Vision Values Holdings Ltd. — Interim / Quarterly Report 2001

Sep 21, 2001

Asia Logistics Technologies Limited

亞洲物流科技有限公司*

(Incorporated in the Cayman Islands with limited liability)

Announcement of Interim Results for the six months ended 30 June 2001

Interim Results

The Board of Directors (the "Board") of Asia Logistics Technologies Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2001 together with the comparative figures for the corresponding period in 2000 as follows:

Consolidated Profit and Loss Account

For the six months ended

30 June

2001 2000

(Unaudited) (Unaudited)

Notes HK$'000 HK$'000

TURNOVER 2 19,574 5,656

Cost of sales (15,203 ) (5,685 )

Operating profit/(loss) 4,371 (29 )

Other revenue 3,476 3,546

Administrative and selling expenses (8,604 ) (5,298 )

Profit/(loss) of disposal of

subsidiaries/ a subsidiary 3 2,695 (5,684 )

PROFIT/(LOSS) FROM

OPERATING ACTIVITIES 4 1,938 (7,465 )

Finance cost 5 (74 ) (315 )

PROFIT/(LOSS) BEFORE TAX 1,864 (7,780 )

Tax 6 - (846 )

NET PROFIT/(LOSS) FROM

ORDINARY ACTIVITIES

ATTRIBUTABLE TO

SHAREHOLDERS 1,864 (8,626 )

Dividends 7 - -

Basic earnings/(loss) per share 8 HK0.07 cent (HK0.41) cent

Notes

1. Basis of preparation

The unaudited interim financial report, which are not statutory accounts, has been prepared in accordance with the requirements of the Main Board Listing Rules of The Stock Exchange of Hong Kong Limited, including compliance with Statement of Standard Accounting Practice 25 "Interim Financial Reporting" issued by the HKSA except that comparative figures for the cash flow statement have not been prepared as the company has taken advantage of the transitional provisions set out in the Main Board Listing Rules.

The same accounting policies adopted in the 2000 annual accounts have been applied to the 2001 interim financial report.

2. Turnover

The Group's turnover and contribution to profit and loss from operations before finance costs by principal activities are analysed as follows:

For the six months For the six months

ended June 2001 ended June 2000

Contribution Contribution

to profit to loss

Turnover before tax Turnover before tax

HK$'000 HK$'000 HK$'000 HK$'000

By principal activity

Bowling recreation

business 256 2,634 5,656 (4,763 )

Logistics technology

business 19,318 (770 ) - (3,863 )

19,574 1,864 5,656 (8,626 )

By geographical area

The PRC

Hong Kong - (3,084 ) - (3,863 )

Elsewhere 19,574 4,948 5,656 (4,763 )

19,574 1,864 5,656 (8,626 )

Turnover represents the value of sale of software licences and services rendered earned during the financial periods.

Up to 15 June 2001, the Group has disposed of all the subsidiaries which are related to bowling recreation business. Accordingly, the segmental information of the bowling recreation business above represents the turnover and contribution of the discontinued operation of bowling recreation business during the financial periods.

3. Profit of disposal of subsidiaries

During the six months ended 30 June 2001, the Company sold the Group's investment in subsidiaries of the bowling recreational operations. These transactions gave rise to a profit of HK$2,695,025 and a net cash inflow of HK$29,972,000. The net assets and the turnover of the subsidiaries constituted approximately 11% and 100% of the consolidated net assets and turnover respectively in the annual accounts for the year ended 31 December 2000.

4. Profit/loss from operating activities

The Group's profit and loss from operating activities is arrived at after charging:

30 June 30 June

2001 2000

HK$'000 HK$'000

Cost of inventories sold and services provided 15,203 5,686

Depreciation 165 4,808

Staff costs 3,867 2,216

and after crediting:

Bank interest income 3,219 212

Rental income, net of outgoings of Nil

(2000: HK$100,000) - 158

Cost of inventories sold and services provided includes HK$15,203,000 (2000: HK$5,686,000) relating to staff costs, depreciation, operating lease rentals in respect of land and buildings and co-operation fee, which amount is also included in the respective total amounts disclosed separately above for each of these types of expenses.

5. Finance Costs

30 June 30 June

2001 2000

HK$'000 HK$'000

Interest on bank loans wholly repayable

within 1 year: 74 145

Interest on loan from a director: - 170

74 315

6. Taxation

No provision for Hong Kong profits tax has been made as the Group did not generate any assessable profits arising in Hong Kong during the six months ended 30 June 2001 (2000: Nil).

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, interpretation and practices in respect thereof. Tax recoverable represents tax paid in excess of the estimated tax liability for the period.

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 30 June 2001 (2000: Nil).

The re-valuations of the Group's fixed assets do not constitute timing differences and, consequently, the amount of potential deferred tax thereon has not been quantified.

7. Dividends

The Board has resolved not to declare any interim dividend for the six months ended 30 June 2001 (2000: Nil).

8. Basic earnings/(loss) per share

The calculation of basic earnings/(loss) per share is based on the net earnings/(loss) attributable to shareholders for the half year ended 30 June 2001 of HK$1,864,000 (2000: loss of HK$8,626,000), and the weighted average of 2,652,046,000 (2000: 2,115,178,000) ordinary shares in issue during the period.

The diluted earnings per share for the period ended 30 June 2001 has not been shown as the share options outstanding during the current period had an anti-dilutive effect on the basic earnings per share for the period.

The diluted loss per share for the period ended 30 June 2000 has not been shown as the share options and warrants outstanding during the period had an anti-dilutive effect on the basic loss per share for the period.

Management Discussion and Analysis

Operating Results

As a result of the worldwide economic downturn, the Group has been experiencing a difficult half year. Nevertheless, the Group performed satisfactorily during the six-month period ended 30 June 2001. Turnover for the period was HK$19.6 million, representing an increase of 246% as compared with the corresponding period last year. Profit attributable to shareholders recorded a result of HK$1.9 million (2000: loss of HK$8.6 million).

Business Review

In the first half of 2001, the Group had completely disposed of its bowling recreation centers and made the transition to a professional e-solutions provider, aiming to become the best eSupply Chain Management and eLogistics Solutions Enabler in Asia.

To keep up with this development, new management team members had been nominated by the board of directors, to push ahead with plans to become a leading eSupply Chain Management enabler. The strengthened management team consists of experienced IT and management professionals, leading the Group as it faces evolving business needs in this lucrative market.

In 2001, the Group's business is concentrating on three major areas: (1) providing consultancy services for Business Process Re-engineering (BPR), Enterprise Resources Planning (ERP), eSupply Chain Management and eLogistics Management; (2) offering Supply Chain Management and Logistics Management software, applications and solutions; and (3) making strategic investment in synergistic partnerships and projects.

Given the magnitude of the opportunities offered by the China market, the Company has established a wholly-owned subsidiary, Asia Logistics Technologies (China) Limited. Based in Beijing, it is responsible for the operations and business development of the Group, aiming to provide the most comprehensive and customized solutions and professional services to clients in China.

The Group's other subsidiary, Han International Consulting Company Limited ("HAN"), has also recorded a significant evidence of a steady growth in the business consultancy services in the PRC. During the period, HAN received "Greater China Top Application Partner Performer" award from Oracle as it had delivered more than 25% of Oracle's indirect application revenue in the Greater China Region.

Currently, HAN has more than 11 branch offices in China in Beijing, Shanghai, Guangzhou, Tianjin, Nanjing, Hangzhou, Chengdu, Dalian, Xiamen, Wuhan and Xian. With more than 300 professional consultants, HAN is the largest business consulting company in China, assisting clients to improve their competitiveness, managerial skills and operational efficiencies. Most of HAN's clients are reputable state-owned enterprises and international companies such as Hasense Group, Haier Group, Matsushita Electric Works etc.

Research and Development

To cater for the enormous China market and to provide quality products and services to clients, the Group established a research and development center in Xian. The Xian Research and Development Center, which is supported by the renowned Xian Jiaotong University, is committed to providing quality, tailor-made solutions including software development, customization, localization and globalization of eSupply Chain Management and eLogistics solution.

Prospects

China's entry into WTO, is likely to foster a greater efficiency among large corporations and state-owned enterprises as they strive to lower costs by reviewing and streamlining their business process. This will greatly increase market potential in the near future.

China is being identified as the primary market of the Group's main business, as numerous business opportunities are expected to rapidly emerge as businesses scale to achieve world-class quality levels in preparation for the WTO challenge. With its intensive experience and understanding of Eastern and Western management culture, business practices and technology know-how, the Company is in an excellent position to obtain a higher market share in the China market. In fact, several eSupply Chain Management and eLogistics contracts, ranging from planning and implementation of manufacturing logistics to distribution logistics, from well-known state-owned enterprises such as Beijing Pharmacy Limited, Tianjin Zhong Xin Pharmaceutical Group Corporation Limited and ChangSha Tobacco Company, have been concluded within this period. Apart from the pharmaceutical and tobacco industries, the Group is now developing eSupply Chain Management and eLogistics Management business in the automobile industry.

Additionally, the Group has also been forming strategic alliances with leading global companies to enhance its business operations. The Group believes that it is imperative to team up with business partners to stay ahead of the competition, achieving mutual benefits. Partners include Sun Microsystems. Deloitte Consulting, eSkylink and webMethods. These alliances will leverage the resources and applications of both parties, contributing to increased growth and revenues.

The Company offers a series of supply chain management and logistics solutions, helping clients to manage the manufacturing process from raw materials to finished goods through the control of commercial flow, information flow, logistics flow, cash flow and service flow. Some of the business solutions also support the EAN.UCC standard of the Hong Kong Article Numbering Association.

To keep ahead in the area of supply chain management and logistics management, the Group will seek to grow further through merger and acquisition to strengthen its software and solution development capacity. The Group will explore the feasibility of providing complementary e-business solutions and services to each customer, with a view of bolstering and reaching existing business.

Liquidity and Financial Position

On 4 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 for the Company. These net proceeds will be used for general working capital purposes.

During the period under review, the Group continued to strengthen its financial management policy to maintain a strong and healthy financial position. As of 30 June 2001, the Group had no bank borrowing. As such, debt and gearing ratios for the Group were negligible. On the other hand, the Group's cash on hand remained strong at approximately HK$196.6 million.

Interim Dividend

The Board has resolved not to declare any interim dividend for the six months ended 30 June 2001 (2000: Nil).

pURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SHARES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed shares during the six months ended 30 June 2001.

Publication of Detailed Results Announcement on The Stock Exchange'S Website

A detailed interim results announcement containing all the information in respect of the Company required by paragraph 46(1) to 46(6) of Appendix 16 of the Listing Rules will be published on the website of The Stock Exchange of Hong Kong Limited in due course.

By Order of the Board

Lo Lin Shing, Simon

Chairman

Hong Kong, 20 September 2001

* For identification only

"Please also refer to the published version of this announcement in the Hong Kong i-mail"