RMB’000 RMB’000
Investment properties 3,880 2,936
Deferred tax liabilities 582 440
Accumulated profits 3,298 2,496
Six months ended 30 June
2007 2006
RMB’000 RMB’000
Other income 860 -
Deferred tax expenses 142 -
Depreciation (84) -
Profit for the period 802 -
Earnings per share – basic (RMB) 0.002 -
3. PRINCIPAL ACCOUNTING POLICIES
The accounting policies and basis of preparation used in the preparation of the
unaudited condensed consolidated interim financial statements are consistent with
those used in the annual accounts for the year ended 31 December 2006 except for
investment properties as mentioned above.
The unaudited condensed consolidated interim 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.
5
In the current interim period, the Group has adopted all new and revised Hong Kong
Financial Reporting Standards (“HKFRSs”) issued by the HKICPA which are
relevant to its operations and effective for accounting periods beginning on or after 1
January 2007. HKFRSs comprise Hong Kong Financial Reporting Standards
(“HKFRS”); Hong Kong Accounting Standards (“HKAS”); and Interpretations. The
adoption of these new and revised HKFRSs did not result in substantial changes to
the Group’s accounting policies and amounts reported for the current year and prior
years.
The Group has not early applied the following new standards, amendments or
interpretations that have been issued but are not yet effective. The directors of the
Company anticipate that the application of these standards, amendments or
interpretations will have no material impact on the results and the financial position
of the Group:
HKAS 23 (Revised) Borrowing Costs
1
HKFRS 8 Operating Segments
1
HK(IFRIC)-Int-11 HKFRS 2 Group and Treasury Share Transactions
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.
4. TURNOVER AND SEGMENT INFORMATION
(a) Turnover
Turnover represents the amount received and receivables for goods sold
during the period.
(b) Business and geographical segments
The Group’s turnover and profit attributable to equity holders of the
Company are entirely derived from the manufacture and trading of fine
chemical products. The Directors consider that these activities constitute one
business segment since these activities are related and are subject to common
risks and returns.
6
Segment information regarding the Group’s turnover by location of
customers, irrespective of the origin of the services, being the primary format
for reporting segment information of the Group, is presented below:
Six months ended 30 June
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
Turnover
People’s Republic of China (“PRC”) 197,525 174,213
Taiwan 23,465 25,674
United Kingdom 9,084 7,478
Japan 8,488 6,028
India 10,406 6,391
Others 13,742 14,215
262,710 233,999
Segment results
PRC 25,339 33,727
Taiwan 2,942 3,760
United Kingdom 1,205 1,114
Japan 1,729 1,067
India 2,362 1,374
Others 2,365 2,838
35,942 43,880
Unallocated other corporate revenue 2,666 2,072
Unallocated corporate expenses (18,253) (13,086)
Finance costs (1,634) (2,695)
Profit before tax 18,721 30,171
Income tax expense (697) (3,107)
Profit for the period attributable to
equity holders of the Company 18,024 27,064
7
5. OTHER INCOME
Six months ended 30 June
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
Government grants (Note) 458 1,103
Rental income 270 175
Interest income 197 232
Scrap sales - 61
Fair value gain on investment properties 1,220 -
Other 521 501
2,666 2,072
Note: The amounts mainly represent the grants given by (i) the Finance Bureau of
Shanghai Pudong New District上海市浦東新區財政局 to the Group for the
encouragement of purchase of real estate in Pudong, Shanghai, the PRC, (ii)
the Management Committee of Weifang Economic and Technology
Development District濰坊市經濟技術開發區管委會 to the Group as
finance subsidy for the encouragement of investment in Weifang City of
Shandong Province, the PRC and (iii) the Finance Bureau of Weifang
Economic and Technology Development District 濰坊市經濟技術開發區財
政局 to the Group as a subsidy for the high technology development.
6. INCOME TAX EXPENSE
Six months ended 30 June
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
Current tax:
PRC enterprise income tax 600 3,107
Deferred tax 97 -
697 3,107
8
The provision for PRC Enterprise Income Tax is based on the estimated taxable
income for PRC taxation purposes at the rate of taxation applicable to each period.
No provision for Hong Kong Profits Tax has been made as the Group’s income
neither arises in nor is derived from Hong Kong.
Taxation charge mainly consists of enterprise income tax in the PRC attributable to
the assessable profits of Weifang Common Chem Co., Limited濰坊同業化學有限公
司 (“Weifang Common”) and Shanghai Dehong Chemical Company Limited上海德
弘化工有限公司 (“Shanghai Dehong”) charged at the rate of 24% and 15%
respectively. The taxation charge is calculated at the applicable rates prevailing in
the PRC.
Weifang Common and Weifang Parasia Chem Co., Limited 濰坊柏立化學有限公司
(“Weifang Parasia”) are eligible for certain tax holidays and concessions in the PRC.
The tax holiday and concession are in the form of two years tax exemption from the
first profitable year, followed by a 50% reduction of the applicable tax rate in the
following three years. Weifang Common was tax exempted in year 2001 and 2002.
From 2003 to 2005, the reduced tax rate for the relief period for Weifang Common is
12%. As an advance technology enterprise, Weifang Common is also granted with an
extension of tax holiday for 2006 and 2007, at a reduced tax rate of 12%. No
provision for PRC income tax has been made for Weifang Parasia as it was the second
profitabe year and tax exempted. Shanghai Dehong is subject to Enterprise Income
Tax at the rate of 15%, being the preferential tax rate in Shanghai Pudong New
District.
For the six months ended 30 June 2007, the Group has unused tax losses of
RMB4,235,000 (six months ended 30 June 2006: Nil) available for offset against
future profits. A deferred tax asset has been recognised in respect of approximately
RMB2,541,000 (six months ended 30 June 2006: Nil) of such losses. Included in
unrecognised tax losses at 30 June 2007 are losses of approximately RMB1,694,000
(six months ended 30 June 2006: Nil) that will expire in 2012.
9
In 2006, Weifang Binhai Petro-Chem Co., Ltd. 濰坊濱海石油化工有限公司
(“Weifang Binhai”) obtained a government grant for subsidising the construction of
the production lines and ancillary facilities for the manufacture of high purity
isobutylene, polyisobuylene and mono chloro acetic acid. The grant received was
recognised as a deferred income as at 31 December 2006 with no income recognised
in the income statement for the year ended 31 December 2006. Pursuant to the
document issued by the local tax authority, the grant shall be recognised to the cost of
property, plant and equipment after the completion of construction in relation to the
specific production lines. For the six months ended 30 June 2007, partial amount of
the grant of appoximately RMB10,799,000 was recognised to the cost of property,
plant and equipment for the completion of construction of high purity isobutylene.
The new PRC enterprise income tax law passed by the Tenth National People’s
Congress on 16 March 2007 introduces various changes which include the unification
of the enterprise income tax rate for domestic and foreign enterprises at 25%. The
new tax law will be effective from 1 January 2008. The impact of the new tax law
on the Group’s consolidated financial statements will depend on the detailed
implementation rules and regulations which however have not been issued as of the
date of the approval of these consolidated financial statements. Therefore, the Group
cannot reasonably estimate the financial impact of the new enterprise income tax law
to the Group at this stage.
10
7. PROFIT FOR THE PERIOD
Profit for the period has been arrived at after charging the followings:
Six months ended 30 June
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
Directors’ remuneration
Fees
157 -
Others emoluments
1,260 251
Pension costs
12 13
1,429 264
Other staff costs
9,881 5,906
Pension costs
466 318
Total staff costs
11,776 6,488
Depreciation
- property, plant and equipment (net of
Government grants)
10,197 6,919
- investment property
- 84
10,197 7,003
Prepaid lease payments charged to income
statement
744 210
Allowance for bad and doubtful debts
1 73
Allowance for inventories
- 59
Cost of inventories recognised as expenses
222,180 186,952
Loss on disposal of property, plant and
equipment
- 16
8. DIVIDEND
The Directors do not recommend the payment of any interim dividend for the six
months ended 30 June 2007. (six months ended 30 June 2006: Nil)
11
9. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to the equity holders of the
Company is based on the following data:
Six months ended 30 June
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
Profit for the period attributable to equity
holders of the Company
18,024 27,064
Number of ordinary shares as at
30 June 2007 30 June 2006
Weighted average number of ordinary share for
the purpose of basic earnings per share
400,000,000 300,000,000
For the purpose of the calculation of basic earnings per share, the weighted average
number of 300,000,000 shares in issue was assumed as if the Group Reorganisation
had taken place on 1 January 2006.
There was no diluted earnings per share for the six months ended 30 June 2007 and
2006 as there were no potential dilutive shares.
10. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2007, the Group acquired property, plant and
equipment of approximately RMB66 million.
12
11. TRADE AND OTHER RECEIVABLES
Trade and other receivables include trade and bills receivables of approximately
RMB77,152,000 (31 December 2006: RMB87,175,000). The Group allows a credit
period normally ranging from one month to six months to its trade customers. The
bills receivables are of the age within six months at both balance sheet dates. An aged
analysis of the Group’s trade and bills receivables is as follows:
30 June 31 December
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
0 - 90 days 68,688 81,651
91 - 180 days 3,708 5,191
181 - 365 days 4,756 333
77,152 87,175
12. TRADE AND OTHER PAYABLES
Trade and other payables include trade and bills payables of approximately
RMB53,282,000 (31 December 2006: RMB40,627,000). An aged analysis of the
Group’s trade and bills payables is as follows:
30 June 31 December
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
0 - 90 days 39,649 31,648
91 - 180 days 7,591 8,751
181 - 365 days 5,829 212
Over 1 year 213 16
53,282 40,627
13
13. BANK BORROWINGS
30 June 31 December
2007 2006
RMB’000 RMB’000
(unaudited) (audited)
Bank loans repayable:
On demand or within one year 37,740 20,140
In the second year 30,340 24,440
In the third to fifth year inclusive 24,300 37,720
92,380 82,300
Less: Amount due within one year shown as
current liabilities (37,740) (20,140)
Amount due after one year 54,640 62,160
All bank borrowings are denominated in Renminbi. Short-term and long-term bank
borrowings are arranged at fixed interest rates ranged from 6.33% to 7.43% (31
December 2006: 5.58% to 7.61%) exposing the Group to fair value interest rate risks
and are secured by property, plant and machinery, investment properties and the
Group’s interest in leasehold land under prepaid lease payments.
Subsequent to the year ended 31 December 2005, Weifang Tianhong Corporate
Management and Consultancy Company Limited (“Weifang Tianhong”) in which the
Directors, namely, Mr. Liu Hongliang, Mr. Wang Zijiang, Mr. Guo Xitian and Mr.
Guo Yucheng have beneficial interests, provided certain securities to the Group’s
banker to secure the short-term bank borrowings granted to the Group. The securities
provided by Weifang Tianhong to the Group’s banker was released in September
2006.
14
MANAGEMENT DISCUSSION AND ANALYSIS
SUMMARY OF OPERATING RESULTS
For the six months ended 30 June 2007, the Group recorded a remarkable growth of the
turnover even though its product price was adjusted downward since the keen market
competition. The turnover reached approximately RMB262.7 million, representing an
increase of 12.3 % compared to the corresponding period last year. The growth was mainly
due to the contribution of new products such as sodium cyanide, cyanoacetate and high purity
isobutylene, in addition to the substantial growth of methyl cyanoacetate and diethyl
malonate.
Despite a health growth of the turnover and the overall unit cost was decreased by 3.5% when
compared with the corresponding period last year, the open market price of some of the
products was decreased during the period under review. The overall gross profit margin
recorded a decrease of 4.6% point to 14.5% when compared with 19.1% in the corresponding
period last year.
The Group’s selling and distribution expenses increased by 64.2% or approximately RMB3.6
million during the first six months of 2007, mainly due to the increase in freight costs and
sales commission. General and administrative expenses also increased by 34.3% or
approximately RMB2.8 million over the corresponding period last year as a result of the
business expansion and start-up operating costs of new production plant.
During the period under review, the investment properties of the Group were classified as at
fair value through profit or loss for which a net profit arising from changes in the fair value of
approximately RMB0.9 million was included in the income statement.
The profit attributable to equity holders of the Company was dragged down to approximately
RMB18.0 million, representing a decrease of 33.4% when compared with approximately
RMB27.1 million in the corresponding period last year. The net profit margin attributable to
equity holders of the Company was 6.9%, representing a decrease of 4.7% as compared with
11.6% in the corresponding period last year.
Basic earnings per share amounted to RMB4.5 cents. (six months ended 30 June 2006:
RMB9.0 cents per share).
15
BUSINESS REVIEW
In the first half of 2007, the Group adjusted its business strategy to extend its market shares.
In result, the overall turnover was increased by 12.3% to approximately RMB262.7 million as
compared with the corresponding period of last year. In spite of the cost of mono chloro
acetic acid, one of the core raw materials, stood high during the period under review.
Leveraging on the adoption of vertical integration production strategy, the overall cost of
sales was still decreased by 3.5% as compared with the corresponding period last year. It is
proven that the vertical integration production strategy is a right business direction to reduce
the Group’s reliance on the raw materials supply from the open market. However, the open
market price of some of the products was decreased during the period under review, it was
inevitably that the overall gross profit margin of the Group was adjusted downward.
Although the turnover was growth healthy and overall cost of sales was decreased, the overall
financial performance of the Group was still adversely affected by (1) the open market price
of some of the products was decreased leading to a lower gross profit margin, (2) the
significant increase in distribution costs and a higher administrative expenses caused by the
completion of construction for the new production lines, and (3) the profit contribution from
the new products has not been fully reflected during the period under review. While it was
alleviated by the profit from revaluation of investment properties, the profit attributable to
equity holders of the Company was approximately RMB18.0 million, representing a decline
of 33.4% from the corresponding period last year approximately RMB27.1 million.
The Group’s overall business remains sound and well developed. The Directors believe
that the temporary market adverse impact probably will be diminished in the second half of
2007. Besides, a number of new products of the Group will be launched very soon. The
Group’s overall financial performance is expected to be improved shortly.
The Group continued to focus on its business development strategies including (i)
strengthening research and development capabilities; (ii) reinforcing sales channels and
distribution network; (iii) advancement of production facilities for better efficiency; and (iv)
expansion of product range.
16
The Group has acquired a piece of land and property for the development of a highly
competent research and development professional centre in December last year. The
Directors are pleased to report that the centre has been established and is now in operation.
The aim of the centre is to enhance the quality of the existing products of the Group and
improve the Group’s production procedures as well as develop new potential products to
bring new business opportunities to the Group.
With a view to increasing the Group’s products acquaintance in the market and further
enhance the market position of the Group and its corporate image, the Group has participated
in the two fine chemical fairs held in Nanjing and Shanghai of the PRC during the period
under review. The Group has also planned to take part in an influential fine chemical fair to
be held in Europe in the fourth quarter of this year. The Group believes that the participation
will uplift its international market status and it is also an initial step to directly open and
expand the overseas market of the Group. It is also facilitate the marketing of the new
products of the Group that will be launched in the second half of this year.
The Group has been continuously devoting more efforts in accelerating production
technology advancement, maintaining premium products quality, improving products features,
following its upward vertically integration production strategy and also maintaining its mass
production strategy to achieve the advantage of economic of sales. During the period under
review, the Group has expanded the production capacity of di-ethyl malonate to a capacity of
3,000 tons per annum to cope with the growing market demand. In addition, the trial
production of methanol and high purity isobutylene was commenced in the first half of this
year. The production of another new product, namely cyano acetic acid which is a core raw
material for production of caffeine and used in wide range of varies pharmaceutical products,
was also started in May 2007. The Group is convinced that the above new potential
products will bring certain profit contribution to the Group in the second half of this year and
coming future.
On top of that, the Group was also designated a committee to address and control the safety
and environmental protection issue in order to achieving the lowest production and inherent
risk operation. The Group believes that has a sufficient and efficient safety and
environmental protection control will build a solid foundation for sustaining future
development of the Group.
17
PROSPECTS
The Group has invested heavily in production infrastructure since 2005 to support the
anticipated business growth. In August 2007, the construction of production lines for
upstream products like, mono chloro acetic acid and hydrochloric acid which are the core raw
materials of the Group was were completed and the production by the Group was commended
immediately. Through the self-supply of such core raw materials, it can reduce the reliance
on the raw materials supplied from the open market. The Directors have strong confident
that the overall unit cost will be under well control and dropped continuously. It is expected
that the competitiveness of the Group’s products will be strengthened continuously and the
Group’s results will be getting better.
With the trial production of high purity isobutylene in the first half of 2007, the production of
polyisobutylene will be scheduled in November 2007. The new product line will facilitate
the diversification of the Group’s products and bring a better return to the Group to counteract
the effect of the operating expenses for the new production plant.
Despite the intensifying market competition, the Group will take various effective measures
to improve profit margin, control sales and marketing spend, and develop new potential
products to enhance the overall return to the shareholders.
Looking forward, the Group will adopt an optimization of production strategy, striving to
introduce and develop more new potential products and deploy upward vertical integration of
production to strengthen its competitive and in supporting further growth of the profitability.
Besides, the Group will continue to streamline the production procedures, strengthen the
capacity of each production process and improve its production techniques. Riding on such
right business direction, with the strong foothold and extensive experience in the industry and
also given the strengthen of the Chinese domestic market, the Directors are optimistic on the
coming future growth of the Group.
FINANCIAL REVIEW
Liquidity and Financial Resources
For the six months ended 30 June 2007, the Group’s primary source of funding was derived
from the cash generated from operating activities and newly raised bank borrowings. The
Group’s cash resources have principally been used to pay for the acquisition of fixed assets,
prepaid lease payment and repayment of bank borrowings.
18
The increase in net cash inflow from operating activities from approximately RMB10.4
million of corresponding period last year to approximately RMB49.1 million was primarily
attributable to the decrease in trade and other receivables and the increase in trade and other
payables. Besides, the new raised borrowings amounted to RMB20.3 million (six months
ended 30 June 2006: RMB142.6 million) generated cash inflow from financing activities.
With the financial resources obtained from the Group’s operations, the Group had invested
approximately RMB72.2 million (six months ended 30 June 2006: RMB33.8 million) in the
acquisition of the prepaid lease payments, property, plant and equipment, and repaid
approximately RMB10.2 million (six months ended 30 June 2006: approximately RMB69.7
million) borrowings.
As at 30 June 2007, the Group had cash and bank deposits of approximately RMB24.0
million (31 December 2006: RMB38.7 million). The total amount of outstanding
borrowings was approximately RMB92.4 million (31 December 2006: RMB82.3 million), in
which short-term loans amounted to approximately RMB37.7 million and long-term loans
amounted to approximately RMB54.7 million. The Group’s gearing ratio which is
represented by the ratio of total borrowings to total shareholders’ equity, was approximately
28.6% (31 December 2006: 27.1%).
With the positive cash inflow from the Group’s operations, its available banking facilities and
existing cash resources, the Group will continue to maintain a health finance position to meet
its working capital requirements, capital commitments and future investments for expansion.
Pledge of assets
As at 30 June 2007, the Group had approximately RMB0.2 million bank deposit (31
December 2006: approximately RMB1.8 million), which was pledged for bills facilities.
Certain property, plant and equipment of the Group with an aggregate net book value of about
RMB64.0 million (31 December 2006: approximately RMB63.6 million) and prepaid lease
payments of approximately RMB59.0 million (31 December 2006: approximately RMB59.0
million) were pledged to secure the Group’s bank borrowings.
Contingent Liabilities
As at 30 June 2007, the Group had no material contingent liabilities.
19
Exposure to Fluctuations in Exchange Rates
The Group’s assets, liabilities, revenues and transactions are mainly denominated in
Renminbi, Hong Kong dollars and United States dollars with its operation mainly in the PRC.
Bank borrowings were denominated in Renminbi.
The Group’s foremost exposure to the foreign exchange fluctuations was caused by the
revaluation of Renminbi during the period under review. The Group’s export sales were, in
majority, denominated in United States dollars. Nevertheless, the Group has not
experienced any material difficulties or effects on its operations or liquidity as a result of the
fluctuations in currency exchange rates during the period.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SHARES
During the six months ended 30 June 2007, neither the Company nor any of its subsidiaries
had redeemed, purchased or sold any of the Company’s listed shares.
CORPORATE GOVERNANCE PRACTICES
The Company has complied with all the code provision of the Corporate Governance
Practices (the “CG Code”) as set out in the Listing Rules during the six months ended 30 June
2007, except that there is no separation of the role of Chairman and chief executive officer
(“CEO”), Mr. Liu Hongliang currently assumes the role of both the Chairman and general
manager of the Company. In view of Mr. Liu’s extensive experience in the industry and
deep understanding of the Group’s businesses, the Board believes that this structure provides
the Group with strong and consistent leadership and allows for more effective and efficient
business planning and decisions as well as execution of long term business strategies. As
such, it is beneficial to the business prospects of the Company.
20
21
MODEL CODES FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED
COMPANIES
The Company has adopted a code of conduct with standards not lower than those prescribed
under the Model Code as set out in Appendix 10 to the Listing Rules for securities
transactions by Directors. Upon enquiry by the Company, all Directors have confirmed that
they have complied with the required standards as set out in the Model Code and the
Company’s code of conduct regarding securities transactions by Directors throughout the six
months ended 30 June 2007.
The senior management, who, because of their office in the Company, are likely to be in
possession of unpublished price sensitive information, have been requested to comply with
the provisions of the Model Code and the Company’s code of conduct regarding securities
transactions by Directors.
AUDIT COMMITTEE
The Audit Committee of the Company comprises the three independent non-executive
directors of the Company, namely Mr. Leung Kam Wan (Chairman of the Audit Committee),
Mr. Guo Baoyu and Mr. Liu Chenguang. The Audit Committee has reviewed the accounting
principles and practices adopted by the Company and discussed internal control and financial
reporting matters with senior management relating to the preparation of the unaudited
condensed consolidated financial statements of the Group for the six months ended 30 June
2007. There is no disagreement raised by the Audit Committee on the accounting treatment
adopted by the Company during the period under review.
By Order of the Board
Liu Hongliang
Chairman
Hong Kong, 14 September 2007
As at the date of this announcement, the executive Directors are Mr. Liu Hongliang, Mr. Wang
Zijiang, Mr. Guo Xitian and Mr. Guo Yucheng; whilst the independent non-executive Directors
are Mr. Leung Kam Wan, Mr. Liu Chenguang and Mr. Gao Baoyu.
INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 |
More
Newest articles
