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JD Logistics, Inc. Interim / Quarterly Report 2001
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Download source fileAnnouncement of results for the six months ended 30th June 2001
RESULTS
The Board of Directors (the “Directors”) of Midas Printing Group Limited (the “Company”) is pleased to announce that the unaudited consolidated results of the Company and its subsidiaries (the “Group”) for the six months ended 30th June 2001 together with the comparative figures for the previous period are as follows:
| For the six months ended 30th June | |||
| 2001 | 2000 | ||
| Notes | HK$'000 | HK$'000 | |
| (unaudited) | (unaudited) | ||
| Turnover | (1) | 238,833 | 278,490 |
| Cost of sales | (165,225) | (189,781) | |
| Gross profit | 73,608 | 88,709 | |
| Other revenue | 4,904 | 3,759 | |
| Selling expenses | (7,239) | (7,713) | |
| Administrative expenses | (53,115) | (60,924) | |
| Impairment loss on property, plant and equipment | (1,263) | -- | |
| Profit from operations | (2) | 16,895 | 23,831 |
| Finance costs | (5,641) | (5,327) | |
| Profit before taxation | 11,254 | 18,504 | |
| Taxation | (3) | (1,200) | (2,000) |
| Net profit for the period | 10,054 | 16,504 | |
| Proposed interim dividend | -- | 7,261 | |
| Earnings per share | (4) | ||
| Basic | 2.8 cents | 5.9 cents | |
| Diluted | 2.8 cents | 5.8 cents |
Notes
- SEGMENT INFORMATION
Geographical segments
The Group reports its primary segment information on geographic location of the customers and details for the six months ended 30th June 2001 together with comparative figures for the previous period are presented below:
2001
| Hong Kong | North America | Europe | Australia and New Zealand | Others | Consolidated | |
| HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
| REVENUE | ||||||
| Sales of goods | 88,003 | 43,864 | 54,043 | 48,577 | 4,346 | 238,833 |
| SEGMENT RESULT | 4,067 | 4,784 | 4,668 | 4,522 | 299 | 18,340 |
| Unallocated corporate expenses | (1,445) | |||||
| Profit from operations | 16,895 |
2000
| Hong Kong | North America | Europe | Australia and New Zealand | Others | Consolidated | |
| HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
| REVENUE | ||||||
| Sales of goods | 123,681 | 55,500 | 59,148 | 26,842 | 13,319 | 278,490 |
| SEGMENT RESULT | 8,468 | 6,886 | 7,292 | 1,199 | 1,197 | 25,042 |
| Unallocated corporate expenses | (1,211) | |||||
| Profit from operations | 23,831 |
Business segments
As the operations of the Group are in commercial printing, books printing and packaging printing, the revenue and result of the Group are derived from this business segment.
- PROFIT FROM OPERATIONS
Profit from operations has been arrived at after charging (crediting):
| For the six months ended 30th June | ||
| 2001 | 2000 | |
| HK$'000 | HK$'000 | |
| Depreciation and amortisation | 17,422 | 14,079 |
| Dividend received from investments in securities | 8 | -- |
3. Taxation
| For the six months ended 30th June | ||
| 2001 | 2000 | |
| HK$'000 | HK$'000 | |
| The charge comprises: | ||
| Hong Kong Profits Tax | 2,000 | 2,000 |
| Deferred taxation | (800) | -- |
| 1,200 | 2,000 |
Hong Kong Profits Tax is calculated at 16% of the estimated assessable profit for the period.
The Company's subsidiaries in the People's Republic of China (the “PRC”) are exempted from income tax in the PRC for two years starting from the first profit making year followed by a 50 per cent. reduction in the income tax rate in the following three years. No provision for PRC income tax has been made as the PRC subsidiaries had no assessable profit for both periods.
The Group had no significant unprovided deferred taxation for the period or at the balance sheet date.
- Earnings per share
The calculation of the basic and diluted earnings per share for the period is based on the following data:
| For the six months ended 30th June | ||
| 2001 | 2000 | |
| HK$'000 | HK$'000 | |
| Earnings: | ||
| Net profit for the period and earnings for the purpose of basic and diluted earnings per share | 10,054 | 16,504 |
| Number of shares: | ||
| Weighted average number of ordinary shares for the purpose of basic earnings per share | 365,283,107 | 278,558,266 |
| Effect of dilutive potential ordinary shares in respect of share options | 161,484 | 5,104,216 |
| Weighted average number of ordinary shares for the purpose of diluted earnings per share | 365,444,591 | 283,662,482 |
PROPOSED INTERIM DIVIDEND
The directors do not recommend the payment of any interim dividend (six months ended 30th June 2000: HK2 cents per share on 363,032,068 shares).
BUSINESS REVIEW AND PROSPECTS
Highlights For The Six-Month Period
For the first half-year, the Group recorded an unaudited consolidated turnover of HK$238,833,000 representing a decrease of 14% as compared with the same period of last year's turnover of HK$278,490,000.
The Group recorded a drop in net profit to HK$10,054,000, representing a decrease of 39% as compared with the same period of last year's net profit of HK$16,504,000 EBITDA (earnings before finance costs, taxation, depreciation and amortisation) for the six months also dropped by 9% to HK$34,317,000 from last period’s HK$37,910,000.
Business Review
Books Printing Division
Despite of global competition, the Books Printing Division recorded a slight increase in turnover as compared with the same period of last year. However, in light of the sharper economic slowdown of US economy, it is expected to receive greater price pressures on orders to be placed by buyers. The management will keep on improving product quality and providing professional customer services to counteract the demand on price reduction.
Commercial Printing Division
The Commercial Printing Division recorded a double-digit decrease in turnover reflected the high comparison base of 2000. During the period under review, competition in local commercial printing market was increasingly fierce. Stimulation for expenditure on advertising materials was weakened due to smaller-than-expected rebound of Hong Kong's economic performance in this period. The demand for corporate printing was also weakened due to stagnation of listing and financial activities. Under the adverse market circumstances, sustained price reduction is expected to keep clients. However, the sales and marketing team will continue to explore the market for potential customers and committed to improving the sales performance for the second half year.
Packaging Printing Division
Witnessing the slowdown of manufacturing industries, especially the toy and electronic industries and late starting of peak season, the demand for packaging printing was dropped significantly in the first six months as compared with last year's sales in the same period. The Packaging Printing Division will diversify its client base in order to minimise seasonal fluctuation and maximise the use of production facilities.
Upon completion of Dongguan Plant's extension, the Packaging Printing Division is well prepared to take up new business opportunities when China successfully enters into the World Trade Organization in the foreseeable future.
Financial Positions
As at 30th June 2001, the Group's bank balances and cash amounted to HK$124,645,000 (31st December 2000 audited: HK$127,215,000) and bank and other borrowings amounted to HK$128,002,000 (31st December 2000 audited: HK$190,894,000). The Group's net bank borrowings to equity ratio (being all bank and other borrowings less bank balances and cash as a ratio to shareholders' funds) improved from 23% at 31st December 2000 to 1% at 30th June 2001. Most of the Group's bank balances and borrowings were denominated in Hong Kong dollars and US dollars, risk in exchange rate fluctuation would not be material.
Prospects
Given recent economic and political events, the business environment for the second half of this year is particularly uncertain. As noted in the “Business Review” section above, the Group has suffered from a slowdown in its existing printing business, with aggregate turnover decreasing by approximately 14%. The Directors are consequently adopting more conservative strategies for the Group and implementing various measures in line with such strategies. As regards the printing business, management will take precautionary measures to tighten cost control and enhance productivity and competitiveness. The Directors will also look for ways to diversify the Group's activities and broaden its sources of income as suitable opportunities arise.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the six months ended 30th June 2001, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.
CORPORATE GOVERNANCE
During the six months ended 30th June 2001, 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 any part of the accounting period covered by the interim report, 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”).
An audit committee has been established by the Company since 1999 to review and supervise the Company's financial reporting process and internal controls. The current members of the Audit Committee are the three Independent Non-Executive Directors Messrs. Lai Dominic, Tang Wei, Donald and Shek Lai Him, Abraham and the Non-Executive Director Mr. Lee Sai Wai.
The Group’s auditors have carried out a review on the unaudited interim financial statements for the six months ended 30th June 2001 in accordance with the Statement of Auditing Standards 700 “Engagements to review interim financial reports” issued by the Hong Kong Society of Accountants.
STAFF
As at 30th June 2001, the Group employed approximately 2,000 staff and workers, with their remuneration normally reviewed annually. The Group also provides its staff with other benefits including year-end double-pay, discretionary bonus, contributory provident fund, share options and medical insurance. Staff training is also provided as and when required.
PUBLICATION OF INTERIM RESULTS ON THE WEBSITE OF THE STOCK EXCHANGE OF HONG KONG LIMITED (the “Stock Exchange”)
A detailed interim results announcement for the six months ended 30th June 2001 containing 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 in due course.
By Order of the Board of
Midas Printing Group Limited
Chan Sheung ChiuChairmanHong Kong, 19th September 2001
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