Synagistics Limited — Annual Report 2007

Jul 24, 2007

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CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1140)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 MARCH 2007

RESULTS

The Board of Directors (the “Board”) of Concepta Investments Limited (the “Company”) is pleased to announce the audited results of the Company for the year ended 31 March 2007 (the “Year”), together with the comparative figures for the year ended 31 March 2006 as follows:

INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2007

Note Turnover 3 Cost of financial assets at fair value through profit or loss Gross profit Other income – interest income Net unrealised gain on financial assets at fair value through profit or loss Administrative expenses Profit before tax Income tax 5 Profit for the year 6 Final dividend proposed 7 Basic earnings per share 8	2007 HK$ 48,155,829 (42,603,063 ) 5,552,766 1,019,556 6,764,348 (3,882,485 ) 9,454,185 (1,403,099 ) 8,051,086 5,000,000 8.1 cents	2006 HK$ 50,380,185 (40,159,889 ) 10,220,296 430,828 786,463 (3,255,330 ) 8,182,257 (307,090 ) 7,875,167 – 7.9cents

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BALANCE SHEET AT 31 MARCH 2007

Note Non-current assets Property, plant and equipment Available-for-sale financial assets Current assets Financial assets at fair value through profit or loss Prepayments and other receivables Bank balances Current liabilities Accrued charges Tax payable Net current assets Total assets less current liabilities Non-current liabilities Deferred tax NET ASSETS Capital and reserves Share capital Reserves Final dividend proposed Others TOTAL EQUITY Net asset value per share 9	2007 HK$ – 778,000 778,000 31,524,670 138,498 30,577,667 62,240,835 1,345,353 433,069 1,778,422 60,462,413 61,240,413 – 61,240,413 10,000,000 5,000,000 46,240,413 61,240,413 0.61	2006 HK$ 7,077 778,000
		785,077
		18,579,025 114,382 34,768,451
		53,461,858
		748,433 308,340
		1,056,773
		52,405,085
		53,190,162 835
		53,189,327
		10,000,000 – 43,189,327
		53,189,327
		0.53

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Notes:

1 Basis Of Preparation Of Financial Statements

The financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and the applicable disclosures required by the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and by the Hong Kong Companies Ordinance.

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain investments which are carried at their fair values.

2 Adoption Of New And Revised Hong Kong Financial Reporting Standards

In the current year, the Company has adopted all of the new and revised HKFRSs that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2006. HKFRSs comprise all applicable individual Hong Kong Financial Reporting Standards; Hong Kong Accounting Standards; and Interpretations. The adoption of these new and revised HKFRSs did not result in substantial changes to the Company’s accounting polices and amounts reported for the current year and prior years.

The Company has not applied the new HKFRSs that have been issued but are not yet effective. The application of these new HKFRSs will not have material impact on the financial statements of the Company.

3 Turnover

The Company is principally engaged in medium to long-term investments in listed and unlisted securities in the Greater China. An analysis of the Company’s turnover is as follows:

Proceeds from sale of financial assets at fair value through profit or loss Dividend income from listed investments	2007 HK$ 47,737,069 418,760 48,155,829	2006 HK$ 50,018,690 361,495
		50,380,185

4 Segment Information

No segment information is presented as all of the turnover, contribution to operating results, assets and liabilities of the Company are attributable to investment activities which are carried out or originated principally in Hong Kong.

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5 Income Tax

Current – Hong Kong Profits Tax Provision for the Year Over-provision in previous year Deferred tax Income tax	2007 HK$ 1,403,935 (1 ) (835) 1,403,099	2006 HK$ 308,340 – (1,250 ) 307,090

Hong Kong Profits Tax has been provided at a rate of 17.5% (2006:17.5%) on the estimated assessable profit for the Year.

The reconciliation between the income tax and the product of profit before tax multiplied by Hong Kong Profits Tax rate is as follows:

Profit before tax Tax at Hong Kong Profits Tax rate of 17.5% (2006: 17.5%) Tax effect of income that is not taxable Tax effect of temporary differences not recognised Tax effect of utilisation of deferred tax asset not previously recognised Income tax	2007 HK$ 9,454,185 1,654,482 (251,705 ) 322 – 1,403,099	2006 HK$ 8,182,257 1,431,895 (138,656 ) – (986,149 ) 307,090

6 Profit For The Year

The Company’s profit for the Year is stated after charging the following:

		2007		2006
		HK$		HK$
Auditor’s remuneration		180,000		165,000
Depreciation		7,077		7,720
Investment management fee		864,821		757,594
Performance fee		1,050,465		308,710
Operating lease payments in respect of office premises		108,000		108,000
Staff costs (including directors’ emoluments)
Salaries and other benefits		912,000		912,000
Retirement benefits scheme contributions		25,000		25,000
		937,000		937,000

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7 Final Dividend Proposed

2007 2006 HK$ HK$ Final dividend proposed of HK$0.05 (2006: Nil) per ordinary share 5,000,000 –

At a meeting of the Board held on 24 July 2007, the Board proposed a final dividend of HK$0.05 (2006: Nil) per ordinary share which is subject to approval by the shareholders at the forthcoming annual general meeting. This proposed dividend is not reflected as a dividend payable in these financial statements but it will be reflected as an appropriation of retained profits for the year ending 31 March 2008.

8 Basic Earnings Per Share

The calculation of basic earnings per share is based on the Company’s profit for the Year of HK$8,051,086 (2006: HK$7,875,167) and the weighted average number of ordinary shares of 100,000,000 (2006: 100,000,000) in issue during the Year.

There were no dilutive potential shares during the years ended 31 March 2007 and 2006. Accordingly, no diluted earnings per share has been presented.

9 Net Asset Value Per Share

The net asset value per share is calculated by dividing the net asset value of the Company at 31 March 2007 of HK$61,240,413 (2006: HK$53,189,327) by the number of ordinary shares in issue at that date, being 100,000,000 (2006: 100,000,000).

DIVIDENDS

The Board has resolved to recommend the payment of a final dividend of HK$0.05 per ordinary share, totalling HK$5,000,000 for the Year.

MANAGEMENT DISCUSSION AND ANALYSIS

Business review and prospects

During the Year, the Hang Seng China Enterprises Index traded in the range of 6,000 and 10,800 points. The Company maintained the strategy of buying H shares that are beneficial of Renminbi appreciation with above trend profit growth. The net profit for the Year was approximately HK$8.1 million which comprised realized gain on listed securities of approximately HK$5.5 million, interest income of HK$1 million and net unrealized gain on fair value adjustments through profit and loss on listed securities of HK$6.8 million. Administrative expenses for the Year were approximately HK$3.9 million.

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With the successful share reform in the A share market and the subsequent rally, market focus is beginning to turn from the H shares market to the mainland A share market. The A share market is increasingly driven by improving fundamentals than in the past with companies mostly generating real profit. The domestic mutual fund industry is booming as mainland individuals are increasingly enthusiastic to investing in funds and the amount of domestic savings that will flow into the stock market should not be underestimated since the alternative to buying equities would be receiving savings deposit of 0.72%. The A share market is in no way cheap with a price/earning ratio of over 40 times but fundamentals are improving. Comparatively, H shares are trading at a trailing price/earning ratio of 19 times and an average of 40% discount to their listed A shares. The Board believes that government policies to calm the A shares market to be relatively ineffective as the weight of liquidity coming into market to be far more powerful and a collapse of the market is the last thing the government wish to see. For the near future, the Board is optimistic about growth in China GDP this year as well as corporate earnings.

The Board expects that Hong Kong listed China shares will be well supported due to the significant discount to the A shares market and will remain overweight in the water, aviation and agricultural sectors.

Liquidity and financial resources

As at 31 March 2007, the Company had bank balances of HK$30,577,667 (2006: HK$34,768,451). The Board believes that the Company has sufficient financial resources to satisfy its immediate investments and working capital requirements.

The Company had net current assets of HK$60,462,413 (2006: HK$52,405,085) and no borrowings as at 31 March 2007, which positions the Company advantageously to pursue its investment strategies and new investment opportunities.

The gearing ratio, which was calculated on the basis of total liabilities over total equity as at 31 March 2007, was 0.03 (2006: 0.02).

Capital structure

There has been no change in the Company’s capital structure during the Year.

Investment portfolios

The Company’s investment portfolio comprised of unlisted investment and listed securities investments. The Company held minority stakes of unlisted companies which are believed to have sound prospects of long-term growth in profits and capital appreciation in the future. As at 31 March 2007, the Company’s unlisted investments, valued at cost less impairment, totalling HK$778,000 (2006: HK$778,000).

As at 31 March 2007, all of the Company’s listed securities investments are Hong Kong listed securities. The Company held listed investments, at market value, of HK$31,524,670 (2006: HK$18,579,025) at 31 March 2007.

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Employees

During the Year, the Company had 3 (2006: 3) employees, including executive directors. Total staff costs, including directors’ emoluments for the Year amounted to HK$937,000 (2006: HK$937,000). The Company’s remuneration policies are in line with the market practice and are determined on the basis of the performance and experience of individual employees.

Exposure to fluctuations in exchange rates and related hedges

The Company’s assets and liabilities are denominated in Hong Kong Dollars and, therefore, the Company had no significant exposure to foreign exchange fluctuation.

Charges on the Company’s assets and contingent liabilities

As at 31 March 2007, there were no charges on the Company’s assets and the Company did not have any significant contingent liabilities.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 27 August 2007 to 30 August 2007, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the final dividend to be approved at the forthcoming annual general meeting, all transfers accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch registrar, Abacus Share Registrars Limited (will be renamed to Tricor Abacus Limited with effect from 1 August 2007), at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not later than 4:00 p.m. on 27 August 2007.

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company has not purchased, sold or redeemed any of its shares during the Year.

CORPORATE GOVERNANCE

The Board recognises the importance of corporate governance to the Company’s healthy growth and is dedicated to maintaining good standards of corporate governance so as to enhance corporate transparency and protect the interests of shareholders.

The Company has complied with the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules during the Year.

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AUDIT COMMITTEE

The Company established an audit committee in accordance with rule 3.21 of the Listing Rules. Amongst other duties, the principal duties of the audit committee are to review and supervise the financial reporting process and internal control system of the Company.

The Company’s audit committee comprised three independent non-executive directors, namely, Mr. Kwong Che Keung, Gordon, Prof. He Jia and Mr. Wang Xiaojun. Three meetings were held during the Year.

The audited financial statements for the Year have been reviewed by the audit committee.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 of the Listing Rules. All directors have confirmed, following specific enquiry by the Company, that they have fully complied with the Model Code throughout the Year.

PUBLICATION OF FINANCIAL INFORMATION

This results announcement is published on the websites of the Stock Exchange (www.hkex.com.hk) and the Company (www.concepta.com.hk). The Company’s annual report for 2007 will be dispatched to the shareholders of the Company and available on the above websites in due course.

BOARD OF DIRECTORS

As at the date of this announcement, the Board comprises of executive directors, Mr. Zhang Zhi Ping, Mr. Zhang Gaobo, non-executive director, Mr. Liu Hongru and independent non-executive directors, Mr. Kwong Che Keung, Gordon, Prof. He Jia and Mr. Wang Xiaojun.

On behalf of the Board ZHANG ZHI PING Chairman

Hong Kong SAR, 24 July, 2007

* For identification purposes only

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