CHEUK NANG (HOLDINGS) LIMITED

Transcription

1 CHEUK NANG (HOLDINGS) LIMITED (incorporated in Hong Kong with limited liability) (Stock code: 131) INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 CHAIRMAN S STATEMENT RESULTS AND DIVIDEND I am pleased to announce that the unaudited consolidated profit after taxation for the six months ended 31 December 2006 of our Group is HK$265,550,000 (2005: HK$97,649,000) as set out in the unaudited consolidated income statement which has been reviewed by the Company s audit committee The Directors resolved to recommend the payment of an interim dividend of HK5.5 cents per share (2005: HK4.5 cents), an increase of 22.2% when compare to last period. Based on the current number of issued shares, the total amount of interim dividend payable is HK$11,875,000 which is 247.3% over last year. SCRIP DIVIDEND The Company proposes that a scrip dividend election will be offered to shareholders with Hong Kong addresses. Details of the scrip dividend scheme will be announced later. The interim dividend is payable to shareholders whose names appear on the register of members at the close of business on 18 April PLACEMENT, RIGHTS ISSUE AND WARRANTS A net proceed in the sum of HK$626,000,000 was capitalized during from the stock market through Rights Issues, Placements of shares and issue of Bonus Warrants. Details of the capitalization are described as follows: (I) Placement and Top-up Subscription of Shares (i) Yan Yin Company Limited ( Yan Yin ), a substantial shareholder of the Company has entered into a Placing Agreement with Citigroup Global Markets Limited ( Citigroup ) on 28 July 2006 whereby Yan Yin agreed to sell and Citigroup agreed to purchase 11,000,000 shares in the Company at a total consideration of HK$44,000, On the same day, the Company has entered into a Subscription Agreement with Yan Yin whereby Yan Yin will subscribe and the Company will allot and issue 11,000,000 shares at a total consideration of HK$44,000,000. The issue of new shares has been approved by the Listing Committee of The Stock Exchange of Hong Kong Limited. The Placement of Shares was completed on 1 August 2006 and the Subscription of Shares was completed on 11 August (ii) Yan Yin has entered into a Placing Agreement with Value Partners Limited ( Value Partners ) on 4 December 2006 whereby Yan Yin agreed to sell and Value Partners agreed to purchase 10,000,000 shares in the Company at a total consideration of HK$40,000,000. On the same day, the Company has entered into a Subscription Agreement with Yan Yin whereby Yan Yin will subscribe and the Company will allot and issue 10,000,000 shares at a total consideration of HK$40,000,000. The issue of new shares has been approved by the Listing Committee of The Stock Exchange of Hong Kong Limited. The Placement of Shares was completed on 8 December 2006 and the Subscription of Shares was completed on 15 December

2 (iii) Yan Yin has entered into a Placing and Subscription Agreement with the Company and a Fund Placing Agent on 12 February 2007 to appoint the Placing Agent for placement of 23,000,000 shares to the investors at total consideration of HK$164,450, Following the completion of the Placement, Yan Yin will subscribe and the Company will allot and issue 23,000,000 shares at a total consideration of HK$164,450, The issue of new shares has been approved by the Listing Committee of The Stock Exchange of Hong Kong Limited. The Placement of Shares was completed on 15 February 2007 and the Subscription of Shares was completed on 26 February (II) Rights Issue Resolutions in respect of the proposed rights issue was passed at the Extraordinary General Meeting of the shareholders on 14 November 2006 whereby the issue of 87,737,336 Rights Shares at a price of HK$4 per Rights Share on the basis of one Rights Share for every one existing shares was approved. There was over-subscription of rights shares and the net proceed received amounted to HK$350,000,000. The Rights Shares were issued to the shareholders on 5 December, (III) Bonus Issue of Warrants and Refreshment of General Mandate Resolutions in respect of the proposed bonus issue of warrants and refreshment of general mandate were passed at the Extraordinary General Meeting of the shareholders on 8 February 2007 whereby bonus warrants of 37,175,810 units at an initial share subscription price at HK$5 per share were issued on 12 February The warrants are exercisable at any time between 12 February 2007 and until 4:00p.m. on 11 February Until now, there are a total of 7,035,460 units of warrants being exercised, being approximately 19% of the total issued warrants and a sum of HK$35,177,300 being credited to the accounts. The refreshment of general mandate empower the Board of Directors to issue new shares not exceed 20% of the issued share of the Company. Based on the number of issued shares as at the date of passing of the resolutions, the maximum number of new shares to be issued will be 37,175,810 shares, in which, 23,000,000 shares were being issued on 26 February 2007 pursuant to the provisions of the Placing and Subscription Agreement signed on 12 February APPOINTMENT OF NEW DIRECTORS Dr. Samson Sun Ping-Hsu was appointed as Independent Non-Executive Director, Mr. Joseph Lee Ding Yue was appointed as Non-Executive Director and Mr. Howard Chao was appointed as Executive Director on 1 December REVIEW OF OPERATIONS Hong Kong Properties The sale of medium size residential properties arisen from the bottom in the second half of 2006, amongst other things, the primary market become more active. The atmosphere of the sale market has shown improvement due to the stable interest rate and recent mortgage rate cut competition. According to the figures released by the Rating and Valuation Department recently, there were a total of 16,580 residential units completed in 2006 while there will be only 12,740 units completed in 2007 which is recorded the lowest in the past 35 years. Amongst the 12,740 units, mostly are small to medium size units and the number of luxury residential units is less than 1,500 units. The deluxe residential market has performed prominently in Luxury residential units for senior expatriate employees of foreign corporations in Hong Kong is increasingly in demand. Since the new supply continued to be limited, luxury residential rental and capital values are expected to increase further in The progress of our development in Hong Kong are as follows: 1. One Kowloon Peak (formerly known as Cheuk Nang Bridgeview Bay), No. 8 Po Fung Terrace, Ting Kau, Tsuen Wan The superstructure work for Phase 1 has completed and interior work is now in progress. It is anticipated that the Occupation Permit will be issued by second half of Villa Cecil Phase II, 192 Victoria Road, Pokfulam 90% of the units in Villa Cecil Phase II are leased with satisfactory income. 2

3 3. Villa Cecil Phase III, 216 Victoria Road, Pokfulam The construction of apartment Block 1 is completed awaiting issuance of Occupation Permit. Marketing for rent of Block I will soon be followed. The construction work of Block 2 is now in progress. 4. Cheuk Nang 21st Century Plaza, 250 Hennessy Road The building will be renamed to Cheuk Nang Plaza with effect from 1 May The occupancy of the building remains 90%. 5. Cheuk Nang Lookout, 30 Severn Road, The Peak Fully rented. 6. Shops 1, 3 and 5, Scenic Crest, 18A Mui Wo Ferry Pier Road The shops are now under renovation and will be named Scenic Bazaar after the renovation is completed. Marketing for rent of small shops and restaurants is now in progress. Macau Properties Following the grand opening of the Wynn Macau and the Grand Lisboa, the property market in Macau was improved since the third quarter of An unofficial data showing that the application for investment immigration in Macau has increased which have boosted up the demand for residential units with sales price below MOP2,000,000. Expatriate employees including from China and Hong Kong show increasing demand for residential units. It is expected that the residential market of Macau will continue improve. Following the opening of some international-branded casinos and hotels in the coming years, the economy of Macau will be benefited as a whole and strengthen the position of Macau as Asian Las Vegas. Estrada de Seac Pai Van, Coloane The entire development will be divided into three phases: (i) 1st phase Towers 1 and 5 (ii) 2nd phase Towers 2 to 4 (iii) 3rd phase Hotel/Serviced Apartments The marketing campaign of Phase 1 has not been launched but reservation is accepted since December Over 60% of the units in Tower 5 are being reserved by purchasers. The demolition, site formation and the rock excavation work is now under progress. The revised building plans were submitted to the Macau authorities for approval in August 2006 waiting for approval. Following the appointment of the new Secretaria para os Transportes e Obras Publicas, we believe the time for processing the approval of the building plans will be curtailed. China Properties The growth of the China economy will lead to the appreciation of real estate while on the other hand, the lack of transparency of the Chinese Government and the frequently change in policies has made the investors to be more cautious. Although there is not yet much significant impact on the property market towards the further controlling policy of the Chinese Government, the Central Government will continue their policies to avoid property market over heat and to ensure the property price at reasonable level. We believe it is not the wish of the Central Government to deteriorate the market. Such policies can create a well-regulated and stable property market in the long run. Cheuk Nang Garden Longhwa, Longgang, Shenzhen The superstructure work contract was awarded and it is anticipated that the construction will be finished by Malaysia Properties In order to reduce the disparities between rural and urban areas as well as between less developed and more developed regions, the Malaysian Government will increase the development allocation for development of rural areas and less developed regions. In this regards, the land supply in city centre will be more limited. The stock market of Malaysia has arisen by 30% last year, the stock price of February has recorded the highest in the past 12 months. Currrently, the price of the properties in the city of Malaysia is only 10% of those in the city of Singapore, moreover, the appreciation potential of Ringgit Malaysia will benefit our investment. 3

4 Cecil Chao Centre Lot 690, 849, 851 and 1280, Section 57, Lorong Perak, Kuala Lumpur, Malaysia Phase I named Parkview The marketing of the units at Ground Floor to the 11th Floor of Parkview has been launched in July 2006 and over 60% of the units were sold. The remaining 40% of the units are reserved for Serviced Apartment. Phases II and III named Central Plaza The Development Order of Phases II and III was obtained and a premium for new development order was issued at RM8,583,000. We will submit the new building detail plans to the authority. Entertainment Centre and Car Park The existing entertainment continue to be rented out and the car park is being managed by our local staff. The rental income generated from the entertainment centre and the car park are found satisfactory and sufficient to cover all our running expenses in Kuala Lumpur. PROSPECT AND FUTURE POLICY Following the continuous economic growth in the past three years, the recently released Budget for 2007/08 shows that the Hong Kong Government is trying to enable all levels of people can enjoy the fruits of the economic growth. Besides, with stable oil price and interest rate, Hong Kong still has the privilege of being a preferred destination for foreign and Mainland China companies to set up their offices, because of the existing low and simple tax system. A stable economic growth for 2007 can be projected. Following the completion of the placements and the rights issue, the financial position of the Group has significantly improved. We will continue our policy to diversify our investment in the four areas namely Hong Kong, Macau, China and Malaysia to balance the investment risk. By order of the Board CECIL CHAO SZE-TSUNG Executive Chairman Hong Kong, 28 March 2007 As at the date of this announcement, the Board comprises of eight Directors, of which Dr. Cecil Sze- Tsung Chao, Mr. Philip Yung, Mr. Howard Chao, Ms. Connie Sau-Fun Ho are executive Directors; Mr. Joseph Ding Yue Lee is non-executive Director and Messrs. Joseph Wing Kong Leung, Graham Ka Wai Lam and Dr. Samson Ping Hsu Sun are independent non-executive Directors. 4

5 RESULTS The unaudited accounts of the Company and its subsidiaries (collectively referred to as the Group ) which have been reviewed by the Company s audit committee are listed as follows: Condensed Consolidated Income Statement For the six months ended 31 December December (Unaudited) (Unaudited) Note Turnover 2 30,154 13,709 Direct costs (16,723) (4,665) Gross profit 13,431 9,044 Other income 3 5,823 93,483 Change in fair value of investment properties 312,114 15,586 Administrative expenses (9,135) (5,688) Finance costs 4b (12,113) (10,967) Profit before taxation 4 310, ,458 Taxation 5 (44,570) (3,809) Profit for the period 265,550 97,649 tributable to: Equity holders of the Company 265,937 97,649 Minority interests (387) Profit for the period 265,550 97,649 Dividends 6 26,790 14,396 Earnings per share Basic cents 128 cents 5

6 Condensed Consolidated Balance Sheet As at 31 December December 30 June (Unaudited) (Audited) Note Non-current assets Investment properties 3,059,687 2,741,572 Property, plant and equipment 2,961 2,869 Investments in joint ventures 1 1 Mortgage loans Properties under development for sale 870, ,900 Other non-current assets ,934,368 3,527,869 Current assets Financial assets at fair value through profit or loss Completed properties for sale 89,865 97,103 Trade and other receivables 8 5,875 4,953 Prepaid tax Bank balances and cash 28,147 4, , ,387 Current liabilities Trade and other payables 9 112,962 95,960 Current portion of advances from a director 230,000 Current portion of interest-bearing borrowings 359, ,954 Taxation 2,388 2, , ,119 Net current liabilities (350,256) (421,732) Total assets less current liabilities 3,584,112 3,106,137 Non-current liabilities Long-term interest-bearing borrowings 758, ,500 Advances from a related company 12,000 64,871 Advances from a director 133, ,961 Deferred tax liabilities 343, ,915 1,246,866 1,457,247 NET ASSETS 2,337,246 1,648,890 CAPITAL AND RESERVES Issued capital 18,588 7,674 Reserves 2,318,480 1,641,216 Total equity attributable to equity holders of the Company 2,337,068 1,648,890 Minority interests 178 TOTAL EQUITY 2,337,246 1,648,890 6

7 Notes 1. PRINCIPAL ACCOUNTING POLICIES Basis of preparation The unaudited condensed consolidated interim financial statements have been prepared in accordance with Hong Kong Accounting Standard ( HKAS ) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). The accounting policies and basis of preparation adopted in the condensed consolidated interim financial statements are consistent with those adopted in the annual financial statements for the year ended 30 June Going concern The Group depends on finance from banks, a related company and a director, who is also a substantial shareholder of the Company, to fund its operations and development projects. The related company and the director have confirmed that they will not request repayment of the amount due until such time as the Group is in a position to repay. Based on the Group s existing banking facilities and the advances obtained from a director and the related parties, the Directors believe that the Group will have sufficient resources to fund its operations and will continue as a going concern. Consequently, the Directors have prepared the financial statements on a going concern basis. 2. SEGMENT INFORMATION An analysis of the Group s turnover and profit from operations by principal activities is as follows: Turnover Profit from operations 31 December 31 December (Unaudited) (Unaudited) (Unaudited) (Unaudited) Property sales 11, Property rental 16,577 12,302 11,814 8,057 Estate management 1,122 1, Others ,154 13,709 13,431 9,044 Other income 5,823 93,483 Change in fair value of investment properties 312,114 15,586 Unallocated operating expenses (9,135) (5,688) Profit from operations 322, , OTHER INCOME 31 December (Unaudited) (Unaudited) Gain on disposal of partial interests in a subsidiary 4,849 Net gain on disposal of financial assets at fair value through profit or loss 25 Change in fair value of financial assets at fair value through profit or loss 114 Recovery of bad debts previously written off 63 Excess of Group s interest in fair value of acquirer s net assets over cost (note) 93,483 Sundry income 772 Note: 7 5,823 93,483 On 22 September 2005, the Group, through a wholly owned subsidiary, acquired 99% interest in Top Regent (Asia) Limited, which is the registered and beneficial owner of a piece of land located in Macau. The consideration for the acquisition include a cash consideration of HK$800 million.

8 The fair value of the identifiable assets and liabilities of the business as at the date of acquisition and their carrying value determined in accordance with Hong Kong Financial Reporting Standards immediately before combination are as follows: Carrying value HK$ 000 Fair value HK$ 000 Premium for land lease Other payables and accruals 31,972 (32,031) 1,050,000 (44,000) Deferred tax liabilities (117,700) Net assets acquired (59) 888,300 Consideration Cash paid Discount on early settlement of consideration 800,000 (5,706) Directly attributable costs ,817 Excess of Group s interest in fair value of acquiree s net assets over costs 93, PROFIT BEFORE TAXATION This is stated after charging the following: (a) 31 December (Unaudited) (Unaudited) Other items Depreciation Staff costs (including directors emoluments) Salaries, wages and other benefits 2,897 1,293 Retirement scheme contributions Cost of properties sold 11,826 (b) Finance costs Interest on bank loans and overdrafts wholly repayable within five years Interest on advances from a related company 22,522 1,584 19,305 6,948 Interest on advances from a director Other incidental borrowing costs 13, Total borrowing costs 38,128 26,369 Less: Borrowing costs capitalised in properties under development (26,015) (15,402) 12,113 10, TAXATION Hong Kong Profits Tax has not been provided for the period as the Group has no assessable profits for the six months ended 31 December The income tax provision in respect of operations in overseas is calculated at the applicable tax rates on the estimated assessable profits for the period based on the existing legislation, interpretations and practices in respect thereof. 8

9 The amount of taxation charged to the condensed consolidated income statement represents: 31 December 2006 (Unaudited) 2005 (Unaudited) Current tax Deferred tax Origination of temporary differences 44,570 3,809 44,570 3, DIVIDENDS 31 December (Unaudited) HK$ 000 (Unaudited) HK$ 000 Final dividend paid of HK17 cents (31 December 2005: HK15 cents) per share Interim dividend proposed of HK5.5 cents 14,915 10,977 (31 December 2005: HK4.5 cents) per share 11,875 3,419 26,790 14,396 During the period, scrip dividend alternative was offered to shareholders in respect of 2006 final dividends. This alternative was accepted by shareholders as follows: 31 December final HK$ 000 interim HK$ 000 Dividends: Cash Share alternative 13,297 1,618 1,163 9,814 14,915 10,977 Note: An interim dividend in respect of 2007 of HK5.5 cents per share amounting to approximately HK$11,875,000 have been proposed by the board of directors after the balance sheet date. The proposed dividend is not reflected as dividend payable in the condensed balance sheet, but will be reflected as an appropriation of retained profits in the year ending 30 June EARNINGS PER SHARE The calculation of earnings per share for the period is based on the net profit attributable to equity holders of the Company for the period of HK$265,937,000 (2005: HK$97,649,000) and the weighted average number of 102,072,470 ordinary shares (2005: 76,343,926 ordinary shares) in issue during the period. The weighted average number of share in issued used in the basic earnings per share calculation for the period ended 31 December 2005 has been adjusted to reflect the effect of rights issue during the period which is treated as had been completed on 1 July Diluted earnings per share has not been presented because there was no potential dilutive share in issue during both periods. 8. TRADE AND OTHER RECEIVABLES 31 December 30 June (Unaudited) (Audited) Trade receivables Prepayments, deposits and other receivables 5,414 4,390 5,875 4,953 9

10 The Group maintains a controlled credit policy to minimise any credit risk associated with trade receivables. The ageing analysis of the trade receivables (net of impairment for bad and doubtful debts) is as follows: 31 December 30 June (Unaudited) (Audited) 0 30 days days days Over 90 days TRADE AND OTHER PAYABLES 31 December 30 June (Unaudited) (Audited) Trade payables 1,382 1,356 Accrued charges and other payables 111,580 94, ,962 95,960 The ageing analysis of the trade payables is as follows: 31 December 30 June (Unaudited) (Audited) 0 30 days days days Over 90 days 41 1, ,176 1,382 1,356 CONTINGENT LIABILITIES The Company and two subsidiaries have executed corporate guarantees to banks in respect of banking facilities granted to certain subsidiaries to the extent of HK$1,951,978,000 (30 June 2006: HK$1,777,537,000) of which HK$1,118,250,000 (30 June 2006: HK$1,184,454,000) was utilised as at 31 December PLEDGE OF ASSETS 31 December 2006, the Group s total bank borrowings of HK$1,118,250,000 (30 June 2006: HK$1,184,454,000) were secured by the following: (i) legal charges on certain of the Group s investment properties and certain of the Group s properties for sale with carrying values of HK$3,051,187,000 (30 June 2006: HK$2,734,572,000) and HK$947,589,000 (30 June 2006: HK$655,562,000), respectively; (ii) floating charge over all the assets and undertakings of certain subsidiaries; (iii) mortgages over the shares of certain subsidiaries; and (iv) assignments of sale proceeds, insurance proceeds, rental income and deposits arising from the tenancy agreements of certain properties. 10

11 POST BALANCE SHEET EVENTS (a) On 8 January 2007, the directors proposed to the shareholders of the Company the bonus warrant issue for qualifying shareholders on the basis of one 2009 Warrant for every five existing shares held on 8 February The 2009 Warrant are constituted by an instrument by way of deed poll to be executed by the Company and to be issued by the Company under the bonus warrant issue entitling the holders to subscribe up to an aggregate of 37,175,810 new shares at an initial subscription price of HK$5.00 per new share (subject to adjustment). The bonus warrant issue was approved by the shareholders of the Company in the extraordinary general meeting on 8 February Details of the bonus warrant issue are set out in the prospectus issued by the Company dated 9 February (b) Pursuant to a placing and subscription agreement dated 12 February 2007 made between the Company, Yan Yin Company Limited ( Yan Yin ) and Kim Eng Securities (Hong Kong) Limited ( placing agent ), the placing agent agreed to place 23,000,000 shares in the Company held by Yan Yin at a placing price of HK$7.15 per share. Also, the Company agreed to allot and issue 23,000,000 new shares in the Company to Yan Yin at a subscription price of HK$7.15 per share. On completion of the subscription of 26 February 2007, 23,000,000 share of HK$0.10 each were issued and allotted to Yan Yin at a consideration of HK$7.15 per share. The net proceeds are used for repayment of bank borrowings of the Group. These shares rank pari passu with the existing shares of the Company in all respects. (c) On 27 March 2007, a wholly owned subsidiary of the Company has acquired a piece of land located in Hong Kong from the Lands Department through public auction at a consideration of HK$96.5 million. PURCHASE AND CANCELLATION OF SHARES There was no redemption, purchase or cancellation of shares by the Company or any of its subsidiaries during the six months ended 31 December CORPORATE GOVERNANCE Code on Corporate Governance Practices During the period, the Company had complied with the relevant provisions set out in the Code on Corporate Governance Practices (the CGP Code ) based on the principles set out in Appendix 14 to the Listing Rules, save the following: (i) the non-executive directors were not appointed for a specific term. However, they are subject to retirement by rotation and re-election at the annual general meetings of the Company pursuant to the Bye-Laws of the Company. As such, the Company considers that such provisions are sufficient to meet the underlying objectives of the relevant provisions of the CGP Code; (ii) the role and responsibilities of Chairman and the Chief Executive Officer are not separated as we are still looking for suitable person to act as Chief Executive Officer. Board Audit Committee The Board Audit Committee comprises Messrs. Lam Ka Wai, Graham, Leung Wing Kong Joseph and Dr. Sun Ping Hsu Samson, all being independent non-executive directors of the Company. The Committee has reviewed with the management the accounting principles and practices adopted by the Company and discussed the auditing, internal controls and financial reporting matters including a review of the unaudited interim results of the Company for the six months ended 31 December MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company had adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules ( the Model Code ) as the code of conduct regarding directors securities transactions. Having made specific enquiry of all directors of the Company, they have complied with the required standard set out in the Model Code for the period. CLOSURE OF REGISTER The register of members of the Company will be closed from 16 April 2007 to 18 April 2007 (both days inclusive) during which period no transfers of shares would be effected. In order to qualify for the interim dividend, all transfer of shares together with the relevant share certificates must be lodged with the Company s Share Registrars, Computershare Hong Kong Investor Services Limited at Room , 17th Floor, Hopewell Centre, 183 Queen s Road East, Hong Kong not later than 4:00 p.m. on 13 April

12 PUBLICATION OF DETAILED INTERIM RESULTS ANNOUNCEMENT ON THE WEBSITE OF THE STOCK EXCHANGE A detailed interim results announcement containing all information required by paragraphs 46(1) to 46(6) of Appendix 16 of the Listing Rules will be published on the Stock Exchange s website ( in due course. By order of the Board CONNIE HO Company Secretary Hong Kong, 28 March 2007 As at the date of this announcement, the Board comprises of eight Directors, of which Dr. Cecil Sze- Tsung Chao, Mr. Philip Yung, Mr. Howard Chao, Ms. Connie Sau-Fun Ho are executive Directors; Mr. Joseph Ding Yue Lee is non-executive Director and Messrs. Joseph Wing Kong Leung, Graham Ka Wai Lam and Dr. Samson Ping Hsu Sun are independent non-executive Directors. Please also refer to the published version of this announcement in China Daily. 12