hmvod Limited — Interim / Quarterly Report 2004

Feb 16, 2004

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Tai Shing International (Holdings) Limited
(formerly known as Systek Information Technology (Holdings) Limited)
(incorporated in the Cayman Islands with limited liability)
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www.taishingintl.com www.taishingintl.com
第三季度報告 3rd Quarterly
僅供識別 2003 Report 2003
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CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers.

The Stock Exchange takes no responsibility for the contents of this document, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

香港聯合交易所有限公司（「聯交所」）創業板（「創業板」）的特色

創業板為帶有高投資風險的公司提供一個上市的市場。尤在創業板上市的 公司毋須有過往溢利記錄，亦毋須預測未來溢利。此外，在創業板上市的公 司可因其新興性質及該等公司經營業務的行業或國家而帶有風險。有意投 資的人士應了解投資於該等公司的潛在風險，並應經過審慎周詳的考慮後 方作出投資決定。創業板的較高風險及其他特色表示創業板較適合專業及 其他資深投資者。

以創業板上市公司的新興性質使然，在創業板買賣的證券可能會較於主板 買賣的證券承受較大的市場波動風險，同時無法保證在創業板買賣的證券 會有高流通量的市場。

創業板所發佈的資料的主要方法為在聯交所為創業板而設的互聯網網頁刊 登。上市公司毋須在憲報指定報章刊登付款公佈披露資料。因此，有意投資 的人士應注意彼等能閱覽創業板網頁，以便取得創業板上市發行人的最新 資料。

聯交所對本文件的內容概不負責，對其準確性或完整性亦不發表任何聲明， 並明確表示概不就因本文件全部或任何部份內容而產生或因倚賴該等內容 而引致的任何損失承擔任何責任。

本文件乃遵照聯交所創業板證券上市規則而提供有關泰盛國際（控股）有限 公司（「本公司」）的資料。本公司的董事（「董事」）對本文件的內容共同及 個別承擔全部責任，並作出一切合理查詢後，確認據彼等所知及所信： (1) 本 文件內所載的資料在各重大方面均屬準確完備及並無誤導成份； (2) 本文件 並無遺漏其他事實，以致本文件內的任何聲明有所誤導；及 (3) 本文件內所發 表的意見乃經審慎周詳考慮，並按公平合理的準則與假設而作出。

This document, for which the directors (the “Directors”) of Tai Shing International (Holdings) Limited (the “Company”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of the Stock Exchange for the purpose of given information with regard to the Company. The Directors of the Company, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief:- (1) the information contained in this document is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this document misleading; and (3) all opinions expressed in this document have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

HIGHLIGHTS

• Turnover for the three months and nine months period ended 31 December, 2003 amounted to approximately HK$2,349,000 and HK$18,301,000 respectively representing a decrease of approximately 76.5% and 41.3% over the corresponding periods in 2002.

• During the three months ended 31 December, 2003, it recorded a profit attributable to the shareholders amounted to approximately HK$64,000 representing an improvement of 101.3% over the corresponding period in 2002 operating in a loss. However, for the nine months ended 31 December, 2003, it still recorded a loss attributable to the shareholders amounted to approximately HK$706,000 representing an improvement of 96.3% over the corresponding period in 2002.

• The Board does not recommend the payment of an interim dividend for the nine months period ended 31 December, 2003.

• The Capital Reorganization proposed on 9 September, 2003 has taken effect on 2 February, 2004.

• The change of the Company’s name from Systek Information Technology (Holdings) Limited and 訊泰科技（控股）有限公司 for identification purpose to Tai Shing International (Holdings) Limited and 泰盛國際（控 股）有限公司 for identification purpose respectively has taken effect on 2 February, 2004.

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The board of directors (the “Board”) of Tai Shing International (Holdings) Limited (formerly known as Systek Information Technology (Holdings) Limited) (the “Company”) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively the “Group”) for the three months and nine months period ended 31 December, 2003, together with the unaudited comparative figures for the corresponding periods in 2002, as set out below:

CONSOLIDATED INCOME STATEMENT

		Unaudited	Unaudited	Unaudited	Unaudited
		Three months	ended	Nine months	ended
		31 December		31 December
		2003	2002	2003	2002
	Note	HK$’000	HK$’000	HK$’000	HK$’000
Turnover	2	2,349	9,995	18,301	31,155
Cost of services and
merchandise sold		(1,421)	(7,249)	(12,195)	(21,762)
Gross Profit		928	2,746	6,106	9,393
Other revenue		–	8	22	26
Research and development
costs		–	(2,127)	(623)	(6,238)
Selling expenses		(11)	(291)	(588)	(2,517)
General and administrative
expenses		(566)	(4,835)	(5,414)	(19,323)
Profit/(Loss) from operations	3	351	(4,499)	(497)	(18,659)
Exceptional item – severance
payment		–	(421)	–	(421)
Finance cost		(2)	–	(16)	–
Loss on disposal of
subsidiaries		(285)	–	(193)	–
Profit/(Loss) from ordinary
activities before taxation		64	(4,920)	(706)	(19,080)
Taxation	4	–	–	–	–
Profit/(Loss) from ordinary
activities after taxation		64	(4,920)	(706)	(19,080)
Minority interests		–	–	–	–
Profit/(Loss) attributable to
the shareholders		64	(4,920)	(706)	(19,080)
Earnings/(Loss) per share
– basic (HK cents)	5	0.006	(0.475)	(0.068)	(1.841)

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NOTES TO THE ACCOUNTS

1 Basis of presentation

The unaudited consolidated results of the Group (the “results”) have been prepared in accordance with the Statement of Standard Accounting Practice issued by the Hong Kong Society of Accountants, and with the applicable disclosure requirements of Chapter 18 of the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited and the Hong Kong Companies Ordinance (Chapter 32).

The accounting policies and methods of computation used in the preparation of the results are consistent with those used in the audited annual accounts for the year ended 31 March, 2003.

All significant intra-group transactions and balances have been eliminated in the preparation of the results.

2 Turnover

The principal activities of the Group are the provision of systems development, sale of software and hardware products, provision of professional services and provision of training. Turnover represents income arising from the provision of systems development and consultancy services, provision of IT engineering and technical support services, provision of training courses and the sale of software and hardware products.

An analysis of the turnover by principal activities of the operations of the Group during the reporting periods is as follows:

Principal activities Systems development Sales of software and hardware products Professional services fees Training fees	Unaudited Three months ended 31 December 2003 2002 HK$’000 HK$’000 1,056 4,883 370 1,718 890 2,892 33 502 2,349 9,995	Unaudited Nine months ended 31 December 2003 2002 HK$’000 HK$’000 9,693 18,454 3,102 2,789 4,725 8,638 781 1,274 18,301 31,155	Unaudited Nine months ended 31 December 2003 2002 HK$’000 HK$’000 9,693 18,454 3,102 2,789 4,725 8,638 781 1,274 18,301 31,155
			31,155

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3 Profit/(Loss) from operations

Profit/(Loss) from operations is stated after charging/(crediting):

Crediting Interest income Charging Auditors’ remuneration Depreciation Finance cost – bank interests Amortisation of deferred asset Operating lease Staff costs Exceptional item – severance payment	Unaudited Three months ended 31 December 2003 2002 HK$’000 HK$’000 – 1 – 1 – 150 10 646 2 – s – – 110 1,030 1,527 7,299 – 421	Unaudited Nine months ended 31 December 2003 2002 HK$’000 HK$’000 1 18 1 18 145 450 767 1,911 16 – – 48 1,300 3,231 12,791 22,038 – 421	Unaudited Nine months ended 31 December 2003 2002 HK$’000 HK$’000 1 18 1 18 145 450 767 1,911 16 – – 48 1,300 3,231 12,791 22,038 – 421
			18
			450 1,911 – 48 3,231 22,038 421

4 Taxation

No provision for Hong Kong profits tax has been made for the nine months ended 31 December, 2003 and 2002 as the Group sustained losses for taxation purpose during the periods.

Subsidiaries operating in the PRC are exempted from PRC income tax for two years commencing from the first profit making year and are entitled to a 50% relief from PRC income tax for the following three years, after which the profits are subject to PRC income tax at the standard rate of 33%. These subsidiaries sustained losses since incorporation and the two-year tax exemption period has not commenced.

5 Earnings/(Loss) per share

The calculation of basic earnings per share for the three months and basic loss per share for the nine months ended 31 December, 2003 were based on the profit attributable to the shareholders of approximately of HK$64,000 (2002: loss of HK$4,920,000) and the loss attributable to the shareholders of approximately of HK$706,000 (2002: loss of HK$19,080,000) respectively divided by the weighted average number of 1,036,375,000 (2002: 1,036,375,000) shares in issue during the year.

There were no potential dilutive ordinary shares in issue for the three months and nine months ended 31 December, 2003 and 2002.

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INTERIM DIVIDEND

The Board does not recommend the payment of any interim dividend for the nine months period ended 31 December, 2003 (2002: Nil).

BUSINESS REVIEW

During the period under review, the Company had successfully acquired 40% interest in 北京中廣鴻聯網絡技術有限公司 (“Hung Luen”), an information technology company incorporated in Beijing, the People’s Republic of China (“PRC”) in a consideration of HK$1.8 million which was satisfied by an issue of promissory note. Hung Luen is principally engaged in the business of research, development and provision of information-on-demand system solutions, telecommunication and broadcasting media network solutions and the provision of related products and services. In addition, it is also engaged in distribution of computers and computerrelated hardware, medical equipments, domestic appliances, general merchandises and spare parts of automobiles. The Board believed that the acquisition provided an opportunity for the Company to widen its assets and earning base and to diversify its business portfolio by capturing a suitable investment opportunity in the information technology industry in the PRC. Upon completion of the acquisition, the Group and Hung Luen can form an alliance with which Hung Luen can offer strong technical know-how and the Group offers its good knowledge of the international market experience in project management and software products quality assurance. The Group can make use of the advantages of Hung Luen in low-cost operating environment and PRC market penetration to explore more sales opportunities in the PRC market.

On 9 September, 2003 the Company announced a proposal for capital reorganization (“Capital Reorganization”) under which, among other matters, the paid-up and the nominal value of each of the 1,036,375,000 issued shares will be reduced from HK$0.10 to HK$0.002 whereby the Company’s issued share capital of HK$103,637,500 will be reduced to HK$2,072,750 (“Share Capital Reduction”), every 25 intermediate shares of HK$0.002 each will be consolidated into one reorganized share of HK$0.05 each. The amount standing to the credit of the share premium account will be applied towards the elimination of the same amount of the accumulated losses of the Company as permitted by the laws of the Cayman Islands. The relevant petition for the Share Capital Reduction and the elimination of share premium accounts (the “Petition”) was made to the Grand Court of the Cayman Islands on 21 November, 2003. The hearing of the Petition for confirmation of the Share Capital Reduction was held on 30 January, 2004 during which the Share Capital Reduction was approved. The effective date of the Capital Reorganization was 2 February, 2004.

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Subsequent to the review period, the name of the Company was changed from Systek Information Technology (Holdings) Limited and 訊泰科技（控股）有限公 司 for identification purpose to Tai Shing International (Holdings) Limited and 泰 盛國際（控股）有限公司 for identification purpose respectively with effect from 2 February, 2004. The change of name were made pursuant to a special resolution passed at an extraordinary general meeting of the Company held on 22 October, 2003 and the approval of the Companies Registrar of the Cayman Islands on 2 February, 2004.

During the period under review, the Board has further disposed of unprofitable subsidiaries. In view of the ever-decreasing profit margin and the persisting loss sustained by the subsidiaries, the Board believes that the disposal is in the best interest of the Group and the shareholders. The Board will continue to dispose of unprofitable businesses in order to enhance the profitability of the Group.

The Board will use its best endeavor to take every measure to reduce the loss sustained by the Group and explore suitable business opportunities and new investments which are in the best interests of the Group and the shareholders.

In view of the improving sentiment in the equity capital market in Hong Kong, the directors are considering a fund raising exercise to provide additional working capital to the Company or to facilitate its future business expansion. In the event that the Company has resolved to proceed with any fund raising exercise, it will make the relevant announcement and seek the approvals, if necessary, of the shareholders and the authorities as prescribed by the GEM Listing Rules.

FINANCIAL PERFORMANCE

During the nine months ended 31 December, 2003, the Group recorded a turnover of HK$18.3 million (2002: HK$31.1 million) representing a decrease of approximately 41.3% as compared with the same period of last year. General and administrative expenses were reduced to approximately HK$5.4 million as compared to HK$19.3 million of the previous corresponding period, representing a decrease of approximately 72%. The loss attributable to the shareholders amounted to approximately HK$0.7 million (2002: HK$19.1 million) representing an improvement of approximately 96.3% over the same period in 2002.

FUTURE PROSPECTS

The Board will continue to simplify the organization of the Group, tightly manage expenses, develop new products and services, dispose of unprofitable businesses and execute strategic acquisitions in order to enhance the profitability of the Group. The Board remains cautiously optimistic about the prospects of the Group.

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DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS IN SECURITIES

As at 31 December, 2003, the relevant interests or short positions of the directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571, the Laws of Hong Kong) (“SFO”))) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they have taken or deemed to have under such provisions of the SFO), or which are required, pursuant to Section 352 of the SFO, to be entered in the register maintained by the Company referred to therein, or which are required, pursuant to Rules 5.40 to 5.58 of the GEM Listing Rules relating to securities transactions by the directors, to be notified to the Company and the Stock Exchange, were as follows:

Long positions in the shares of the Company

					Percentage
		Number of ordinary shares held			of issued
Name of Director	Personal	Family	Corporate	Total	share capital
Mr. Luk Yat Hung_(Note)_	–	–	538,561,914	538,561,914	51.97%

Note: Mr. Luk Yat Hung will be taken to be interested in 538,561,914 shares in the Company as a result of him being beneficially interested in 50% of the issued share capital of Wide Source Group Ltd. which in turn holds 538,561,914 shares in the Company.

Long positions in underlying shares of equity derivatives and debentures of the Company

As at 31 December, 2003, no long positions of the directors and chief executive in the underlying shares of equity derivatives and debentures of the Company and its associated corporations were recorded in the register or as otherwise notified to the Company and the Stock Exchange pursuant to Rule 5.40 of the GEM Listing Rules.

Short positions in shares, underlying shares of equity derivatives and debentures of the Company

During the period under review, no short positions of the directors and chief executive in the shares, underlying shares of equity derivatives and debentures of the Company and its associated corporations were recorded in the register or as otherwise notified to the Company and the Stock Exchange pursuant to Rule 5.40 of the GEM Listing Rules.

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Save as disclosed above, as at 31 December, 2003, none of the directors or chief executive of the Company or their respective associates had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the minimum standards of dealing by the directors of listed issuers as referred to in Rules 5.40 to 5.58 of the GEM Listing Rules.

SUBSTANTIAL SHAREHOLDERS

So far as is known to the directors or chief executive of the Company, as at 31 December, 2003, the following persons who had an interest or a short position in the shares and underlying shares in the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:–

			Approximate
		Number of	Percentage of
Name of Shareholders	Note	shares held	shareholding
Wide Source Group Ltd.	1	538,561,914	51.97%
Mr. Luk Yat Hung	2	538,561,914	51.97%
Mr. Ma Bing	3	538,561,914	51.97%
Suez Asia Holdings Pte Ltd.	4	85,300,000	8.23%

Notes:

1. Wide Source Group Ltd. (“Wide Source”) is a company incorporated in the British Virgin Islands with limited liability and is ultimately and beneficially owned as to 50% by Mr. Luk Yat Hung and as to 50% by Mr. Ma Bing.

2. Mr. Luk Yat Hung will be taken to be interested in 538,561,914 shares in the Company as a result of him being beneficially interested in 50% of the issued share capital of Wide Source which in turn holds 538,561,914 shares in the Company.

3. Mr. Ma Bing will be taken to be interested in 538,561,914 shares in the Company as a result of him being beneficially interested in 50% of the issued share capital of Wide Source which in turn holds 538,561,914 shares in the Company.

4. Suez Asia Holdings Pte Ltd. is a private equity investor in Asia holding the share of the Company in trust.

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Save as disclosed above, as at 31 December, 2003, the directors are not aware of any other person who has an interest or a short position in the shares and underlying shares (including interests in options, if any) of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

DIRECTORS’ INTERESTS IN CONTRACTS

No contracts of significance in relation to the Group’s business to which the Group was a party and in which a director of the Group had a material interest, whether directly or indirectly, subsisted at the end of the nine months period ended 31 December, 2003 or at any time during such period.

DIRECTORS’ COMPETING INTERESTS

As of 31 December, 2003, none of the directors or the initial management shareholders of the Company or their respective associates (as defined under the GEM Listing Rules) had any business or interest in a business which competes or may compete with the business of the Group.

SHARE OPTION SCHEME

The share option scheme of the Company was adopted on 26 August, 2000 (the “Old Share Option Scheme”), the principal terms of which were set out in the Company’s prospectus dated 4 September, 2000. No option has been granted by the Company under the Old Share Option Scheme during the period under review or outstanding as at 31 December, 2003.

To be in line with the changes of the GEM Listing Rules in relation to share option scheme and in order for the Company to attract, retain and motivate talented employees to strive for the goals of the Group and to provide the Company with a flexible means of giving incentives to, rewarding, remunerating and/or providing benefits to the employees, on 9 September, 2003, the Board proposed the termination of the Old Share Option Scheme and an adoption of a new share option scheme (the “New Share Option Scheme”) for the employees of the Group. A summary of the principal terms of the New Share Option Scheme has been set out in Appendix I to the circular of the Company dispatched on 30 September, 2003. An extraordinary general meeting was held on 22 October, 2003 during which, all

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relevant resolutions for, among other things, the said termination of the Old Share Option Scheme and an adoption of the New Share Option Scheme were passed as ordinary resolutions by the shareholders. As at 31 December, 2003, no option has been granted by the Company under the New Share Option Scheme.

Save as disclosed herein, as at 31 December, 2003, none of the directors, chief executive or management shareholders or their respective associates (as defined under the GEM Listing Rules) had any right to subscribe for the shares of the Group.

AUDIT COMMITTEE

The Company has established an audit committee on 18 May, 2000 with written terms of reference in compliance with the requirements as set out in Rules 5.23 to 5.25 of the GEM Listing Rules. The audit committee members comprise two independent non-executive directors, namely, Mr. Chung Shui Ming, Timpson and Professor Ip Ho Shing, Horace and Mr. Chung Shui Ming, Timpson is the chairperson of the audit committee. The primary duties of audit committee are to review and to supervise the financial reporting process and internal control system of the Group and to provide advice and comments to the Board.

The audit committee has reviewed the draft of this quarterly results and has provided advice and comments thereon.

BOARD PRACTICES AND PROCEDURES

Up to the nine months period ended 31 December, 2003, the Company has complied with Board Practices and Procedures as set out in Rules 5.28 to 5.39 of the GEM Listing Rules.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the nine months period under review, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

By Order of the Board Luk Yat Hung Chairman

Hong Kong, 11 February 2004

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