Synagistics Limited — Interim / Quarterly Report 2005

Dec 17, 2004

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CONCEPTA INVESTMENTS LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1140)

ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER, 2004

RESULTS

The Board of Directors (the “Board”) of Concepta Investments Limited (the “Company”) is pleased to announce the unaudited condensed results of the Company for the six months ended 30th September 2004 (the “Period”) with comparative figures for the corresponding period in 2003 and selected explanatory notes as under. These results have been reviewed by the Audit Committee of the Company.

CONDENSED INCOME STATEMENT

Six months ended 30th September 2004 (Unaudited) Note HKD Turnover 3 217,878 Net (loss)/gain on disposal of other investments – listed (3,200,480) Net unrealised holding (loss)/gain on other investment – listed (2,625,904) Other revenue – Interest income 1,747 Administrative expenses (1,278,022) (Loss)/Profit from operations 5 (6,884,781) Finance cost – Interest on bank overdraft – (Loss)/Profit before taxation (6,884,781) Taxation 6 – Net (loss)/profit attributable to shareholders (6,884,781) Interim dividend – Basic (loss)/earnings per share 7 (6.88) cents

Six months ended 30th September 2003 (Unaudited) HKD 527,577 7,757,611 10,336,999 140,042 (2,962,988) 15,799,241 (57) 15,799,184 (2,585,527) 13,213,657 – 13.21 cents

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Notes:

1 Basis of preparation of financial statements

The condensed unaudited interim financial statements (“Interim Report”) have been prepared in accordance with Appendix 16 of the Rules Governing the Listing of Securities (“Listing Rules”) on the Stock Exchange of Hong Kong Limited (“Stock Exchange”) and compliance with Statement of Standard Accounting Practice (“SSAP”) 25, “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants.

2 Principal accounting policies

The Interim Report is prepared under the historical cost convention, except that, certain investment in securities are stated at fair value.

The Interim Report should be read in conjunction with the 2004 annual financial statements.

The principal accounting policies and methods of computation used in the preparation of this Interim Report are consistent with those used in the preparation of the annual financial statements for the year ended 31st March 2004.

3 Turnover

The Company is principally engaged in medium to long-term investment in listed and unlisted companies in the Greater China. Turnover represented dividend income from investments in securities during the Period.

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.

5 (Loss)/Profit from operations

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

	Six months	Six months
	ended 30th	ended 30th
	September 2004	September 2003
	(Unaudited)	(Unaudited)
	HKD	HKD
Contributions to retirement benefits scheme
(already included in staff costs)	10,000	6,500
Depreciation	3,860	20,760
Operating lease payments in respect of office premises	54,000	54,000
Staff costs (including directors’ emoluments)	417,570	294,887

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6 Taxation

No Hong Kong profits tax has been provided as the Company does not have any assessable profit for the Period.

The amount of taxation charged to the condensed income statement represents:

Hong Kong profits tax – current – deferred taxation relating to origination of temporary differences Taxation	Six months ended 30th September 2004 (Unaudited) HKD – – –	Six months ended 30th September 2003 (Unaudited) HKD 776,552 1,808,975
		2,585,527

7 Basic (loss)/earnings per share

The calculation of basic (loss)/earnings per share is based on the Company’s net loss attributable to the shareholders of HKD6,884,781 (2003: Net profit of HKD13,213,657) divided by the weighted average number of ordinary share outstanding during the Period, being 100,000,000 (2003: 100,000,000).

There were no dilutive potential shares during the periods ended 30th September 2004 and 30th September 2003, therefore, no diluted (loss)/earnings per share has been presented.

INTERIM DIVIDEND

The directors do not recommend the payment of interim dividend in respect of the six months ended 30th September 2004 (2003: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review and Prospects

For the Period under review, the fluctuations of the H shares ranged from 10% to 15%. The Company bought certain H shares when they overshot on the downside and sold them at a period of relatively strong sentiment and high valuations. In addition, the Company also held retail plays to benefit from the upward retail cycle. The Board are constantly looking for retail plays and investment opportunities that have pricing power especially those that can benefit from the Closer Economic Participation Arrangement (CEPA).

The loss for the Period of approximately HKD6.88 million was mainly attributable to realised loss of approximately HKD3.20 million and unrealised loss of HKD2.62 million on securities investment. The realised loss was resulted from the closing out of a long position in an equity investment in transportation sector in response to its unfavorable financial results and in turn allowed the Company to continue to seek other investment opportunities. While the unrealised loss was mainly arisen from the Company’s core holding investment in consumer electronic industry. Given the mega trend of transforming from analog to digital in consumer electronic, the Company still maintains its positive view and that the unrealised loss will only be temporary.

For the immediate future period until the first quarter of 2005, the Board foresees downward earning revisions across China that may drag down the stock market. However, the current liquidity remains strong and this buoys up the share price to a relatively high valuation. The liquidity situation looks more favorable in 2005 with the relaxation of credit and a more favorable monetary policies. To cite a point, with effective from 1st December 2004, all Chinese nationals who have

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immigration visas abroad, including Hong Kong and Macau, will be allowed to convert their Chinabased Renminbi assets into foreign currencies and take them out of China. The People’s Bank of China estimates that the value may amount to tens of billions US Dollars.

On the policy front, the Chinese government is moving away from reliance on administrative measures to a more market oriented tools to cool down the overheated economy. Looking ahead, more interest rate hikes and a possible exchange rate relaxation regime are well be expected. Furthermore, a gradual relaxation of lending volume is also expected. The Board expects inflation to stay at a level of around 5% throughout 2005 and consumption momentum is likely to be picking up.

The favorable sectors of the Company for investment purpose are some defensive ones like infrastructure and telecom plays. The Board is looking for opportunities to add more positions after the downward earnings pressure is being priced into the market and the valuation becomes reasonably attractive. The Company also look at the Initial Public Offers in the pipeline to see if there are good counters that offer attractive valuations with upside potentials.

Liquidity and Financial Resources

As at 30th September 2004, the Company had bank balances of HKD10,541,292 (31st March 2004: HKD41,554,774). 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 HKD43,596,851 (31st March 2004: HKD60,477,772) and no borrowings as at 30th September 2004, 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 shareholders’ funds as at 30th September 2004, was 0.070 (31st March 2004: 0.074).

Capital Structure

There has been no change in the Company’s capital structure since 31st March 2004.

Significant Investments Held

As at 30th September 2004, the Company held investment in listed shares of HKD35,467,000 and unlisted securities of HKD853,000.

Employees

As at 30th September 2004, the Company had 3 (31st March 2004: 3) employees, including executive directors. Total staff costs for the Period amounted to HKD417,570 (2003: 294,887). 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 has no significant exposure to foreign exchange fluctuations.

Charges on the Company’s Assets and Contingent Liabilities.

As at 30th September 2004, there were no charges on the Company’s assets and the Company did not have any significant contingent liabilities.

Purchase, Sale or Redemption of Securities

During the Period, the Company has not purchased, sold or redeemed any of its shares.

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COMPLIANCE WITH THE CODE OF BEST PRACTICE

None of the directors is aware of any information that would reasonably indicate that the Company is not, or was not, at any time during the Period, in compliance with the Code of Best Practice as set out in Appendix 14 to the Listing Rules except that the independent non-executive directors are not appointed for a specific term but they are subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Company’s Articles of Association.

DISCLOSURE OF INFORMATION ON THE STOCK EXCHANGE’S WEBSITE

All the information required by 46(1) to 46(6) of Appendix 16 of the Listing Rules in force prior to 31st March 2004, which remain applicable to result announcements in respect of accounting periods commencing before 1st July 2004 under transitional arrangements, will be published on the Stock Exchange’s website 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 directors, 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 Gaobo Executive Director

Hong Kong SAR, 17th December, 2004

Please also refer to the published version of this announcement in The Standard.

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