Vision Values Holdings Ltd. — Annual Report 2001

Apr 23, 2002

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Asia Logistics Technologies Limited * 亞洲物流科技有限公司

(Incorporated in the Cayman Islands with limited liability)

ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2001

RESULTS

The board of directors (the “Directors”) of Asia Logistics Technologies Limited (the “Company”) announces that the audited consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2001 with comparative figures for the previous year as follows:

Notes TURNOVER Continuing operations Discontinued operations 2 1 Cost of sales Gross profit Other revenue Administrative expenses Selling and distribution costs Other operating expenses Gain on disposal of leasehold land Gain on disposal of deposits paid for investment properties Deficit on revaluation of leasehold land and buildings	2001 HK$’000 61,920 889 62,809 (43,208) 19,601 7,923 (43,373) (4,865) (835) – – –	2000 HK$’000 – 10,019 10,019 (7,538) 2,481 11,344 (21,713) (1,721) – 1,880 1,880 (1,905)

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Write-off of leasehold improvements Loss on disposal of discontinued operations LOSS FROM OPERATING ACTIVITIES Continuing operations Discontinued operations Finance costs Share of loss of an associate LOSS BEFORE TAX Tax 3 LOSS BEFORE MINORITY INTERESTS Minority interests NET LOSS FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS LOSS PER SHARE 4 Basic	– (534) (21,417) (666) (22,083) (326) (70) (22,479) (183) (22,662) (1,690) (24,352) HK0.84 cent	(3,558) (5,684) (11,475) (5,521) (16,996) (509) – (17,505) (2,045) (19,550) – (19,550) HK0.84 cent

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Notes:

1. TURNOVER AND SEGMENT INFORMATION

An analysis of the Group’s revenue and results for the year by business segments and by geographical segments are summarised as follows:

(a) Business segments

Segment revenue: Sales to external customers Rental income Total Segment results Interest income Unallocated expenses Loss from operating activities Finance costs Share of loss of an associate Loss before tax Tax Loss before minority interests Minority interests Net loss from ordinary activities attributable to shareholders	Continuing operations Logistics technology 2001 2000 HK$’000 HK$’000 61,920 – – – 61,920 – (25,921 ) (15,563 )	Discontinued operations Bowling recreation 2001 2000 HK$’000 HK$’000 889 10,019 1,132 4,792 2,021 14,811 (666 ) (5,521 )	Consolidated 2001 2000 HK$’000 HK$’000 62,809 10,019 1,132 4,792 63,941 14,811 (26,587 ) (21,084 ) 6,791 6,552 (2,287 ) (2,464 ) (22,083 ) (16,996 ) (326 ) (509) (70 ) – (22,479 ) (17,505 ) (183 ) (2,045 ) (22,662 ) (19,550 ) (1,690 ) – (24,352 ) (19,550 )

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(b) Geographical segments

Segment revenue: Sales to external customers Segment results	The 2001 HK$’000 61,168 (3,243 )	PRC 2000 HK$’000 10,019 (5,521 )	Hong Kong 2001 2000 HK$’000 HK$’000 1,641 – (23,344 ) (15,563 )	Consolidated 2001 2000 HK$’000 HK$’000 62,809 10,019 (26,587 ) (21,084 )	Consolidated 2001 2000 HK$’000 HK$’000 62,809 10,019 (26,587 ) (21,084 )
					(21,084 )

2. DISCONTINUED OPERATIONS

During the year, the Group focused particularly on the logistics technology business. Therefore, on 15 May 2001, the Group completely disposed of certain subsidiaries, the principal activity of which was the operation of bowling recreation centres in the PRC. The bowling recreation business was accounted for until the date of its disposal, at which time the assets and liabilities of the business were transferred out of the group and taken into consideration in calculating the loss on disposal of discontinued operations.

3. TAX

Group: Hong Kong Elsewhere Tax charge for the year	2001 HK$’000 183 – 183	2000 HK$’000 – 2,045
		2,045

Hong Kong profits tax has been provided at the rate of 16% on the estimated assessable profits arising in Hong Kong during the year. No provision for Hong Kong profits tax has been made as the Group did not generate any assessable profits arising in Hong Kong in prior year.

Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof. The tax recoverable as at 31 December 2000 represented tax paid in excess of the estimated tax liability.

亞洲物流科技（中國）有限公司 and 漢普管理咨詢（中國）有限公司 , subsidiaries established in the PRC during the current year are exempted from the PRC income tax for two years from their first profit making year of operations and thereafter are eligible to a 50% relief from the PRC income tax for the following three years under the Income Tax Law of the PRC. Upon expiry of the tax relief period, these subsidiaries will be subject to the PRC income tax rate of 33%.

Deferred tax has not been provided for the Group and the Company as there were no significant timing differences giving rise to deferred tax liabilities at 31 December 2001 (2000: Nil).

4. LOSS PER SHARE

The calculation of basic loss per share is based on the net loss from ordinary activities attributable to shareholders for the year of HK$24,352,000 (2000: HK$19,550,000), and the weighted average of 2,885,446,921 (2000: 2,328,372,542) ordinary shares in issue during the year.

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Diluted loss per share amounts for the years ended 31 December 2001 and 31 December 2000 have not been shown, as the share options outstanding during these years and the convertible bond outstanding during the current year had antidilutive effects on the basic loss per share for these years.

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Results

For the year ended 31 December 2001, the Group recorded a turnover of approximately HK$63 million, representing a significant growth of approximately 530% when compared to last year’s figure of approximately HK$10 million. Loss attributable to shareholders was approximately HK$24 million against the loss of approximately HK$20 million last year.

Financial Position

In June 2001, the Company placed 505,846,000 new shares at an issue price of HK$0.175 per share, which generated a net cash inflow of approximately HK$86.9 million. Such proceeds have been used by the Group as general working capital.

During the fiscal year, the Group was able to maintain a strong financial position. Cash on hand, as at 31 December 2001, stood at approximately HK$131 million (2000: HK$198 million). At the same time, the Group had no bank borrowing. The only long term debt which is material in nature was the issue of a convertible bond (“Convertible Bond”) in an aggregate principal amount of HK$39,286,000 by the Company to New World CyberBase Nominee Limited as part of the consideration for the acquisition of approximately 18.5% of the then issued share capital of New World CyberBase Limited (“NWCB”). The Convertible Bond bears interest at 3% per annum and is convertible at an initial conversion price of HK$0.10 per share of the Company (subject to adjustment) at any time from and including the first anniversary of the date of the issue of the Convertible Bond until the maturity date ending on the third anniversary of the date of the issue of the Convertible Bond. Notwithstanding this, the gearing ratio of the Group as at 31 December 2001, dividing the outstanding amount of the Convertible Bond by the shareholders’ equity, was 0.13.

The Group is in a strong financial position and is therefore confident that it has sufficient funds to pursue its business plans.

Disposal of Subsidiaries

For the purpose of transforming into logistics technology business, the Group had disposed of three subsidiaries relating to bowling recreation business during the year for a total cash consideration of HK$30 million.

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Business Review

2001 has been a challenging year for the Group with overall economic conditions being adversely affected by the global economic slowdown. Nevertheless, the Group did not slow down its business development in view of the stagnant environment. Given the vast opportunities and potential of the China market as a result of the booming economy, the Group has taken strategic moves to establish a foothold in the China market. In line with the Chairman’s vision to tap the tremendous business opportunities in the China market as a total solutions provider, the Group has strengthened its business operations and adopted flexible business strategies and visionary steps. With the many new business opportunities, the Group expects to gain increasing momentum towards solid growth, even more so as under performing businesses have been removed.

To assist the Group’s smooth transformation into a logistics technology solutions provider, it has brought in new members to the management team. With a wealth of industry experience, knowledge, and know-how in IT and management, these new members have helped to strengthen the management team considerably. The Group is confident that the new management team will lead the Group to the achievement of its business objectives in the burgeoning business environment.

During the year under review, the Group had successfully transformed into a professional logistics technology solutions provider, focusing on providing research and development, consulting services, turnkey solutions and application implementations to business enterprises. It boasts expertise in the implementation of solutions in Enterprises Resources Planning (ERP), eSupply Chain Management (eSCM) and eLogistics Management, as well as in Logistics Value-added Application Platform (VASP).

Turnkey Solutions and Applications Implementations

Aiming to assist clients to strengthen their core competencies and operational efficiency, the Group is dedicated to offering best-fit and turnkey solutions and applications implementation that have been tailor-made for their specific business needs. During the year under review, the Group has already obtained several major projects such as Hong Kong Housing Society, Tianjin Zhong Xin Pharmaceutical Group Corporation Ltd. and etc. The Group is actively seeking to expand and diversify its service portfolio to meet the needs of a wider range of industries.

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The Consultancy Business

In view of the rising needs of large and traditional corporations in China for improving their competitiveness to face new challenges after its entry into WTO, the Group believes it has been on the right track to accelerate the iConsulting business development through its subsidiary, 漢普管理咨詢（中國）有限公司 (“Han”), one of the leading management consulting and IT service companies in China.

Han has the largest BPR/ERP consulting team and client base in China. With a team of management professionals and specialists who fully understand the Chinese culture and are completely familiar with advanced international managerial techniques, Han specializes in providing professional consultancy services to enterprises in the reform of management models and business process re-engineering. More than 100 PRC enterprises have turned to Han for consulting services in relation to IT reform and approximately 400 companies have benefited from its IT training. During the year, Han received the “Greater China Top Application Partner Performer 2001” award from Oracle as it delivered more than 25% of Oracle’s indirect application revenues in the Greater China region. Most of its clients are prominent state-owned enterprises and international companies such as Hisense Group, Haier Group, Matsushita Electric Works, etc.

Research and Development

To assist clients to implement best-fit solutions, the Group established the Xian Research and Development Centre that specializes in the customization, localization and globalization of software solutions and research and development for eSupply Chain Management and eLogistics solutions. The Xian Research and Development Center is committed to providing quality, tailor-made solutions including software development, customization, localization and globalization of eSupply Chain Management and eLogistics solutions.

Strategic Investment

The Group has been seeking suitable investment opportunities that will contribute to its continuous growth. The decision to invest in NWCB in October 2001 (details were disclosed in the circular of the Company dated 26 October 2001) has helped to expand its capabilities in the research and development of software. Through the sharing of technical expertise and resources, the Group has benefited from NWCB’s wellestablished e-Business practices which specialize in research and development and the implementation of e-Business products and services, improving the Group’s supply chain management and logistics solutions, and complementary e-business solutions and services. NWCB’s core software technologies in the areas of process management, document management as well as Geographical Information Systems (GIS),

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complement the Group’s logistics software solutions for improving work efficiency, and tracking and tracing visibility in the provision of supply chain management services.

Strategic Alliances

Through close collaboration with subsidiaries, associated companies and business partners, and benefiting from the synergies thus created, the Group provides customers with turnkey solutions. This strategy helps to create multiple revenue streams for the Group while at the same time strengthening the Group’s product and service offerings. So far, the Group has successfully forged strategic alliances with certain leading global companies. To enhance its competitiveness in the consulting industry, it has formed a strategic alliance with Deloitte Consulting. To strengthen its technology capabilities, the Group has also formed alliances with Webmethods, Oracle, Sun Microsystems, eSkylink, etc. These alliances allow the Group to closely collaborate and leverage mutual resources and applications to provide the best solutions to customers.

Prospects

The continued economic growth in China is expected to sound a positive note for the Group’s further expansion. With solid foundation and sound business strategies, we are ready to tap every arising opportunity that improves our synergies and enhances the growth of the Group.

New Joint Venture with a leading India-based software solutions provider

In November 2001, the Group announced the proposed establishment of a joint venture company with ZenSar Technologies Limited (“ZenSar”), a leading India-based software solutions provider with a global presence. The joint venture will be the first SinoIndian consulting and technology firm in China. Its target business is to provide quality consulting, software blueprinting and ERP solutions for small and medium enterprises. It will also offer banking and finance solutions, an offshore development services and IT support for global customers in China. Through ZenSar’s global presence, the Group can serve global customers in China.

Combining the Group’s in-depth knowledge in China market and ZenSar’s Software Engineering Institute’s Capability Maturity Model (“CMM”) Level 5 credentials and large CMM consultancy force, the joint venture will be able to provide customers with complete applications management services. These services enable customers to better manage their IT environments and apply the most suitable technology to help them implement their business initiatives. It will also help the Group achieve its goal to raise the position and standards of the software industry in the Greater China region and upgrade our software development capabilities.

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As an offshore development center offers complete or tailor made IT services to local and remote customers at a comparative low cost, there is a growing trend in the international market to seek outsourced services from software development centers to cut costs. To capitalize on this trend, the joint venture with ZenSar, will set up an offshore development centers in southern China, offering services of an international standard to multinational customers. These centers will have access to a vast pool of talent, an established IT infrastructure, and enjoy low overheads. With these favourable factors, the Group believes that China will eventually develop into another most important IT outsourcing service provider in the world, delivering the best services to customers.

北京金柏新干線

In the light of strong Chinese government support and the Group’s preparations to capture rising market demand, The Company has acquired 北京金柏新干線信息科 技有限公司 , a wholly foreign-owned enterprise incorporated in China, through the conversion of the exchangeable notes in Cyber Pilot Limited in January this year. It is a fourth-party integrated logistics and supply chain technology and consultancy services provider, and its existing and targeted customers include logistics and supply chain corporations in the PRC. Currently, it provides logistics management, marketing and technical consultancy services to a logistics provider in the PRC.

New Strategic Shareholder

In March 2002, the Group entered into conditional subscription agreements with Legend Group Limited (“Legend”) for the subscription of shares in the Company and Han. Upon completion, the Group will be able to ride on Legend’s leading position in the China market, its solid client base and sales network to enhance market coverage. Partnering Legend in the joint development of the IT management consultancy business will further promote and establish the iConsulting business concept. Pooling the strengths of the Group, Legend and Han, it will be able to establish a best-in-thebreed iConsulting business, creating a “4-win” situation for the three companies concerned and for customers.

In summary, armed with its extensive industry experience, international business practices, technological know-how, understanding of Chinese and Western markets, and professional management team, the Group is in a highly advantageous position to seize new business opportunities and expand services, thereby strengthening its leading position as a total solutions provider.

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Employees

As at 31 December 2001, the Group had 239 employees. Apart from salaries, the Group also provides training and other fringe benefits to employees, which include provident funds, medical insurance and share options. The remuneration policy and packages of the Group’s employees are reviewed on a regular basis.

FINAL DIVIDEND

The Directors do not recommend the payment of a final dividend for the year ended 31 December 2001 (2000: Nil).

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Wednesday, 22 May 2002 to Tuesday, 28 May 2002, both dates inclusive, during which period no transfer of shares will be effected.

In order to determine the entitlement to attend and vote at the forthcoming annual general meeting, all share transfers accompanied by the relevant share certificates, must be lodged with the branch share registrars of the Company in Hong Kong, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong for registration no later than 4:00 p.m. on Tuesday, 21 May 2002.

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

Neither the Company, nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the year.

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PUBLICATION OF DETAILED RESULTS ANNOUNCEMENT ON THE STOCK EXCHANGE’S WEBSITE

A detailed results announcement containing all the information in respect of the Company required by paragraph 45(1) to 45(3) of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) will be published on the website of the Stock Exchange in due course.

By Order of the Board Lo Lin Shing, Simon Chairman

Hong Kong, 22 April 2002

• For identification only

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Asia Logistics Technologies Limited will be held at Chater Room II, Function Room Level, The Ritz-Carlton, Hong Kong, 3 Connaught Road Central, Hong Kong, on Tuesday, 28 May 2002 at 3:30 p.m. for the following purposes:

1. To receive and consider the audited financial statements and the reports of the directors and auditors for the year ended 31 December 2001.

2. To re-elect directors and to authorise the board of directors to fix their remuneration.

3. To re-appoint auditors and to authorise the board of directors to fix their remuneration.

By Order of the Board Kuan Chi Yuen Company Secretary

Hong Kong, 22 April 2002

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a member of the Company. Completion and return of the form of proxy will not preclude a member from attending and voting in person at the meeting.

2. In order to be valid, the form of proxy together with the power of attorney or other authority (if any) under which it is signed, or notarially certified copy of such power or authority must be deposited at the branch share registrars of the Company in Hong Kong, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not less than 48 hours before the time appointed for holding of the meeting or any adjournment thereof.

Please also refer to the published version of this announcement in the Hong Kong iMail.

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