Central Development Holdings Limited — Interim / Quarterly Report 2005

Dec 16, 2004

==> picture [56 x 53] intentionally omitted <==

SEAPOWER RESOURCES INTERNATIONAL LIMITED

(Incorporated in the Cayman Islands with Limited liability)

(Stock Code: 269)

ANNOUNCEMENT FOR THE INTERIM RESULTS for the 6 months ended 30 September 2004

RESULTS

The Board of Directors (“Directors”) of Seapower Resources International Limited (“Company”) announces the unaudited consolidated results of the Company and its subsidiaries (“Group”) for the six months ended 30 September 2004 and the unaudited condensed consolidated balance sheet of the Group as at 30 September 2004. The unaudited interim financial report for the six months ended 30 September 2004 have been reviewed by the Company’s Independent Accountants.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 September

2004 Notes HK$’000 (Unaudited) Turnover 4,173 Direct operating expenses (3,091) Other revenue 21 Other income 47 Selling and administrative expenses (5,608) Other operating expenses 6 (514) Loss from operations (4,972) Finance costs (198) Loss before taxation (5,170) Taxation 7 — Loss after taxation (5,170) Minority interests — Loss attributable to shareholders (5,170) Loss per share — basic 9 (0.10 cents)

2003 HK$’000 (Unaudited) 5,002 (3,854) 208 1,605 (4,160) (1,930) (3,129) (23,298) (26,427) (7,427) (33,854) 18 (33,836) (36.45 cents)

— 1 —

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared in accordance with the Statement of Standard Accounting Practice (“SSAP”) 25 “Interim financial reporting” issued by the Hong Kong Institute of Certified Public Accountants and with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Stock Exchange”).

The condensed consolidated financial statements have been prepared under the historical cost convention, as modified for the revaluation of cold storage warehouses and other land and buildings.

The accounting policies and basis of preparation adopted for the preparation of the interim financial report are consistent with those adopted by the Group in its annual financial statements for the year ended 31 March 2004.

2. BASIS OF PREPARATION

In preparing the unaudited interim financial report, the Directors of the Company have given careful consideration to the future liquidity of the Group in light of the Group’s net current liabilities of approximately HK$5,078,000 as at 30 September 2004.

The substantial shareholder of the Company, Many Returns Limited (“MRL”) has agreed to provide and procure the provisions of working capital to the Company such that the Group will have sufficient working capital for its operations for 12 months commencing from 5 December 2003 to 4 December 2004, in accordance with the Restructuring Agreement dated 14 May 2003 and its supplemental agreement dated 11 August 2003. MRL also agrees to undertake to the Company that the Company will not dispose of any of its assets after completion if such disposal will result in the Company breaching paragraph 38 of its listing agreement with the SEHK.

In light of the above, the Directors of the Company have prepared the financial statements on a going concern basis that the Group would be able to meet the debts as and when they fall due and will have sufficient working capital to carry on its business for the foreseeable future.

3. THE INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

The Independent Accountants have reviewed the unaudited interim financial statements for the six months ended 30 September 2004 which does not constitute an audit.

The Independent Accountants have considered that the basis of going concern basis for the preparation of the interim financial report has been adequately disclosed in note 2 above.

On the basis of their review, the Independent Accountants are not aware of any materials modifications that should be made to the interim financial report for the six months ended 30 September 2004.

— 2 —

4. BUSINESS AND GEOGRAPHICAL SEGMENT INFORMATION

Business Segments

For the six months ended 30 September 2004:

	Cold storage
	warehousing
	and logistics	Property
	management	**investment **	Consolidated
	HK$’000	HK$’000	HK$’000
REVENUE
External revenue	4,173	—	4,173
Other revenue	21	—	21
Total revenue	4,194	—	4,194
SEGMENT RESULTS	(334)	—	(334)
Unallocated costs			(4,638)
Finance costs			(198)
Loss attributable to shareholders			(5,170)
For the six months ended 30 September 2003:
	Cold storage
	warehousing
	and logistics	Property
	management	investment	Consolidated
	HK$’000	HK$’000	HK$’000
REVENUE
External revenue	5,002	—	5,002
Other revenue	23	185	208
Total revenue	5,025	185	5,210
SEGMENT RESULTS	(991)	(68)	(1,059)
Unallocated costs			(2,070)
Finance costs			(23,298)
Taxation — Charge			(7,427)
Minority interests			18

(33,836)

Loss attributable to shareholders

— 3 —

Geographical Segments

For the six months ended 30 September 2004:

	Hong Kong
	and
	PRC	**Australia **	Consolidated
	HK$’000	HK$’000	HK$’000
REVENUE
External revenue	—	4,173	4,173
Other revenue	—	21	21
Total revenue	—	4,194	4,194
SEGMENT RESULTS	(4,333)	(639)	(4,972)
For the six months ended 30 September 2003:
	Hong Kong
	and
	PRC	Australia	Consolidated
	HK$’000	HK$’000	HK$’000
REVENUE
External revenue	—	5,002	5,002
Other revenue	185	23	208
Total revenue	185	5,025	5,210
SEGMENT RESULTS	(2,004)	(1,125)	(3,129)

5. DEPRECIATION AND AMORTISATION

During the period, depreciation and amortisation of approximately HK$770,000 (for the six months ended 30 September 2003: HK$787,000) was charged in respect of the Group’s property, plant and equipment.

— 4 —

6. OTHER OPERATING EXPENSES

Other operating expenses comprise:

Restructuring cost Provision for bad and doubtful debts Others	For the six months ended 30 September 2004 2003 HK$’000 HK$’000 — 1,704 478 212 36 14 514 1,930	For the six months ended 30 September 2004 2003 HK$’000 HK$’000 — 1,704 478 212 36 14 514 1,930
		1,930

7. TAXATION

Deferred taxation Underprovision for Hong Kong Profits Tax in prior years	For the six months ended 30 September 2004 2003 HK$’000 HK$’000 — (850) — (6,577) — (7,427)	For the six months ended 30 September 2004 2003 HK$’000 HK$’000 — (850) — (6,577) — (7,427)
		(7,427)

8. DIVIDEND

No dividend was declared and paid during either period.

9. LOSS PER SHARE

The calculation of the basic loss per share is based on the net loss for the period of approximately HK$5,170,000 (for the six months ended 30 September 2003: HK$33,836,000) and on 4,788,822,570 shares (for the six months ended 30 September 2003: 92,822,570 shares (as adjusted for the effects of share consolidation and share split on 5 December 2003)).

Diluted loss per share is not presented as there were no dilutive potential ordinary shares in existence for the six months ended 30 September 2004.

— 5 —

DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004

BUSINESS REVIEW

Review of the business development

For the six months ended 30 September 2004, the Company has concentrated resources on the operation of its core business of cold storage warehousing and logistics management services while at the same time attempted to explore other business opportunities.

For the six months ended 30 September 2004, the turnover of the Group dropped by HK$0.8 million compared with the last corresponding period to approximately HK$5 million. The Group recorded an operating loss of approximately HK$4.97 million for the same period as compared to the operating loss of approximately HK$3.13 million for the last corresponding period. The finance costs for the six months ended 30 September 2004 dropped significantly by approximately HK$23 million because bank and other borrowings were waived and discharged pursuant to the Schemes of Arrangement as part of the Debt Restructuring completed on 5 December 2003. Despite the economic improvement in Australia during the period, business of the Group experienced a mild slow-down mainly because certain multi-national customers cut down their external warehousing requirement by developing or upgrading their own storage facilities. As a way out, the Group has been sourcing import traders which have increasing demand on storage space.

The Group has conducted a large scale recovery actions and examination of the assets of the Group with an expectation of resuming and recovering the value of some assets. However, due to incomplete records, the recovery actions were not fruitful and the Group has stopped putting into further expenses on the recovery exercise.

Future plan and prospect

The Company was and is still seeking new business opportunities through service development and strategic alliance with potential business partners and associates with the aims of achieving a profitable level of operations.

The Company believes that the development of new customers and/or completing a suitable business opportunity will contribute to the turnover and in the future. Once a business opportunity has been identified, the Company will investigate and evaluate the business opportunity. In selecting a suitable business opportunity, the Company will focus on the potential for future profits and strength of current operating management of the business opportunity. The Company has not put specific industrial or geographical limitations on the nature of any business opportunities or choice of corporate strategic partners.

The Company will inform the shareholders of the new business developments in due course.

— 6 —

LIQUIDITY AND FINANCIAL REVIEW

The Group mainly finances its daily operations with internally generated cash flows. At 30 September 2004, the current ratio of the Group, measured as total current assets to total current liabilities, was 0.47:1.

During the period, the Group recorded cash outflows from operating activities of approximately HK$2.9 million, investing activities of approximately HK$0.3 million and financing of approximately HK$0.4 million.

The Group conducts its business transactions mainly in Hong Kong dollars and Australian dollars. The total borrowings are predominantly in Australian dollars and as at 30 September 2004, approximately HK$4.8 million borrowings is in Australian dollars which were applied for financing the acquisition of the assets located in Australia. Bank borrowings are subject to floating interest rates. The convertible note of HK$5 million is interest free. The Group did not use financial instruments or arrange any forward currency contract for hedging purposes and did not have foreign currency net investments being hedged by foreign currency borrowings and other hedging instruments. The management will review from time to time the potential foreign exchange exposure and will take appropriate actions to minimize any potential foreign exchange exposure risk to arise in the future.

The convertible note of HK$5 million was issued on 1 February 2004 to an independent third party and, if fully exercised, will result in the issuance of 500,000,000 new shares of the Company representing approximately 9.4% of the enlarged issued share capital and will improve the liquidity of the Group.

The gearing ratio of the Group, measured as total debts to total assets, was 63% as at 30 September 2004, comparing to 53% as at 31 March 2004.

CAPITAL COMMITMENT, CHARGES ON ASSETS AND CONTINGENT LIABILITIES

As at 30 September 2004, the Group has no material capital commitment.

As at 30 September 2004, the Group’s cold warehousing property located in Australia with an aggregate carrying value of approximately HK$17.7 million has been pledged to secure the credit facilities granted and utilized by the Group.

As at 30 September 2004, the company has given corporate guarantees amounting to approximately HK$4.8 million in favour of the financial institutions for the credit facilities granted and utilized by its subsidiaries.

EMPLOYEES

The Group has approximately 15 employees in Hong Kong and Australia as at 30 September 2004. The Group ensures that the pay scales of its employees are rewarded on a performance rated basis within the general framework of the Group’s remuneration policy.

— 7 —

SHARE OPTION SCHEMES

At the general meeting on 16 July 2004, the Company passed the resolution to adopt the new Share Option Scheme and to terminate the old Share Option Scheme (previously adopted by the Company on 30 September 1999). On the 10th August 2004, the Listing Committee of The Stock Exchange of Hong Kong Limited (“Stock Exchange”) granted approval of the listing of, and permission to deal in, any shares of the Company which may fall to be issued pursuant to the exercise of the options to be granted under the new Share Option Scheme.

At no time during the period was the Company or any of its associated corporation is a party to any arrangement to enable the directors of the Company to acquire benefits by means of acquisition of shares in, or debt securities (including debentures) of, the Company or any other body corporate, and none of the directors, chief executive or their spouses or children under the age of eighteen had any right to subscribe for the securities of the Company or any of its associated corporation, or had exercised any such right during the period.

SALE AND PURCHASE OF SHARES

There was no purchase, sale or redemption of shares in the Company made by the Company or any of its subsidiaries during the six months ended 30th September 2004.

REVIEW BY AUDIT COMMITTEE

The audit committee of the Company has reviewed and discussed with management the internal controls, financial reporting matters and the unaudited interim financial report for the six months ended 30th September 2004.

CODE OF BEST PRACTICE

None of the Directors of the Company is aware of any information that would reasonably indicate that the Company is not, or was not for the six months ended 30th September 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 of Hong Kong Limited (the “Listing Rules”).

THE MODEL CODE

The Company has adopted a code of conduct regarding directors’ securities transactions on terms no less than the required standard set out in the Model Code in Appendix 10 of the Listing Rules and the Directors of the Company has confirmed that they have complied with the required standard set out in the Model Code and the Company’s code of conduct regarding directors’ securities transactions.

— 8 —

PUBLICATION OF RESULTS ON THE STOCK EXCHANGE’S WEBSITE

All the information required by paragraphs 46(1) to 46(6) of Appendix 16 to the Listing Rules will be published on the website of The Stock Exchange of Hong Kong Limited in due course.

As at the date of this Announcement, the Board comprises of four Executive Directors, namely, Mr. Chan Chun Hing, Kenneth, Mr. Tsang Kam Ching, David, Mr. Zhao Ming and Mr. Fung Tsun Pong; and three Independent Non-Executive Directors, namely Mr. Wang Ji Cheng, Mr. Liu Ka Lim and Mr. Yip Tak On.

For and on behalf of Seapower Resources International Limited Tsang Kam Ching, David Director

Hong Kong, 16 December 2004

Please also refer to the published version of this announcement in the China Daily.

— 9 —