CCIAM Future Energy Limited — Earnings Release 2001

Mar 28, 2002

(incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance)

ANNOUNCEMENT OF 2001 RESULTS

1. Results

The audited consolidated results for the year ended 31st December 2001 are as follows:

		2001	2000
	Note	HK$’million	HK$’million
TURNOVER	1	202.4	256.7
COST OF SALES		(38.8)	(57.5)
GROSS PROFIT		163.6	199.2
ADMINISTRATIVE EXPENSES		(43.5)	(41.9)
OTHER OPERATING EXPENSES (NET)		(32.6)	(26.3)
OPERATING PROFIT	2	87.5	131.0
FINANCE COSTS	3	(28.3)	(34.0)
PROFIT BEFORE TAXATION		59.2	97.0
TAXATION	4	(5.8)	(8.7)
PROFIT AFTER TAXATION		53.4	88.3
MINORITY INTERESTS		(2.9)	(2.8)
PROFIT ATTRIBUTABLE TO SHAREHOLDERS		50.5	85.5
DIVIDENDS	5	46.0	66.2
EARNINGS PER SHARE	6
- Basic		HK 17.6 cents	HK 29.7 cents

Notes:

(1) Turnover and contribution to profit before taxation by principal activities and markets

The Group is principally engaged in the investment holding, property investment, property rental, property development, estate management and agency and distribution of golf accessories.

An analysis of the Group’s turnover and contribution to profit before taxation for the year by principal activities and markets is as follows:

	2001		2000
	Turnover	Contribution to profit before taxation	Turnover	Contribution to profit before taxation
	HK$’million	HK$’million	HK$’million	HK$’million
Hong Kong
Property rental	121.5	83.9	126.5	82.2
Property sales	6.6	6.2	1.5	1.1
Property related services	9.6	5.8	9.6	5.9
Others	1.5	(1.0)	2.0	2.0
Less: Administrative and interest expenses (net)		(50.6)		(56.6)
	139.2	44.3	139.6	34.6
North America
Property rental	62.3	37.4	54.7	35.1
Property sales	--	--	62.4	46.6
Others	0.9	(1.2)	--	--
Less: Administrative and interest expenses (net)		(21.3)		(19.3)
	63.2	14.9	117.1	62.4
	202.4	59.2	256.7	97.0

(2) Operating profit

	2001	2000
	HK$’million	HK$’million
Operating profit is stated after crediting and charging the following:
Crediting
Dividend income from listed investments	1.1	1.1
Interest income	2.1	2.6
Net gain on disposal of investment properties	6.2	1.1
Charging
Amortisation of goodwill	1.6	--
Bad debts expense	2.6	0.3
Cost of sales of land and buildings for resale	--	15.8
Depreciation	6.8	5.5
Loss on disposal of other fixed assets	0.1	0.2
Staff costs (excluding directors’ emoluments)	26.3	24.0

(3) Finance costs

		2001	2000
		HK$’million	HK$’million
Interest expenses
- bank loans and overdrafts wholly repayable within five years		22.2	24.7
- bank loans not wholly repayable within five years		6.1	8.5
Other incidental borrowing costs		0.9	0.8
		29.2	34.0
Less:	Interest expenses and other incidental borrowing costs capitalised in properties under development	0.9	--
		28.3	34.0

(4) Taxation

Hong Kong profits tax has been provided at the rate of 16% (2000: 16%) on the estimated assessable profits. Taxation on overseas profit has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the Group operates.

	2001	2000
	HK$’million	HK$’million
Hong Kong profits tax	5.8	7.2
Overseas taxation	--	1.5
	5.8	8.7

(5) Dividends

	2001	2000
	HK$’million	HK$’million
Interim, paid, of HK9 cents (2000: HK10 cents) per ordinary share	25.9	28.9
Special, paid, of HK Nil cent (2000: HK5 cents) per ordinary share	--	14.3
Final, proposed, of HK7 cents (2000: HK8 cents) per ordinary share	20.1	23.0
	46.0	66.2

Notes:

(a) The previously recorded final dividends proposed and declared after the balance sheet date but accrued in the accounts for the years ended 31st December 1999 and 2000 were HK$20,136,877 and HK$23,013,574 respectively. Under the Group’s new accounting policy, these have been written back against opening retained profits as at 1st January 2000 and 2001 and are now charged in the year in which they were proposed.

(b) At a meeting held in 27th March 2002, the directors declared a final dividend of HK7 cents per ordinary share. This proposed dividend is not reflected as a dividend payable in these accounts, but will be reflected as an appropriation of retained profits for the year ending 31st December 2002.

(6) Earnings per share

The calculation of basic earnings per share is based on profit attributable to shareholders of HK$50,511,359 (2000: HK$85,468,385) and the weighted average number of 287,669,676 (2000: 287,669,676) ordinary shares in issue during the year.

Diluted earnings per share is not shown as there are no dilutive instruments outstanding during the year.

1. Proposed Final Dividends

An interim dividend of HK9 cents (2000: HK10 cents and special dividend of HK5 cents) per share were paid to shareholders on 15th October 2001. The directors of the Company have resolved to recommend to shareholders at the Annual General Meeting to be held on Friday, 31st May 2002, the payment of a final dividend of HK7 cents (2000: HK8 cents) per share making a total distribution of HK16 cents per share for the financial year ended 31st December 2001. The proposed final dividend is expected to be made payable to the shareholders whose names appear on the register of members of the Company on 31st May 2002 (“Record Date”) and the dividend cheques therefor are expected to be dispatched at the close of business of 31st May 2002.

1. Closure of Register of Members

The register of members of the Company will be closed from Friday, 24th May 2002 to Friday, 31st May 2002, both dates inclusive, during which period no transfer of shares will be registered. In order to qualify for the proposed final dividend, all transfers of shares must be accompanied by the relevant share certificates and lodged with the Company's Registrars, Central Registration Hong Kong Limited at 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:00 p.m. on Thursday, 23rd May 2002.

1. Management Discussion and Analysis

(a) Business Review

Despite the economic downturn in the United States (“US”) during 2001 which was deepened by the September 11 incident, rental income from Montgomery Plaza in San Francisco posted a modest increase of HK$7.6 million or 14% over the previous year.

Notwithstanding the difficult property market condition, the total recurrent income from leases in Hong Kong fared better by a slight decline of 4% in 2001 to HK$121.5 million as against HK$126.5 million in 2000. Except on commercial property, nearly full occupancy was maintained.

Overall, the Group’s total recurrent rental income was HK$184 million in 2001 as compared to HK$181 million in 2000.

Reduction of operational costs and successive lowering of interest rates in Hong Kong benefited our earnings. Tight measures on costs are continuously taken in order that the Group will remain competitive and revenue oriented.

(b) The Group’s liquidity and financial resources

During the relevant period, the Group’s total bank borrowings increased by HK$61.3 million to HK$495.1 million. The shareholders’ funds deceased by HK$142.2 million to HK$1,961.2 million and long term bank loans outstanding as at 31st December 2001 amounted HK$393.8 million (2000: HK$391.5 million). The debt to equity ratio was 25% (2000: 21%). The banking facilities now available are sufficient for the Group’s working capital and there is no major capital commitment as at 31st December 2001. Further bank facilities will be arranged for the requirements of property development. The Group’s financial flexibility remains healthy.

(c) Capital structure of the Group

The capital structure of the Group had not changed materially from the last annual report. The Group borrowings are primarily denominated in Hong Kong and US Dollars. The Group therefore has no significant exposure to foreign exchange fluctuation.

The maturity of the Group’s long term bank loans is as follows:

	2001	2000
	HK$’million	HK$’million
- within one year	29.1	35.4
- in the second year	29.3	115.6
- in the third to fifth years inclusive	290.9	170.5
- after the fifth year	44.5	70.0
	393.8	391.5

The Group’s total bank borrowings are secured by certain properties with an aggregate net book value of HK$1,648 million (2000: HK$1,659 million) and rental income thereon.

(d) Significant investment held and their performance and future prospects

Our prime residential property at No. 1 Barker Road, The Peak, Hong Kong, is now under re-development into super luxurious apartments with recreational facilities. Completion of the property is expected to be in 2003/2004.

A portion of our property held under Lot No. R.B.L. 1137 known as Nos. 20 & 22 Severn Road, The Peak, Hong Kong, is under development into two super luxurious houses. Completion of the property is expected to be in 2004/2005.

A portion of our residential estate in Floral Villas in Tso Wo Hang, Sai Kung, New Territories, is under planning for development into several luxurious residential houses and/or apartments. Completion of the property is expected to be in 2004/2005.

All the properties upon completion of construction will be held for investment purpose.

(e) Details of material acquisitions and disposal of subsidiary companies

In 2001, the Group has incorporated a wholly owned subsidiary company, namely Montgomery Golf Corporation (“MGC”) with limited liability in the US. All the assets of MGC were purchased from Swing Solutions, a golf training software developer, in September 2001 at a purchase consideration of approximately HK$9.6 million. Its principal activities are trading of golf digital video equipment and technology software. The trade name of the product lines is still Swing Solutions.

During 2001, the Group’s 12% equity investment in The Yangtze Ventures Limited (“YVL”) injected HK$15.6 million through its wholly owned subsidiary company to participate in 20% equity interest of a company which is developing biochemical products. It forecasts sales to commence in the second half of 2002. In January 2002, YVL also invested HK$7.8 million through its wholly owned subsidiary company to hold 15% equity interest of a company which engages in integrated circuits.

(f) Details of future plans for material investments

In continuous pursuit of a conservative and prudent business policy, the Group will consider to invest in profitable projects wherever arising in the future.

1. Staff

The total number of employees in the Group was 180 as at 31st December 2001. In addition to salary payment, other benefits include year-end double pay, discretionary bonus, insurance, medical schemes and provident fund schemes.

1. Prospects

The economy in Hong Kong continues to be affected by global downturn. Although there are signs of a gradual economic recovery in the US, its effect would not be immediately felt to benefit Hong Kong which is in the process of re-positioning its role in the context of China’s accession to the World Trade Organisation.

Under such a current situation, the property market in Hong Kong would remain poor and uninspired in the near term which may affect our recurrent income. However, the Group is confident that eventual recovery in the US and continuing economic growth in China will benefit Hong Kong in the years ahead.

Barring any unforeseen circumstances, the Group will continue to pursue its prudent policy and maintain stable earnings for the coming year.

1. Purchase, Sale or Redemption of Shares

The Company has not redeemed any of its shares during the year. Neither the Company nor any of its subsidiary companies purchased or sold any of the Company’s issued shares during the year.

1. Compliance with the Code of Best Practice

During the year ended 31st December 2001, the Company was in compliance with the Code of Best Practice as set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) except that the Independent Non-Executive Directors of the Company are not appointed for a specific term as they are subject to retirement by rotation and re-election at Annual General Meeting of the Company in accordance with the Company’s Articles of Association.

1. Audit Committee

Mr. Edward Cheung Wing Yui and Mr. Kevin Chau Kwok Fun, both of whom are Independent Non-Executive Directors, have been appointed as committee members of the Audit Committee which was established on 9th April 1999. The Audit Committee is dedicated to the review of matters with the purview of the audit, such as financial statements and internal control, to protect the interests of the shareholders of the Company.

1. Full Details of Financial Information

A detailed results announcement containing all the information required by paragraphs 45(1) to 45(3) of Appendix 16 of the Listing Rules will be published on the web-site of The Stock Exchange of Hong Kong Limited in due course.

By Order of the Board
William Ma Ching WaiChairmanHong Kong, 27th March 2002

NOTICE OF ANNUAL GENERAL MEETING

NOTICE is hereby given that the Annual General Meeting of the Shareholders of the Company will be held at Salon 3, Level 3, JW Marriott Hotel Hong Kong, One Pacific Place, 88 Queensway, Hong Kong on Friday, 31st May 2002 at 2:00 p.m. for the following purposes:

1. To receive and consider the audited Statement of Accounts for the year ended 31st December 2001, the report of the Directors and the report of the Auditors.

2. To declare a final dividend for the year ended 31st December 2001.

3. To re-elect Directors in place of those retiring and to fix the remuneration of the Directors.

4. To re-appoint Auditors for the ensuing year and to authorise the Directors to fix their remuneration.

5. As special business to consider and, if thought fit, pass with or without modifications, the following resolutions as Ordinary Resolutions:

ORDINARY RESOLUTIONS

(1) “THAT:

(a) a general mandate be and is hereby generally and unconditionally given to the Directors to exercise during the Relevant Period (as hereinafter defined) all the powers of the Company to repurchase shares of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or on any other stock exchange on which the shares of the Company may be listed and which is recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time provided however that the aggregate nominal amount of the shares to be repurchased pursuant to this Resolution shall not exceed ten per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution; and

(b) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; or

(iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting.”

(2) “THAT:

(a) a general mandate be and is hereby generally and unconditionally given to the Directors to exercise during the Relevant Period (as hereinafter defined) all the powers of the Company to allot, issue and deal with additional shares of the Company, and to make or grant offers, agreements or options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require the exercise of such powers either during or after the expiry of the Relevant Period, provided that the aggregate nominal amount of the share capital allotted or agreed conditionally or unconditionally to be allotted and issued by the Directors pursuant to this Resolution (otherwise than as scrip dividends pursuant to the Articles of Association of the Company from time to time or pursuant to a rights issue or pursuant to the exercise of any rights of subscription or conversion under any existing warrants, bonds, debentures, notes and other securities issued by the Company or pursuant to any share option scheme), shall not exceed twenty per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution; and

(b) for the purpose of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; or

(iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting.”

(3) “THAT conditional upon the passing of Ordinary Resolutions Nos.5(1) and 5(2) set out in the notice convening this meeting, the general mandate granted to the Directors to allot shares pursuant to Ordinary Resolution No.5(2) set out in the notice convening this meeting be and is hereby extended by the additional thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution No.5(1) set out in the notice convening this meeting, provided that such extended amount shall not exceed ten per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution.”

By Order of the Board
Katy Ma Ching ManSecretaryHong Kong, 27th March 2002

Notes:

(1) The registers of members of the Company will be closed from Friday, 24th May 2002 to Friday, 31st May 2002, both days inclusive, during which no transfer of shares will be registered. In order to qualify for the proposed final dividend, all transfers of shares accompanied by the relevant share certificates must be lodged with the Company’s Registrars, Central Registration Hong Kong Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:00 p.m. on Thursday, 23rd May 2002.

(2) A member of the Company entitled to attend and vote at the meeting is entitled to appoint more than one proxy to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company. In order to be valid, a form of proxy, together with any power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be lodged with the Company’s registered office not less than 48 hours before the time appointed for holding the meeting.

(3) A circular containing, inter alia, an explanatory statement relating to the repurchase of shares and details regarding Ordinary Resolution No.5(1) set out above will be sent to shareholders together with the 2001 Annual Report.

(4) Concerning Ordinary Resolutions Nos.5(2) and 5(3) set out above, approval is being sought from members, as a general mandate (“Issue Mandate”) in compliance with Section 57B of the Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in order to ensure that in the event it becomes desirable for the Company to issue any new shares of the Company, the Directors of the Company are given flexibility and discretion to allot and issue new shares up to the aggregate of 20% of the issued share capital plus the number of shares repurchased by the Company pursuant to the general mandate approved in Ordinary Resolution No.5(1) set out above. The Directors of the Company, however, have no immediate plans to issue any new shares of the Company under the Issue Mandate.

Please also refer to the published version of this announcement in the Hong Kong iMail.