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Silkwave Inc Earnings Release 2001
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Download source fileSOUTH CHINA HOLDINGS LIMITED
(Incorporated in the Cayman Islands with limited liability)
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2001
GROUP RESULTS
The Directors of South China Holdings Limited (the "Company") announce that the audited results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2001 are as follows:-
CONSOLIDATED INCOME STATEMENT
2001 2000
Notes HK$'000 HK$'000
(Restated)
Turnover 2,109,048 2,521,336
Cost of sales (1,740,821 ) (2,001,859 )
Gross profit 368,227 519,477
Other revenue 25,882 34,445
Distribution and selling expenses (81,960 ) (87,809 )
Restructuring cost of a subsidiary (17,730 ) -
Provision for impairment in value
of fixed assets (30,708 ) -
(Provision for)Write-back of impairment
in value of land pending development (9,550 ) 6,790
Deficit on revaluation of investment
properties (3,400 ) (7,339 )
Realisation of warrant subscription
reserve of a subsidiary 63,050 -
Net (loss) gain on disposal of long-term
investments (1,201 ) 166,943
Changes in fair value of short-term listed
investments 33,477 (49,817 )
Interest expenses for margin financing
and money lending operations (20,219 ) (33,536 )
Provision for doubtful debts (75,360 ) (66,655 )
Provision for impairment in value of
long-term investments (18,883 ) (130,669 )
Provision for impairment in value of
goodwill (625 ) (26,428 )
Other operating expenses (431,156 ) (429,612 )
Loss from operations (200,156 ) (104,210 )
Finance cost (21,275 ) (26,427 )
(Loss) Gain on investments in associates (35,192 ) 31,099
Share of losses of associates (21,200 ) (40,721 )
Gain on disposal of subsidiaries 33 51,426
Loss before taxation (277,790 ) (88,833 )
Taxation 4 (36,588 ) (7,716 )
Loss before minority interests (314,378 ) (96,549 )
Minority interests 127,347 27,608
Loss attributable to shareholders (187,031 ) (68,941 )
Dividends 5 2,332 45,566
Transfer from reserves, net 6 199,076 11,672
Basic loss per share 7 (HK 10.3 cents ) (HK 3.8 cents )
Notes:
1. Principal accounting policies and basis of preparation
The financial statements have been prepared in accordance with the Statements of Standard Accounting Practice issued by the Hong Kong Society of Accountants ("SSAP"), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited. The financial statements have been prepared on the historical cost basis, except for the trading and non-trading listed investments, certain of land and buildings and investment properties, which are carried at revalued amounts.
Effective 1 January 2001, the Group had adopted, for the first time, the following SSAPs issued by the Hong Kong Society of Accountants:
SSAP 9 (revised) : Events after the balance sheet date
SSAP 14 (revised) : Leases
SSAP 26 : Segment reporting
SSAP 28 : Provisions, contingent liabilities and contingent assets
SSAP 29 : Intangible assets
SSAP 30 : Business combinations
SSAP 31 : Impairment of assets
SSAP 32 : Consolidated financial statements and accounting for investments in subsidiaries
The adoption of the above new/revised SSAPs had no significant impact on the Group's financial statements, other than as described below:
i. SSAP 9 (revised): Events after the balance sheet date
In accordance with SSAP 9 (revised), dividends proposed or declared after the balance sheet date in respect of the financial year ended on the balance sheet date are not recognised as a liability at the balance sheet date, but are disclosed as a separate component of capital and reserves on the face of the balance sheet. This change in accounting policy has been applied retrospectively as a prior year adjustment, resulting in an increase of HK$22,783,000 in capital and reserve as at 1 January 2001, which represents the proposed final dividends for the year ended 31 December 2000.
ii. SSAP 30 - Business combinations
Prior to 1 January 2001, goodwill was eliminated against available reserves when it arose. With the adoption of SSAP 30, the Group has adopted the transitional provisions prescribed therein. Goodwill and negative goodwill, which arose prior to 1 January 2001 will continue to be held in reserves and no restatement has been made. However, any impairment arising on such goodwill is recognised in the income statement in accordance with the newly issued SSAP 31 "Impairment of assets". Goodwill arising after 1 January 2001 is capitalised as an asset and is amortised to the income statement on a straight-line basis over its estimated economic life. Goodwill is stated at cost less accumulated amortisation and any impairment loss. Negative goodwill arising after 1 January 2001 is presented as a deduction from assets in the same balance sheet classification as goodwill and is recognised in the income statement in accordance with SSAP 30.
The Group treats the recognition of impairment losses as a change in accounting policy in accordance with SSAP 2 since the Group has not previously followed a policies of recognising impairment losses in respect of goodwill written off against reserves. In this connection, the Group has performed an assessment of the fair value of goodwill that had previously been eliminated against reserves as at 1 January 2000 and 31 December 2000. The Group has thus retrospectively restated its previously reported results for assessment of goodwill arising from the acquisitions of subsidiaries and associates in prior years. In this connection, the consolidated retained profit at the beginning of the years ended 31 December 2000 and 2001 was reduced by approximately $52,807,000 and $79,235,000, respectively and the Group's loss attributable to shareholders for the year ended 31 December 2000 was increased by $26,428,000.
In addition to the adoption of the above standards, the Group has adopted the consequential changes made to SSAP 10 "Accounting for investments in associates", SSAP 17 "Property, plant and equipment", SSAP 18 "Revenue" and SSAP 21 "Accounting for interests in joint ventures". The Directors consider that the consequential changes made to these SSAPs do not have a material impact on the financial statements of the Group. However, with the adoption of SSAP 18 "Revenues", dividends declared by investees after the balance sheet date in respect of the financial year ended on the balance sheet date are not recognised as income in the income statement. This change in accounting policy has been applied retrospectively as a prior year adjustment.
The 2000 comparative figures presented herein incorporate the effect of adjustments, where applicable, resulting from the adoption of the new SSAPs.
2. Turnover and segmental information
An analysis of the Group's consolidated turnover and contribution to profit (loss) from operations by principal activity and geographical location for the year ended 31 December 2001 and 2000 is as follows:
Contribution
to profit(loss)
Turnover from operations
2001 2000 2001 2000
HK$'000 HK$'000 HK$'000 HK$'000
By principal activity: 1,651,925 1,940,023 (101,838 ) 7,308
Trading and manufacturing
Securities and financing related business 130,662 268,024 11,824 14,038
Property development and investment 8,407 9,623 (10,345 ) (9,479 )
Information technology related business 108,950 59,915 (7,384 ) (6,528 )
Media business 209,080 242,319 (48,791 ) (31,707 )
Investment holding and others 24 1,432 (43,622 ) (77,842 )
2,109,048 2,521,336 (200,156 ) (104,210 )
By geographical location*:
United States of America 1,020,969 954,409 314 20,667
Europe 324,518 558,684 (13,174 ) 14,520
The People's Republic of China
(the "PRC") and Hong Kong 612,793 767,203 (178,362 ) (137,317 )
Japan 29,651 86,203 (5,997 ) (348 )
Others 121,117 154,837 (2,937 ) (1,732 )
2,109,048 2,521,336 (200,156 ) (104,210 )
3. Depreciation
Loss from operations for the year is arrived at after charging depreciation of approximately HK$77,639,000 (2000: HK$82,639,000) in respect of the Group's property, plant and equipment.
4. Taxation
2001 2000
HK$'000 HK$'000
Company and subsidiaries -
Provision for current taxation
-
Hong Kong profits tax
-
current year 2,939 6,474
-
under-provision in prior years 32,602 -
-
Overseas income tax 750 1,328
Provision for deferred taxation (12 ) 89
36,279 7,891
Associates -
Provision for current taxation
- Hong Kong profits tax 309 -
Write back of deferred taxation - (175 )
309 (175 )
36,588 7,716
Hong Kong profits tax has been provided at the rate of 16% (2000: 16%) on the estimated assessable profit arising in or derived from Hong Kong. Overseas income tax has been provided for by subsidiaries with overseas operation at tax rates applicable in the countries in which the subsidiaries operate.
The subsidiaries of Wah Shing International Holdings Limited ("WSIHG"), the indirect subsidiaries of the Company, was subject to a field audit by the Hong Kong Inland Revenue Department ("HKIRD"). WSIHG agreed with the HKIRD on a final settlement of approximately HK$39 million for additional charges in respect of the years of assessment 1994/5 to 1999/2000, which was charged to taxation for the year ended 31 December 2001, net of HK$7 million already provided.
5. Dividends
Dividends comprised:
2001 2000
HK$'000 HK$'000
Interim dividend declared of HK 0.10 cents
(2000 - HK 1.25 cents*) per ordinary share after
share subdivision 1,823 22,783
Special dividend paid of HK 0.0279 cents
(2000 - Nil) per ordinary share before the share
subdivision 509 -
Final dividend proposed after the balance sheet date,
of Nil (2000 - HK 1.25 cents*) per ordinary share - 22,783
2,332 45,566
On 24 August 2001, the Board of Directors declared a special dividend of HK 0.0279 cents to the shareholders, totaling approximately HK$509,000 (2000: Nil). The special dividend was paid in specie on the basis of one share of Jessica Publications Limited, a then wholly-owned subsidiary, for every ordinary share (before the share subdivision) held by shareholders on 10 September 2001.
6. Transfer From Reserves, Net
The transfer (to) from reserves during the year comprised:
2001 2000
HK$'000 HK$'000
Transfer from special reserve 200,000 12,076
Transfer to statutory reserve (924 ) (404 )
199,076 11,672
7. Loss per Share
The calculation of basic loss per share is based on the loss attributable to shareholders of approximately HK$187,031,000 (2000: HK$68,941,000*) and on weighted average number of approximately 1,822,874,000 shares (2000: approximately 1,822,651,000 shares, after adjusting for the effect of share subdivision) in issue during the year.
Diluted loss per share is not shown, as there is no dilutive effect in either year.
8. Retained Profits
2001 2000
HK$'000 HK$'000
At beginning of year as previously reported 236,709 313,116
Effect of adopting SSAP 30 (see Note 1(ii)) (79,235 ) (52,807 )
At beginning of year as restated 157,474 260,309
Dividends (see Note 5) (2,332 ) (45,566 )
Loss for the year (187,031 ) (68,941 )
Repurchase of a subsidiary's shares by the subsidiary (420 ) -
Transfer (to) from reserves, net (see Note 6) 199,076 11,672
At end of year 166,767 157,474
9. Post Balance Sheet Events
Subsequent to 31 December 2001, South China Information and Technology Limited ("SCIT"), a subsidiary of the Group, has entered into agreements with an independent third party on 22 April 2002, to effect a financial restructuring proposal of SCIT. The independent third party will essentially inject HK$66 million into SCIT. Further details of the agreements will be disclosed by SCIT as soon as practicable.
BUSINESS REVIEW
The Group recorded turnover and loss attributable to shareholders of HK$2.1 billion and HK$187 million for the year ended 31 December 2001. Turnover reduced by 16% and loss rose by 1.7 times as compared to previous year. The Group encountered major challenges in the declining economic environment both locally and globally in the year 2001. As a result of the massive contraction in the turnover of Hong Kong stock market, commission income from securities brokerage and interest income from share margin financing dropped. Sales from the trading and manufacturing operations further deteriorated, toys manufacturing income was down severely as a result of reduced demand from the US market and advertising revenue fell in the consolidating advertising market. Overall within the Group considerable provisions on revaluation of investment properties and doubtful debts were made.
Brokerage and Financial Services
The total turnover of the Group's financial arm, South China Brokerage ("SCB") group, reduced by half when compared to prior year. Commission income from securities and commodities broking fell significantly and interest income from share margin operations and bank deposits dropped. This adverse result was however, partially set off by the encouraging improvement in the personal loan business. Revenue from personal loan business rose satisfactorily resulting from a four times expansion in the loan portfolio. With attractive commission incentive offered to online clients, turnover from online securities trading picked up gradually during the year. By the end of 2001, it contributed approximately 10% of the average daily turnover of SCB group. SCB recorded HK$20.0 million net profit for the year 2001, a 15.3% reduction compared to last year.
Trading and Manufacturing
South China Industries ("SCI") group's performance suffered a serious set back in the year 2001. Its net result dived to a loss of HK$137 million, the first year of recording net loss since its incorporation. SCI was adversely affected by the disappointing result of its major subsidiary, Wah Shing International Holdings Limited ("Wah Shing Toys") which was due to the slowdown of the US economy that slackened its customer demand but combined with high material and logistics costs. Keen competition from other manufacturers further drove down profit margin. The reason for the exceptional loss this year was a one-off restructuring cost of HK$17.7 million and a tax provision of HK$32.6 million for settlement with the Hong Kong Inland Revenue Department on its transfer pricing policy for prior years.
SCI's electronics operations, Wah Shing Electronic Company Limited ("Wah Shing Electronic"), reported satisfactory net profit of HK$16.3 million, benefiting from its competitive edge on toy production technology and manufacturing process. The associate, Nority International Group Limited ("Nority"), which engages in manufacturing of shoes, turned around from loss to a profit attributable to shareholders of HK$16.6 million, as a result of effective cost control.
Information and Technology
SCIT group recorded a surge in turnover of 77% to HK$112.6 million for the year ended 31 December 2001, of which 97% was attributable to information technology ("IT") and related businesses.
Property Development and Investment
A full marketing scheme has been launching since July 2001 after the property development project, "The Centrium", a Grade A commercial/office building at Arbuthnot Road/ Wyndham Street in Central district obtained the official occupation permit on 29 June 2001. At present, all of the ground floor shops and around 25% of the total office areas have been leased out.
Rental income from other investment properties went up slightly in the current year due to a higher occupancy rate.
As a result of the declining property market, the Group has made HK$35.2 million provisions on investment in property projects, HK$3.4 million deficit on property revaluation and HK$40.3 million on self-use properties, fixed assets and land pending for development.
Travel and Related Services
During the year, the Group disposed of all its equity interest in Fourseas.com Limited ("Fourseas"). However, the Group still maintained its participation in the travel and related businesses by acquiring 49% equity interest in Fourseas' travel business subsidiaries.
Media and Publications
During the first six months of 2001, South China Media's 12 magazines experienced mild growth in both circulation and advertising. The event of September 11th and Hong Kong's weak economy, led to sudden slashes in advertising budgets, and circulation income suffered from falling consumer spending. Mature titles continued to be profitable. Foreseeing extremely difficult times ahead, a series of cost-cutting exercises were undertaken to reduce overall costs to more competitive levels, and focus was put on improving the editorial contents of our titles to strengthen reader loyalty.
Other Investments in the PRC
By the end of 2001 the Group had planted over 500,000 lychee trees in total covering a land area of approximately 22,000 mu and are making it one of the largest famous farms in the PRC. The pharmaceutical joint venture in Shenyang started its expansion plan, which involves relocating the production site to the high technology zone where it will increase its production capacity by two to three fold. Its research and development teams made satisfactory progress and two brand new products obtained the Certificate of New Medicine from the State Drug Administration of the PRC.
FINANCIAL RESOURCES AND GEARING RATIO
As at 31 December 2001, the Group had a current ratio of 1.09 and a gearing ratio (long-term liabilities of approximately HK$178 million to equity of approximately HK$767 million) of 0.23. The Group's operations continue to be financed by internal resources and bank borrowings.
CAPITAL STRUCTURE
In August 2001, a share subdivision proposal for all the ordinary shares of the Company was approved at an extraordinary general meeting of shareholders. Each of the ordinary shares of HK$0.10 each in the share capital of the Company was subdivided into four ordinary shares of HK$0.025 each.
During the year, the Company issued 750,624 ordinary shares upon exercise of warrants. All outstanding warrants of the Company had expired on 22 November 2001.
Apart from the above, the Group had no debt securities or other capital instruments as at 31 December 2001.
EXPOSURE TO FLUCTUATIONS IN EXCHANGE RATES AND RELATED HEDGES
As at 31 December 2001, the Group had no exposure to fluctuations in exchange rates and any related hedges.
MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND ASSOCIATED COMPANIES
In September 2001, Fourseas.com Limited ("Fourseas"), a former associate of the Group, completed its group's financial restructuring. The Group disposed all of its equity interest in Fourseas, while acquiring its entire property portfolio together with the related mortgages and 49% of its travel related businesses of Fourseas for a consideration of HK$15 million. The Group received HK$70 million as repayment of shareholder loan from Fourseas in its financial restructuring.
CHARGES ON GROUP ASSETS
Fixed assets, land pending for development and investment properties of net book values of approximately HK$187 million, HK$34 million and HK$79 million respectively were pledged as collateral for the Group's banking facilities.
CONTINGENT LIABILITIES
At the balance sheet date, the Group's contingent liabilities not provided for in the financial statements were as follows:
GROUP
2001 2000
HK$'000 HK$'000
Guarantees given to banks for banking facilities
granted to an associate 174,000 165,989
Guarantees given to banks in connection with
letters of guarantee issued by banks 5,500 5,500
Undertaking to a former associate in respect of a
banking facility granted to the associate 23,250 -
202,750 171,489
OUTLOOK
Brokerage and Financial Services
SCB intends to offer clients more trading products like bullion, global futures and US securities and enhancing online trading platform for the expected extension of trading hours. Sales and investment trainee programs will continue to be developed for maintaining a pool of front office resources to provide quality client services. Business in the professional advisory services increased due to more companies in the PRC getting listed in Hong Kong or acquiring interests in Hong Kong companies. The personal loan portfolio continues to expand cautiously in the year 2002. Other related personal financing products and diversification opportunities will be explored.
Trading and Manufacturing
To achieve greater profitability, Wah Shing Toys is further streamlining or scaling down some of its production facilities to reduce overhead costs. The relocation of its main operations and functions to Shenzhen, the PRC will be accelerated to improve communication effectiveness and operational efficiency. Focus will be made on striking a better balance by obtaining more orders of conventional products that have a steady demand throughout the year and lower material costs. All these efforts should be seen in the year 2002.
Wah Shing Electronics is tightening cost control measures and upgrading manufacturing process to optimize and maintain its profit margins. Nority is endeavouring to seek further business development an opportunities in China through studies and market researches so as to open itself to the great market potential following China's accession to the World Trade Organisation ("WTO"). It is setting up a new company in the PRC as a foothold for its future business development.
Information and Technology
SCIT has a fine and dedicated team of employees, advanced technologies, and the resources to meet the challenges and tackle the difficulties. Thus, we feel that we are fully prepared to focus on our mission of providing leading edge, best-of-class, highest quality services to our customers in both Hong Kong and the PRC.
Property Development and Investment
Given the present stagnant property market, the leasing progress of the Grade A commercial/office building at Central, The Centrium is presently slow. The situation is anticipated to prevail until the local property market and the overall economic environment improve. Some of the existing investment properties with poor occupancy are being or will be renovated to improve leasing income.
Travel and Related Services
In view of China's accession to the WTO and the future hosting of the Olympic Games in the years to come, we believe that the Greater China area is now experiencing a continuous growth in the business and leisure travel industry. More marketing and support staff are being employed to cope with this rapidly expanding market.
Media and Publications
Advertising revenue is expected to be weak for the first half of the year 2002, as advertisers continue to consolidate and cut spending in media. However, we expect the overall advertising market to see improvement during the year and we are making the necessary adjustments to grow our advertising income. We will continue to aggressively but prudently position and define our titles in this competitive market environment, to gain market share and improve advertising revenues. We will also place efforts in developing our magazines in the China publications market while maintaining cost efficiencies and fortifying our base in Hong Kong.
Other Investments in the PRC
The Group aims to make its fruit farms more efficient and improve the yield as well as the business logistics for fruits distribution and marketing. In February 2002, the Group entered into an agreement to set up a joint venture to farm hairy crabs in the Nanjing area.
In February 2002, the shares of Jinchang Pharmaceutical Holdings Limited comprising the pharmaceutical joint venture in Shenyang and Capital Publications Limited which publishes "Capital" magazine were distributed in specie to shareholders. The distribution will enable the shareholders to hold a direct investment and also participate in the future development of these two companies. Moreover, it is expected further such distributions will be made during the year.
Overview
The Group's businesses are well placed to benefit from an expected upturn in Hong Kong's economy especially following our substantial cuts in overheads and restructuring of some non-performing operations. The travel and related services business has already turned into profit in the first quarter and already other major operating units are performing better. It is expected that certain non-strategic investments will be disposed of during the year.
EMPLOYEES
Total number of staff as at 31 December 2001 was approximately 21,000.
The Group considers its staff as its most valuable asset. In addition to salary, other fringe benefits such as medical subsidies, life insurance, provident fund and subsidised training programs are offered to all staff members of the Group. Performance of the staff is normally reviewed on an annual basis with adjustment compatible to the market. Individual staff may also receive a discretionary bonus at the end of each year based on performance. Share options have also been granted to certain employees of the Group.
DIVIDENDS
The Directors do not recommend a final dividend (2000 : HK 1.25 cents) in respect of the year ended 31 December 2001. Together with the interim dividend of HK 0.1 cents (2000 : HK 1.25 cents) per share (as adjusted for share sub-division) already paid, the total dividends for 2001 will amount to HK 1.25cents (2000 : HK 2.5 cents) per share.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members of the Company will be closed from 30 May 2002 to 31 May 2002, both days inclusive, during which period no share transfers will be registered. To qualify for attendence of the Annual General Meeting,, all transfers accompanied by the relevant share certificates must be lodged for registration with the Company's Share Registrar, Standard Registrars Limited of 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not later than 4:00 p.m. on 29 May 2002.
PURCHASE, SALE OR REDEMPTION OF SHARES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed shares during the year ended 31 December 2001.
CODE OF BEST PRACTICE
In the opinion of the Directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Listing Rules of The Stock Exchange of Hong Kong Limited throughout the accounting period covered by the annual report, except that the independent non-executive directors of the Company are not appointed for specific terms but are subject to retirement by rotation in accordance with the Company's Articles of Association. In the opinion of the Directors, this meets the same objective as the Code of Best Practice.
PUBLICATION OF ANNUAL RESULTS ON THE STOCK EXCHANGE'S WEBSITE
The detailed information required by paragraph 45(1) to 45(3) inclusive of Appendix 16 of the Listing Rules of the Stock Exchange, will be published on the website of the Stock Exchange in due course.
APPRECIATION
On behalf of the Board, I wish to express my gratitude to our customers and shareholders for their continued support and all our staff members for their hard work and dedicated service.
On behalf of the Board
Ng Hung Sang, Robert
Chairman
Hong Kong Special Administrative Region
of the People's Republic of China
24 April 2002
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that an Annual General Meeting of South China Holdings Limited (the "Company") will be held at 28/F., Bank of China Tower, 1 Garden Road, Central, Hong Kong on 31 May 2002, Friday, at 11:00 a.m. for the purposes of considering and, if thought fit, passing the following resolutions, as ordinary resolutions of the Company:-
-
To receive and consider the audited financial statements and the Reports of the Directors and Auditors for the year ended 31 December 2001;
-
To re-elect Directors and fix the Directors' fees;
-
To re-appoint Auditors and to authorise the Board of Directors to fix their remuneration;
ORDINARY RESOLUTIONS
- As special business, to consider and, if thought fit, pass, with or without amendments, the following resolutions as Ordinary Resolutions:
"THAT, subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited ("Stock Exchange") granting approval of the new share option scheme of the Company (the "New Share Option Scheme"), the rules of which are contained in the document marked "A" produced to the meeting and for the purposes of identification signed by the Chairman thereof, and the granting of any options thereunder (the "Options") and the listing of and permission to deal in the shares of the Company (i.e. shares of HK$0.025 each of the Company (the "Shares")) to be issued pursuant to the exercise of any such Options.
(a) the New Share Option Scheme be and is hereby approved and adopted and the directors of the Company (the "Directors") be and are hereby authorised to do all such acts, deeds and things and to enter into all such transactions, arrangements and agreements as they may, in their absolute discretion, deem necessary or expedient in order to give full effect to the New Share Option Scheme including but without limitation:
(i) to administer the New Share Option Scheme under which Options will be granted to participants eligible under the New Share Option Scheme to subscribe for Shares in the share capital of the Company;
(ii) to modify and/or amend the New Share Option Scheme from time to time provided that such modification and/or amendment is effected in accordance with the provisions of the New Share Option Scheme relating to modification and/or amendments;
(iii) to issue and allot from time to time such number of Shares in the share capital of the Company as may be required to be issued pursuant to the exercise of the Options under the New Share Option Scheme provided always that the maximum number of Shares to be issued pursuant to the New Share Option Scheme together with any shares subject to any other share option scheme remaining outstanding (but excluding the share option scheme adopted by the Company on 29 July 1992 ("Existing Share Option Scheme") shall not exceed 10 per cent of the issued share capital of the Company at the date of the approval and adoption of the New Share Option Scheme;
(iv) to make application at the appropriate time or times to the Stock Exchange, and any other stock exchange upon which the issued shares of the Company may for the time being be listed, for listing of and permission to deal in any Shares which may hereafter from time to time be issued and allotted pursuant to the exercise of the Options under the New Share Option Scheme; and
(v) to consent, if it so deems fit and expedient, to such conditions, modifications and/or variations as may be required or imposed by the relevant authorities in relation to the New Share Option Scheme; and
(b) upon the New Share Option Scheme becoming unconditional, the Existing Share Option Scheme be and is hereby terminated and no further options be granted under the Existing Share Option Scheme but in all other respects, the provisions of the Existing Share Option Scheme shall remain in full force and effect in respect of options which have been granted prior to the adoption of the New Share Option Scheme and such options shall continue to be exercisable in accordance with their terms of issue."
- As special business, to consider and, if thought fit, pass, with or without amendments, the following resolutions as Ordinary Resolutions:
"THAT, subject to and conditional upon the Stock Exchange granting approval of the new share option schemes (the "Subsidiaries New Share Option Schemes") of South China Industries Limited ("SCI"), South China Brokerage Company Limited ("SCB") and South China Information and Technology Limited ("SCIT"), subsidiaries of the Company, the rules of which are contained in the documents marked "B", "C" and "D" respectively produced to the meeting and for the purpose of identification signed by the Chairman of the meeting, and the granting of any options thereunder and the listing of and permission to deal in the shares of SCI, SCB and SCIT to be issued pursuant to the exercise of any such options, and the approval and adoption of the Subsidiaries New Share Option Schemes by their respective shareholders of SCI, SCB and SCIT at their annual general meetings to be held on 31 May 2002, the Subsidiaries New Share Option Schemes be and are hereby approved for the purposes of Rule 17.01(4) of the Rules Governing the Listing of Securities on the Stock Exchange."
- As special business, to consider and, if thought fit, pass, with or without amendments, the following resolutions as Ordinary Resolutions:
(A) "THAT,
(a) subject to sub-paragraph (c) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with additional shares or securities convertible into shares, or options, warrants or similar rights to subscribe for any shares and to make or grant offers, agreements and options which might require the exercise of such powers be and is hereby generally and unconditionally approved;
(b) the approval in sub-paragraph (a) of this Resolution shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;
(c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in sub-paragraph (a) of this Resolution, otherwise than pursuant to (i) a Rights Issue as hereinafter defined, (ii) an issue of shares upon the exercise of rights of subscription or conversion under the terms of any warrants issued by Company or any securities which are convertible into shares of the Company, (iii) the exercise of options granted under any option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company or (iv) an issue of shares as scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the articles of association of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution, and the said approval shall be limited accordingly; and
(d) 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; and
(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.
"Rights Issue" means an offer of shares open for a period fixed by the Directors of the Company to holders of shares of the Company or any class thereof on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusion or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in any territory outside Hong Kong).
(B) " THAT,
(a) subject to sub-paragraph (b) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to repurchase issued shares in the capital of the Company on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") or on any other exchange on which the securities of the Company may be listed and recognised for this purpose by The Securities and Futures Commission of Hong Kong and the Stock Exchange under The Hong Kong Code on Share Repurchases ("Recognised Stock Exchange") subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange as amended from time to time (the "Listing Rules") or that of any other Recognised Stock Exchange, be and is hereby generally and unconditionally approved;
(b) the aggregate nominal amount of the shares which may be purchased pursuant to the approval in sub-paragraph (a) of this Resolution, shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution and the said approval shall be limited accordingly; and
(c) 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; and
(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.
(C) " THAT:-
conditional upon the Resolutions Nos. 6(A) and 6(B) set out in the notice convening this Meeting being passed, the aggregate nominal amount of the number of shares which are repurchased by the Company after the date of the passing of this Resolution (up to a maximum of 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue immediately following the Resolutions Nos. 6(A) and 6(B) in the notice convening this meeting taking effect) shall be added to the aggregate nominal amount of share capital that may be allotted or agreed conditionally or unconditionally to be allotted by the Directors of the Company pursuant to Resolution No. 6(A) set out in the notice convening this Meeting."
- To transact any other ordinary business.
By Order of the Board
Yuen Kam Tim, Francis
Company Secretary
Hong Kong Special Administrative Region
of the People's Republic of China
24 April 2002
Notes:
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A member entitled to attend and vote at the above Meeting is entitled to appoint one or more proxies to attend and on a poll vote instead of him. A proxy need not be a member of the Company.
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In order to be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of authority, must be deposited at the Company's Share Registrar, Standard Registrars Limited of 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, not less than 48 hours before the time fixed for holding the Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude any member from attending and voting in person should he so wishes.
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The Register of Members of the Company will be closed from 30 May 2002 to 31 May 2002, both days inclusive, during which period no share transfers will be registered. To qualify for the attendance of the Annual General Meeting, all transfers accompanied by the relevant share certificates must be lodged with the Company's Share Registrar, Standard Registrars Limited of 5/F., Wing On Centre, 111 Connaught Road Central, Hong Kong, not later than 4:00 p.m. on 29 May 2002, for registration.
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With regard to resolution set out in item 6 of this notice, the Directors wish to state that they have no immediate proposals either to issue or repurchase any securities of the Company. Approval is being sought from members as a general mandate pursuant to the Listing Rules of the Stock Exchange.
"Please also refer to the published version of this announcement in the Hong Kong i-mail"