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Tomson Group Limited — Interim / Quarterly Report 2004
Sep 27, 2004
49075_rns_2004-09-27_b339b269-d72b-4744-96a0-6b13789a3d29.pdf
Interim / Quarterly Report
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(Incorporated in Bermuda with limited liability) (Stock Code: 149)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE, 2004
The board of directors (the “Board”) of China Velocity Group Limited (the “Company”) announces the unaudited condensed consolidated results of the Company and its subsidiaries (the “Group”) for the six months ended 30th June, 2004, together with the unaudited comparative figures for the six months ended 30th June, 2003.
| Six months ended | 30th June, | ||
|---|---|---|---|
| 2004 | 2003 | ||
| Notes | HK$’000 | HK$’000 | |
| (unaudited) | (unaudited) | ||
| Turnover | 3 | 5,978 | 57,240 |
| Cost of sales | (1,289) | (29,070) | |
| Impairment loss and revaluation deficit | 4 | (16,650) | (134,503) |
| Other operating income | 8 | 571 | |
| Administrative expenses | (7,256) | (9,663) | |
| Other operating expenses | (2,114) | (43,033) | |
| Loss from operations | 5 | (21,323) | (158,458) |
| Finance costs | (3,422) | (19,877) | |
| Loss before taxation | (24,745) | (178,335) | |
| Taxation | 6 | – | 10,655 |
| Loss before minority interests | (24,745) | (167,680) | |
| Minority interests | (11) | 4,164 | |
| Net loss for the period | (24,756) | (163,516) | |
| Loss per share | 7 | ||
| – Basic | HK$(0.09) | HK$(0.59) | |
| – Diluted | N/A | HK$(0.59) |
Notes:
1. Basis of preparation of financial statements
The condensed financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and with Statement of Standard Accounting Practice No. 25 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants.
2. Principal Accounting Policies
The condensed financial statements have been prepared under the historical cost convention, as modified for the revaluation of investment properties.
The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31st December, 2003.
3. Segmental information Business segments
For management purposes, the Group is currently organised into the following divisions. These divisions are the basis on which the Group reports its primary segment information.
– 1 –
Pursuant to the group reorganisation as set out in the circular of the Company dated 31st October, 2003, the hotel operation engaged by the Group in prior years was discontinued on 12th December, 2003.
An analysis of the Group’s turnover and contribution to operating results by business segment is presented below:
Six months ended 30th June, 2004
| TURNOVER External sales RESULT Segment result Unallocated corporate expenses Loss from operations Finance costs Loss before taxation |
Continuing operations Property sale and Property Other development rental operations Consolidated HK$’000 HK$’000 HK$’000 HK$’000 – 5,978 – 5,978 (17,013) 1,899 – (15,114) (6,209) (21,323) (3,422) (24,745) |
Continuing operations Property sale and Property Other development rental operations Consolidated HK$’000 HK$’000 HK$’000 HK$’000 – 5,978 – 5,978 (17,013) 1,899 – (15,114) (6,209) (21,323) (3,422) (24,745) |
Continuing operations Property sale and Property Other development rental operations Consolidated HK$’000 HK$’000 HK$’000 HK$’000 – 5,978 – 5,978 (17,013) 1,899 – (15,114) (6,209) (21,323) (3,422) (24,745) |
|---|---|---|---|
| Property sale and development HK$’000 – (17,013) |
Property rental HK$’000 5,978 1,899 |
||
| HK$’000 5,978 |
|||
| (15,114) (6,209) |
|||
| (21,323) (3,422) |
|||
| (24,745) |
Six months ended 30th June, 2003
| TURNOVER External sales RESULT Segment result Unallocated corporate expenses Loss from operations Finance costs Loss before taxation |
Continuing operations | Continuing operations | Other operations HK$’000 – (625) |
Discontinuing operation Hotel operation HK$’000 (Note) 51,749 (140,529) |
Consolidated | |
|---|---|---|---|---|---|---|
| Property sale and development HK$’000 – (4,727) |
Property rental HK$’000 5,491 (487) |
|||||
| HK$’000 57,240 |
||||||
| (146,368) (12,090) |
||||||
| (158,458) (19,877) |
||||||
| (178,335) |
Geographical segments
An analysis of the Group’s turnover by geographical location of its customers is presented below:
| People’s Republic of China (“PRC”), other than Hong Kong Hong Kong |
Turnover Six months ended 30th June, 2004 2003 HK$’000 HK$’000 5,978 32,480 – 24,760 5,978 57,240 |
Turnover Six months ended 30th June, 2004 2003 HK$’000 HK$’000 5,978 32,480 – 24,760 5,978 57,240 |
|---|---|---|
| 57,240 |
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4. Impairment loss and revaluation deficit
| Impairment loss and revaluation deficit recognised in respect of: – properties held for sale – investment properties – properties under/held for development – properties under construction – hotel properties – payment for investments |
Six months ended 2004 HK$’000 16,650 – – – – – 16,650 |
30th June, 2003 HK$’000 – 1,317 4,400 527 110,259 18,000 |
|---|---|---|
| 134,503 |
5. Loss from operations
| Loss from operations has been arrived at after charging (crediting): Depreciation and amortisation Owned assets Assets held under finance leases Unrealised loss on investments in securities Release of negative goodwill, included in other operating income |
Six months ended 2004 HK$’000 26 – – – |
30th June, 2003 HK$’000 11,115 343 137 (442) |
|---|---|---|
6. Taxation
No provision for Hong Kong Profits Tax or taxation in other jurisdictions has been made in the condensed consolidated financial statements as the Group had no assessable profit for both periods.
The taxation for the six months ended 30th June, 2003 represented deferred taxation credit.
7. Loss per share
The calculation of the basic loss per share is based on the net loss for the period of approximately HK$24,756,000 (HK$163,516,000 for the six months ended 30th June, 2003) and on 277,408,596 ordinary shares (277,408,596 ordinary shares for the six months ended 30th June, 2003) in issue during the period.
The weighted average number of ordinary shares used for the purpose of calculating basic loss per share for the period ended 30th June, 2003 has been retrospectively adjusted for the effect of the consolidation of every ten ordinary shares of US$0.002 each into one share of US$0.02 each in 2003.
The computation of diluted loss per share for the period ended 30th June, 2003 did not assume the conversion of the convertible notes since this conversion would result in a decrease in the loss per share for the period ended 30th June, 2003.
No diluted loss per share has been presented as there is no potential ordinary shares in issue during the period.
INTERIM DIVIDEND
The directors of the Company do not recommend the payment of an interim dividend for the six months ended 30th June, 2004 (six months ended 30th June, 2003: Nil).
REVIEW OF OPERATIONS AND RESULTS
Turnover of the Group for the first half year of 2004 was approximately HK$5.9 million compared to approximately HK$57.2 million for the corresponding period in the previous year. The loss attributable to shareholders decreased substantially from approximately HK$163.5 million of last period to approximately HK$24.7 million of this period due to the effective measures in cost control and prudent investment strategy.
The Board of the Company does not recommend the payment of any interim dividend for the period (2003: Nil).
– 3 –
Paul Y. Plaza
As at 30th June, 2004, over 60% of the retail and entertainment area of the podium floors of Paul Y. Plaza were leased out and continued to provide recurring rental income to the Group. Well-known fast-food chain and shops have established their outlet in Paul Y. Plaza, including, Kentucky Fried Chicken, China Mobile and Century Mart Supermarket, etc. With steady increasing pedestrian traffic, Paul Y. Plaza becomes one of the famous shopping centres in Guangzhou. Active marketing campaign has been launched for the remaining units.
Shenzhen Development Centre
Located in the centre of Shenzhen, Shenzhen Development Centre is one of the landmark commercial buildings in Shenzhen. As at 30th June, 2004, over 50% of the total floor area owned by the Group were leased out. The Group is now actively negotiating with some potential tenants for the remaining units.
Liquidity and financial resources
During the period, the Group was mainly financed by cash from operation and the largest major shareholder of the Group, Velocity International Limited.
From 31st December, 2003 to 30th June, 2004, total borrowings increased from approximately HK$130.0 million to HK$133.3 million. Short-term borrowings increased from approximately HK$80.0 million to HK$133.3 million as the HK$50.0 million long-term borrowings as at 31st December, 2003 was classified as short-term borrowings as at 30th June, 2004. These borrowings were mainly deployed for acquisition of the property development projects. As at 30th June, 2004, all the Group’s borrowings are repayable within 1 year.
As at 30th June 2004, all the Group’s borrowings bear interest at floating rates. Since all the borrowings were denominated in Hong Kong dollars, there were no any foreign exchange risk. The Group did not enter into any material foreign exchange contracts, interest or currency swaps or other financial activities. However, the Group will continue to seek other refinancing opportunities in the market to further reduce the borrowing costs of the Group. As at 30th June, 2004, the Group did not have any committed borrowing facilities.
Borrowing requirement are not seasonal as they tend to follow the pattern of capital expenditure and investment. The Group also benefits from a steady inflow of income from its leased properties.
Over the period, the Group’s gearing ratio increased to 44.1% (31/12/2003: 40.7%), which is calculated based on total liabilities of HK$267.4 million and total assets of HK$606.8 million. Cash and cash equivalents decreased from approximately HK$4.8 million to approximately HK$3.8 million. Most of the Group’s deposits were deposited with banks as short-term deposits and denominated in either Hong Kong dollars or Renminbi, which are directly related to the Group’s business in the areas of currencies concerned.
Velocity International Limited, the largest shareholder of the Group, has confirmed to the Group its intention to provide financial support to the Group to enable the Group to meet its liabilities as and when they fall due. Based on the internal resources of the Group and taking into account the financial support agreed to be provided by Velocity International Limited, the Group will have sufficient working capital for its requirement.
Pledge of assets
At 30th June, 2004, the Group has pledged certain part of properties under/held for development with a carrying value of approximately HK$16,628,000 (31.12.2003: HK$16,628,000) to banks in respect of banking facilities granted to a third party to finance the development project of the Group in Taishan, PRC.
Contingent liabilities
Guarantees
The Group has given guarantees of approximately HK$14,045,000 (31.12.2003: HK$14,045,000) to banks in respect of banking facilities utilised by third parties to finance the development project of the Group in Taishan, the PRC.
– 4 –
Litigations
As at the date of this announcement, all the litigations as disclosed in the Annual Report 2003 of the Company are still ongoing and there is no material change in the information disclosed therein in relation to litigations and no additional disclosure is required.
Post balance sheet event
The following events occurred subsequent to the balance sheet date:
-
(a) In August, 2004, certain subsidiaries of the Company entered into conditional sales and purchase agreements with State Achieve Properties Limited for the disposal of the Group’s entire interest in Huizhou Gladly Property Limited, Huizhou World Express Property Limited and Huizhou Best Glory Limited (collectively referred to as the “Huizhou Companies”) for a total consideration of RMB50.0 million. The Huizhou Companies are engaged in the property development projects in Huizhou, the PRC.
-
(b) In August, 2004, certain wholly-owned subsidiaries of the Company entered into various conditional sales and purchase agreements with independent third parties for the disposal of all the units in Chuang’s Garden, which are included as properties held for sale at 30th June, 2004 for a consideration of approximately RMB12.0 million.
EMPLOYEES AND STAFF BENEFITS
As at 30th June 2004, the Group employed a total of approximately 115 staff in Hong Kong and PRC.
The Group’s remuneration policies are primarily based on prevailing market salary levels and the performance of the respective individuals concerned.
PROSPECTS AND PLAN FOR THE FUTURE
The Group is now mainly engaged in the property investment and development in PRC. It will continue to derive rental income form the Paul Y. Plaza in Guangzhou and Shenzhen Development Centre in Shenzhen, which will provide a stable source of income to the Group.
On 10th August, 2004, the Group entered into an agreement to dispose the joint venture interest in Huizhou World Express Property Limited, Huizhou Best Glory Property Limited and Huizhou Gladly Property Limited for a total consideration of RMB50.0 million. These three joint venture were mainly engaged in the property development project in Huizhou which has been put on hold owing to the uncertainties in an unsettled litigation in relation to the project. The Group will have a gain of approximately HK$10.4 million in this disposal.
It is the Group’s policy to dispose of the non-performing assets to reduce the Group’s liabilities and to improve the Group’s gearing. In future, the Group will continue its direction to improve the quality of the Group’s assets. On the other hand, the Group is now actively looking for any possible good investment opportunity.
PURCHASE, SALE OR REDEMPTION OF LISTED SHARES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed shares during the six months ended 30th June, 2004.
CORPORATE GOVERNANCE
None of the directors of the Company is aware of any information that would reasonably indicate that the Company is not, or was not during the six months ended 30th June, 2004, in compliance with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange except in relation to Guideline 1 as certain directors frequently traveled abroad for overseas business trips and were unable to attend the board meetings when convened and held and Guideline 7 as non-executive directors are not appointed for a specific term but are subject to rotation and re-election at the annual general meeting of the Company in accordance with the Company’s Bye-Laws.
REVIEW BY AUDIT COMMITTEE
The Group’s interim financial report for the six months ended 30th June, 2004 have been reviewed by the audit committee which comprises two independent non-executive directors of the Company and by the Company’s auditors, Deloitte Touche Tohmatsu.
– 5 –
APPRECIATIONS
The Board would like to take this opportunity to thank the Company’s shareholders for their continual support and wish to extend its sincere appreciation for the efforts and loyalty of our staff.
PUBLICATION OF INTERIM RESULTS ON THE WEBSITE OF THE STOCK EXCHANGE
A detailed results announcement of the Company for the six months ended 30th June, 2004 containing all information required by paragraphs 46(1) to 46(6) of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange will be published on the website of the Stock Exchange in due course.
By Order of the Board China Velocity Group Limited Chan Yeung Nam Chairman
Hong Kong, 24th September, 2004
As at the date of this announcement, the Board comprises two executive directors, namely, Mr. Chan Yeung Nam and Mr. Fu Jie Pin; two independent non-executive directors, namely, Mr. Tang Cheung Fai and Mr. Lam Ping Cheung.
* For identification purpose only
Please also refer to the published version of this announcement in China Daily.
– 6 –