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Vongroup Limited — Annual Report 2008
Aug 25, 2008
49122_rns_2008-08-25_29baf38f-74f2-4ad3-b808-8b38aeeb1143.pdf
Annual Report
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Vongroup Limited 黃河實業有限公司[*]
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 318)
ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 30 APRIL 2008
The board of directors (the “Directors”) of Vongroup Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 30 April 2008 together with comparative figures for the previous year as follows:
CONSOLIDATED INCOME STATEMENT
| Note Turnover 3 Other revenue 3 Other net income 3 Cost of inventories consumed Cost of trading securities Cost of forfeited collaterals sold Staff costs Operating lease rentals Depreciation and amortisation Other expenses Impairment loss on property, plant and equipment Change in fair value of investment properties Loss from operations 4 Finance costs 5 Share of results of: Jointly-controlled entity Associate Loss before taxation Income tax 6 Loss for the year Attributable to: Equity holders of the Company Minority interests Loss per share 7 Basic Diluted |
For the year 2008 HK$’000 464,360 9,596 3,846 (74,837 ) (270,540 ) (207 ) (59,485 ) (23,665 ) (1,539 ) (81,860 ) – 5,919 (28,412 ) (305 ) 429 987 (27,301 ) (392 ) (27,693 ) (27,214 ) (479 ) (27,693 ) (HK0.47 cents ) N/A |
ended 30 April 2007 HK$’000 (restated) 318,324 6,640 1,566 (84,329 ) (92,664 ) (461 ) (60,833 ) (27,588 ) (4,363 ) (65,826 ) (3,875 ) 834 (12,575 ) (359 ) 1,115 896 (10,923 ) (4,257 ) (15,180 ) (14,948 ) (232 ) (15,180 ) (HK0.27 cents ) N/A |
|---|---|---|
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CONSOLIDATED BALANCE SHEET
| Note Non-current assets Property, plant and equipment Lease premium for land Investment properties Goodwill Investment in a jointly-controlled entity Rental and utility deposits Deposits paid in respect of acquisition of property, plant and equipment and investment properties Available-for-sale investment Current assets Lease premium for land Inventories Merchandise held for sale Accounts receivables 9 Moneylending loan receivables 10 Promissory note receivable Deposits, prepayments and other receivables Amount due from a jointly-controlled entity Amount due from a related company Financial assets at fair value through profit or loss Cash and cash equivalents Current liabilities Accounts payables 11 Accruals and deposits received Tax payables Finance lease payable – current portion Mortgage loans – current portion Amount due to a director Net current assets Total assets less current liabilities Non-current liabilities Other payables Finance lease payable – long-term portion Mortgage loans – long-term portion Deferred tax liabilities NET ASSETS Capital and reserves Share capital Reserves Minority interests TOTAL EQUITY |
As at 2008 HK$’000 11,188 5,711 25,800 8,988 1,982 6,818 9,126 135 69,748 141 11,741 128 443 5,175 7,798 7,166 178 – 42,812 328,250 403,832 10,265 15,461 20,149 162 828 91 46,956 356,876 426,624 1,241 212 4,189 591 6,233 420,391 5,864 398,813 404,677 15,714 420,391 |
30 April 2007 HK$’000 (restated) 2,610 1,292 8,800 8,988 1,368 7,871 7,261 135 |
|---|---|---|
| 38,325 | ||
| 27 10,682 361 2,168 970 40,151 23,899 201 1 11,355 100,686 |
||
| 190,501 | ||
| 11,171 16,241 17,694 – 156 140 |
||
| 45,402 | ||
| 145,099 | ||
| 183,424 | ||
| 1,943 – 5,061 591 |
||
| 7,595 | ||
| 175,829 | ||
| 5,587 131,474 |
||
| 137,061 38,768 |
||
| 175,829 |
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Notes
1. PRINCIPAL ACCOUNTINg POLICIES
a) Statement of compliance
These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”), which includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the disclosure requirements of the Hong Kong Companies Ordinance.
b) Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with HKFRSs and under the historical cost convention, except for the available-for-sale financial assets, investment properties and financial assets at fair value through profit or loss that have been measured at fair value.
The preparation of financial statements in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
c) Amendments, new standards and interpretations issued and effective for the year ended 30 April 2008
The HKICPA has issued a number of new and revised HKFRSs and interpretations that are first effective or available for early adoption for the current accounting period of the Group and the Company.
There have been no significant changes to the accounting policies applied in these financial statements for the years presented as a result of these developments. However, as a result of the adoption of HKFRS 7, Financial instruments: Disclosures and the amendment to HKAS 1, Presentation of financial statements: Capital disclosures, there have been some additional disclosures provided as follows:
As a result of the adoption of HKFRS 7, the financial statements include expanded disclosure about the significance of the Group’s financial instruments and the nature and extent of risks arising from those instruments, compared with the information previously required to be disclosed by HKAS 32, Financial Instruments: Disclosure and presentation.
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The amendment to HKAS 1 introduces additional disclosure requirements to provide information about the level of capital and the Group’s and the Company’s objectives, policies and processes for managing capital.
Both HKFRS 7 and the amendment to HKAS 1 do not have any material impact on the classification, recognition and measurement of the amounts recognised in the financial instruments.
The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.
d) Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended 30 April 2008
Up to the date of issue of these financial statements, the HKICPA has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 30 April 2008 and which have not been adopted in these financial statements.
The Group is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Group’s results of operations and financial position.
In addition, the following developments may result in new or amended disclosures in the financial statements:
| Effective for | ||
|---|---|---|
| annual periods | ||
| beginning on or after | ||
| HKAS 1 (Revised) | Presentation of Financial Statements | 1 January 2009 |
| HKAS 23 (Revised) | Borrowing Costs | 1 January 2009 |
| HKAS 27 (Revised) | Consolidated and Separate Financial Statements | 1 July 2009 |
| HKAS 32 and HKAS 1 | Amendments to HKAS 32 and HKAS 1 | 1 January 2009 |
| Amendments | Puttable Financial Instruments and | |
| Obligations Arising on Liquidation | ||
| HKFRS 2 Amendment | Share-based Payment-Vesting | 1 January 2009 |
| Conditions and Cancellations | ||
| HKFRS 3 (Revised) | Business Combinations | 1 July 2009 |
| HKFRS 8 | Operating Segments | 1 January 2009 |
| HK(IFRIC) – Int 12 | Service Concession Arrangements | 1 January 2008 |
| HK(IFRIC) – Int 13 | Customer Loyalty Programmes | 1 July 2008 |
| HK(IFRIC) – Int 14 | HKAS 19 – The Limit on a Defined Benefit | 1 January 2008 |
| Asset, Minimum Funding | ||
| Requirements and their Interaction |
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2. SEgMENT INFORMATION
Segment information is presented by way of two segment formats: (a) on a primary segment reporting basis, by business segments; and (b) on a secondary segment reporting basis, by geographical segments.
Business segments
The Group comprises the following main business segments:
Consumer finance: Consumer finance business
Securities investment: Trading of securities Properties investment: Letting of properties
Smart-card financial services business: Smart-card financial services business
Restaurant operation: Catering services through the operation of a chain of Chinese restaurants
The following tables present revenue, result and certain asset, liability and expenditure information for the Group’s business segments.
| Consumer finance 2008 2007 HK$’000 HK$’000 (restated ) Segment revenue: Turnover 1,252 1,082 Other revenue and net income 818 1,140 Total 2,070 2,222 Segment results 379 523 Unallocated other revenue Unallocated expenses Loss from operations Finance costs Share of results of: Jointly-controlled entity – – Associate – – Loss before taxation Income tax |
Securities investment 2008 2007 HK$’000 HK$’000 (restated ) 266,165 99,944 5,662 227 271,827 100,171 1,287 7,507 – – – – |
Properties investment 2008 2007 HK$’000 HK$’000 (restated ) 396 192 – – 396 192 6,139 982 – – – – |
Smart-card financial services business 2008 2007 HK$’000 HK$’000 (restated ) – – 2,372 1,198 2,372 1,198 (12,639 ) (359 ) – – – – |
Restaurant operation 2008 2007 HK$’000 HK$’000 (restated ) 196,547 217,106 1,953 3,888 198,500 220,994 (5,211 ) (9,640 ) 429 1,115 987 896 |
Consolidated 2008 2007 HK$’000 HK$’000 (restated ) 464,360 318,324 10,805 6,453 475,165 324,777 (10,045 ) (987 ) 2,637 1,753 (21,004 ) (13,341 ) (28,412 ) (12,575 ) (305 ) (359 ) 429 1,115 987 896 (27,301 ) (10,923 ) (392 ) (4,257 ) |
Consolidated 2008 2007 HK$’000 HK$’000 (restated ) 464,360 318,324 10,805 6,453 475,165 324,777 (10,045 ) (987 ) 2,637 1,753 (21,004 ) (13,341 ) (28,412 ) (12,575 ) (305 ) (359 ) 429 1,115 987 896 (27,301 ) (10,923 ) (392 ) (4,257 ) |
|---|---|---|---|---|---|---|
| 324,777 | ||||||
(987 ) 1,753 (13,341 ) |
||||||
(12,575 ) (359 ) 1,115 896 |
||||||
(10,923 ) (4,257 ) |
(27,693 ) (15,180 )
Loss for the year
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| Smart-card Consumer Securities Properties financial services Restaurant finance investment investment business operation 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (restated ) (restated ) (restated ) (restated ) (restated ) Segment assets 22,010 27,838 330,842 34,296 33,265 8,849 24,263 56,474 44,128 67,179 Investment in a jointly- controlled entity – – – – – – – – 1,982 1,368 Unallocated assets Total assets Segment liabilities 727 1,209 651 99 64 5,302 75 56 45,795 45,106 Unallocated liabilities Total liabilities Other segment information: Capital expenditure 21 176 – – 11,092 7,966 611 23 12,380 2,619 Unallocated amounts Depreciation and amortisation 161 70 – – – – 5 5 1,166 4,194 Unallocated amounts (Reversal of impairment)/ impairment loss on amount due from an associate – – – – – – – – (314 ) 1,801 Impairment loss on property, plant and equipment – – – – – – – – – 3,875 (Gain)/loss on disposal of property, plant and equipment – – 8 – – – – – (1,388 ) (542 ) |
Consolidated 2008 2007 HK$’000 HK$’000 (restated ) 454,508 194,587 1,982 1,368 17,090 32,871 473,580 228,826 47,312 51,772 5,877 1,225 53,189 52,997 24,104 10,784 1,240 2,757 25,344 13,541 1,332 4,269 207 94 1,539 4,363 (314 ) 1,801 – 3,875 (1,380 ) (542 ) |
Consolidated 2008 2007 HK$’000 HK$’000 (restated ) 454,508 194,587 1,982 1,368 17,090 32,871 473,580 228,826 47,312 51,772 5,877 1,225 53,189 52,997 24,104 10,784 1,240 2,757 25,344 13,541 1,332 4,269 207 94 1,539 4,363 (314 ) 1,801 – 3,875 (1,380 ) (542 ) |
|---|---|---|
| 228,826 | ||
| 51,772 1,225 |
||
| 52,997 | ||
| 10,784 2,757 |
||
| 13,541 | ||
| 4,269 94 |
||
| 4,363 | ||
1,801 3,875 (542 ) |
geographical segments
The Group’s operations are carried out in Hong Kong and PRC. Consumer finance business is carried out in Hong Kong and PRC, and smart-card financial services business is carried out in PRC. Securities investment and properties investment are carried out in Hong Kong. Restaurant operation is carried out in Hong Kong and PRC.
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The following table presents revenue and certain assets and expenditure information for the Group’s geographical segments.
| Segment revenue: Turnover Other segment information: Segment assets Capital expenditure |
Hong Kong 2008 2007 HK$’000 HK$’000 (restated) 416,736 272,241 425,515 183,555 21,613 11,216 |
PRC 2008 2007 HK$’000 HK$’000 (restated) 47,624 46,083 48,065 45,271 3,731 2,325 |
Consolidated 2008 2007 HK$’000 HK$’000 (restated) 464,360 318,324 473,580 228,826 25,344 13,541 |
|---|---|---|---|
| 2008 HK$’000 416,736 425,515 21,613 |
2008 HK$’000 47,624 48,065 3,731 |
2008 HK$’000 464,360 473,580 25,344 |
3. TURNOVER, OTHER REVENUE AND OTHER NET INCOME
The principal activities of the Group are providing consumer finance, smart-card financial services business, securities investment, properties investment and restaurant operations.
Turnover represents income from consumer finance, smart-card business, securities investment, properties investment and restaurant operations received or receivable during the year.
The Group’s turnover, other revenue and other net income for the year arose from the following activities:
| Turnover Income from restaurant operations Sales of trading securities Moneylending loan service charge income Sales of forfeited collaterals Gross rental income from an investment property Other revenue Bank interest income Loan interest income Total interest income on financial assets not at fair value through profit or loss Sundry income Written back of other payables Other net income Exchange gain, net Net gain on disposal of property, plant and equipment |
group 2008 2007 HK$’000 HK$’000 (restated) 196,547 217,106 266,165 99,944 1,040 590 212 492 396 192 464,360 318,324 6,887 2,894 2,299 1,151 9,186 4,045 410 2,415 – 180 9,596 6,640 2,466 1,024 1,380 542 3,846 1,566 |
|
|---|---|---|
| 2008 HK$’000 196,547 266,165 1,040 212 396 464,360 6,887 2,299 9,186 410 – 9,596 2,466 1,380 3,846 |
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4. LOSS FROM OPERATIONS
The Group’s loss from operations is arrived at after charging/(crediting):
| Cost of inventories consumed Cost of trading securities Cost of forfeited collaterals sold Staff costs (including directors’ emoluments): Wages and salaries Retirement benefits scheme contributions (Reversal of impairment)/impairment loss on amount due from an associate Auditors’ remuneration Depreciation and amortisation Research and development costs△ Impairment loss on property, plant and equipment Operating lease charges in respect of land and buildings Rental income from an investment property less direct outgoings of HK$14,000 (2007: HK$8,000) Dividend income from listed securities Net realised gain on financial assets at fair value through profit or loss Net unrealised loss on financial assets at fair value through profit or loss# △ This item is included in other expenses. # This item is included in cost of trading securities. |
2008 HK$’000 74,837 270,540 207 57,677 1,808 59,485 (314 ) 758 1,539 17,600 – 23,665 (382 ) (110 ) (4,606 ) 9,091 |
2007 HK$’000 (restated) 84,329 92,664 461 58,839 1,994 60,833 1,801 620 4,363 – 3,875 27,588 (184 ) (256 ) (7,445 ) 421 |
|---|---|---|
5. FINANCE COSTS
| Interest on banks and mortgage loans Interest on finance lease Other interests paid Total interest expense on financial liabilities not at fair value through profit or loss |
2008 HK$’000 211 14 80 305 |
2007 HK$’000 221 – 138 359 |
|---|---|---|
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6. INCOME TAX
| Provision for the year Outside Hong Kong Income tax for the year |
2008 HK$’000 392 392 |
2007 HK$’000 4,257 4,257 |
|---|---|---|
No provision for Hong Kong profits tax has been made as the Group did not generate any assessable profits arising in Hong Kong for both years.
Hong Kong profits tax, if any, is calculated at 17.5% (2007: 17.5%) of the estimated assessable profit for the year. Taxes on profits assessable other than Hong Kong have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.
7. LOSS PER SHARE
(a) Basic loss per share
The calculation of basic loss per share for the year is based on the net loss attributable to equity holders of the Company of HK$27,214,000 (2007: HK$14,948,000) and the weighted average number of 5,809,552,703 (2007: 5,587,385,900) ordinary shares in issue during the year.
(b) Diluted loss per share
Diluted loss per share is not presented as there was no dilutive potential ordinary shares in existence in both years.
8. DIVIDEND
The directors do not recommend the payment of a dividend for the year ended 30 April 2008 (2007: Nil).
9. ACCOUNTS RECEIVABLES
The general credit terms granted by the Group to its customers range from 30 to 90 days. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by senior management.
An aged analysis of the Group’s accounts receivables as at balance sheet date is as follows:
| Within 30 days 31 - 90 days 91 - 180 days Over 180 days |
2008 HK$’000 46 256 41 100 443 |
2007 HK$’000 (restated) 442 673 477 576 2,168 |
|---|---|---|
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10. MONEYLENDINg LOAN RECEIVABLES
The Group offers loans secured by tangible personal property, such as real estate and jewellery, commonly known as moneylending loans. A typical moneylending loan generally has a term of 30 to 180 days.
All the Group’s moneylending loan receivables in PRC are denominated in Renminbi. The moneylending loan receivables in PRC carry interest at a monthly effective rate of approximately 0.5% mark up over the 6-month bank lending rate that is announced by the People’s Bank of China.
11. ACCOUNTS PAYABLES
The aging of the Group’s accounts payables is analysed as follows:
| Within 30 days 31 - 90 days 91 - 180 days 181 - 360 days Over 360 days |
2008 HK$’000 4,271 5,248 354 392 – 10,265 |
2007 HK$’000 5,549 5,458 117 34 13 11,171 |
|---|---|---|
The accounts payables are non-interest bearing and are normally settled on 90-day terms. The carrying amounts of the accounts payables at the balance sheet date approximated their fair values.
12. COMPARATIVE FIgURES
As a result of adopting HKFRS 7, Financial instruments: Disclosures, and the amendments to HKAS 1, Presentation of financial statements: Capital disclosures, certain comparative figures have been adjusted to conform with changes in disclosures in the recent year and to show separately comparative amounts in respect of items disclosed for the first time in 2007.
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MANAgEMENT DISCUSSION AND ANALYSIS
OVERALL PERFORMANCE
For the year ended 30 April 2008, the Group generated turnover of HK$464.4 million, an increase of approximately 45.9% or HK$146.1 million, from approximately HK$318.3 million for last year with a loss for the year of approximately HK$27.7 million (2007: approximately HK$15.2 million). The loss for the current year is mainly due to the research and development cost incurred for different business units.
As at 30 April 2008, the Group maintained a strong financial position with consolidated net current assets of HK$356.9 million (2007: HK$145.1 million) (an increase of approximately 246%) and consolidated net assets of HK$420.4 million (2007: HK$175.8 million) (an increase of approximately 239%) respectively.
BUSINESS REVIEW
Consumer Finance Business
During the year, we successfully transitioned our business from a traditional “pawn shop” which mainly provided small loan balances to individuals in the past to a “financial services company” for selective small and medium enterprise (“SME”) owners in view of their increasing demand for shortterm working capital. During the fiscal year ended 30 April, 2008, the turnover was HK$1.3 million which was similar to that in 2007, but the composition was substantially different. More than half of the turnover was generated from secured loans to SME owners. The outstanding loan receivables as at 30 April 2008 was HK$5.2 million which was significantly higher than the balance of HK$1.0 million in 2007. We expect that such demand will increase in line with the economic development of China and the continuing tightening of banks’ liquidity, and we have begun to plan towards applying for a new branch in Beijing.
In addition to the PRC market, the Group started to explore business opportunities in the consumer finance market in Hong Kong. In October 2007, the Group obtained its money lender’s licence under the Money Lenders Ordinance (Chapter 163 of Laws of Hong Kong) and started its consumer finance business in Hong Kong. Being licensed both in PRC and Hong Kong, the Group is therefore equipped to capture the market of the owners of SMEs with businesses both in PRC and Hong Kong, to facilitate them and give them flexibility to expand their businesses. The Group will continue to identify opportunities to expand its consumer finance business.
Smart-card Financial Services Business
In 2008, we successfully implemented our innovative “e-ticket” system at Beijing Shijingshan Sculpture Park. Beijing Shijingshan Sculpture Park is now positioned as a showcase to demonstrate how our system, by using advanced RFID technology, helps the management of high-traffic venues to control and monitor their traffic flow, and to deploy a new digital media and advertising platform to increase their revenue and help in information dissemination. Such an on-site showcase has been useful in expediting the process of promoting the user-friendliness of the system to major tourist sites and other high-traffic venues in the PRC.
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During the process of developing the e-ticket system, we identified different business opportunities with significant potential by utilizing RFID technology. In the current year, we have invested about HK$12.1 million in research and development to deploy an “e-wallet” system based on the e-ticket system. This research and development cost incurred resulted in a segment loss of HK$12.6 million for the current year.
Securities Investment and Properties Investment
During the current year, the Group continued to develop its securities investment and properties investment businesses. The turnover on trading of securities amounted to HK$266.2 million (2007: HK$99.9 million) and the Group purchased one investment property and committed to purchase 6 more investment properties during the year. The securities investment segment contributed a profit of HK$1.3 million for the current year (2007: HK$7.5 million). The properties investment segment contributed a profit of HK$6.1 million for the current year (2007: HK$1.0 million).
Restaurant Business
Our restaurant business continues to face a challenging market environment. During the year, we closed a restaurant in Hong Kong and a restaurant in Shenzhen as a result of the increases in rental expenses, staff costs, material costs and fuel costs. Turnover for the restaurant operation dropped from HK$217.1 million in 2007 to HK$196.5 million for the year ended 30 April 2008 and a loss of HK$5.2 million (2007: HK$9.6 million) was recorded in ordinary restaurant activities.
SEASONAL/CYCLICAL FACTORS
The sales volume during festive periods is normally higher than the sales volume in the slack periods of the year for restaurant operation only.
FINANCIAL REVIEW
Share capital
In July, 2007, a top-up placement was made, where Deutsche Bank AG, acting through its London Branch, acquired shares of the Company at HK$1.141 per Share, representing approximately 4.9% of the issued share capital of the Company at that time. The net proceeds from the placing of approximately HK$296.1 million were used as additional working capital of the Group.
As at 30 April 2008, the Company had 5,863,960,900 shares in issue with total shareholders’ funds of the Group amounting to HK$404.7 million.
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Liquidity and financial resources
The Group maintains a strong financial position with cash and cash equivalents of the Group as at 30 April 2008 amounting to HK$328.3 million (2007: HK$100.7 million). The Group’s current ratio as at 30 April 2008 is 8.6 (2007: 4.2). The total equity of the Group amounted to HK$420.4 million (2007: HK$175.8 million) as at 30 April 2008.
gearing
The gearing ratio, as a ratio of bank loans to total equity, was 0.01 as at 30 April 2008 (2007: 0.03).
Exchange Rate Exposure
As at 30 April 2008, the Group’s cash and cash equivalents amounted to HK$328.3 million, the majority of which is in Hong Kong dollars. Since the majority of the Group’s transactions, monetary assets and liabilities is denominated in Hong Kong dollars, United Stated dollars and Renminbi, with relatively stable exchange rates of Renminbi to Hong Kong dollars and Hong Kong’s linked exchange rate between United States dollar and Hong Kong dollar, the Group has minimal exposure to exchange rate fluctuations.
Treasury policies
The Group generally finances its ordinary operations with internally generated resources. The interest rates of most of the borrowings, if applicable, is charged by reference to prevailing market rates.
Contingent liabilities
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a) In December 2005, a legal action was commenced by a former employee of Kamboat Chinese Cuisine Company Limited (“KCCC”), a wholly owned subsidiary of the Company, against KCCC for the claim of approximately HK$1,569,000 for personal injuries, loss and damages suffered during work in KCCC. In the opinion of the directors, such claim should be adequately covered by the Group’s insurance. Hence, no provision has been made in the financial statements.
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b) As at 30 April 2008, a number of current employees achieved the required number of years of service to the Group in order to be eligible for long service payments under the Employment Ordinance should their employment be terminated under certain prescribed circumstances. A provision has not been recognised in respect of such possible payments, as it is not considered probable that there will be a material future outflow of resources from the Group in respect thereof. The Group has a contingent liability in respect of possible future payments to employees under the Employment Ordinance with a maximum possible amount of approximately HK$1,205,000 (2007: HK$1,200,000) at 30 April 2008.
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c) As at 30 April 2007 and 2008, the Company provided corporate guarantee to a landlord to the extent of approximately HK$370,000 in respect of the operating lease payments of a subsidiary. No recognition of such guarantee was made for the years ended 30 April 2007 and 2008 because the directors of the Company did not consider it probable that a claim would be made against the Group under the guarantee.
Commitments
The Group has capital commitments, which are contracted but not provided for, in respect of purchase of property, plant and equipment and investment properties amounting to HK$27.5 million as at 30 April 2008 (2007: nil).
FUTURE PROSPECTS
The business environment remains challenging in the coming financial year due to the unsettled global macro-economic environment including fluctuating economic situation in the US, continued inflation threat in the PRC and Hong Kong, and concern about possible overheating of the economy in China.
Despite difficulties in the recent general economic situation, the Group will continue to keep a proactive approach riding on the potential opportunity to provide consumer finance and smart-card financial services in PRC and Hong Kong to achieve favorable returns for our shareholders.
EMPLOYMENT AND REMUNERATION POLICY
As at 30 April 2008, the Group had 452 (2007: 630) employees in Hong Kong and the PRC. The Group has not experienced any significant problems with its employees or disruptions due to labour disputes nor has it experienced difficulties in the recruitment and retention of experienced staff. The Group remunerates its employees based on industry practices. Its staff benefits, welfare, share options and statutory contributions, if any, are made in accordance with individual performance and prevailing labour laws of its operating entities.
PURCHASES, SALE OR REDEMPTION OF SECURITIES
Neither the Company nor any of its subsidiaries purchased or sold any of the Company’s listed securities during the year ended 30 April 2008. The Company did not redeem any of the Company’s listed securities during the year.
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CORPORATE gOVERNANCE REPORT
The Company has complied with the code provisions set out in the Code on Corporate Governance Practices (“the Code”) contained in appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“the Listing Rules”) with certain exceptions as follows:
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According to the code provisions, the non-executive directors should be appointed for a specific term, subject to re-election. All directors are subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the provisions of the Articles, and the terms of their appointment will be reviewed when they are due for re-election. As such, the Board considers that sufficient measures are in place to ensure that the Company’s corporate governance practices are no less exacting than those set out in the Code.
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In accordance with the code provision, the role of chairman and chief executive officer (“CEO”) should be performed by different individuals. Since September 2006, Mr. Vong Tat Ieong, David, who is director and CEO of the Company, has also carried out the responsibilities of the chairman of the Company. The Board considers the present structure is more suitable to the Company for it can provide strong and consistent leadership and allow for more efficient formulation and implementation of the Company’s development strategies.
MODEL CODE FOR DIRECTORS’ SECURITIES TRANSACTIONS
The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules as the code of conduct in respect of securities transactions of the directors (the “Model Code”). Having made specific enquiry of all directors, the Company has confirmed that all directors have complied with the required standards set out in the Model Code and its code of conduct regarding directors’ securities transactions during the year.
AUDIT COMMITTEE
The Audit Committee comprises three independent non-executive Directors with Dr. Lee G. Lam as the chairman. 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 Group’s final results for the year ended 30 April 2008 have been reviewed by the Company’s Audit Committee.
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AUDITORS
CCIF CPA Limited acted as auditors of the Company for the year ended 30 April 2008. CCIF CPA Limited has been appointed to act as the auditors of the Company with effect from 25 July 2007. RSM Nelson Wheeler were the auditors of the Company before the appointment of CCIF CPA Limited.
CCIF CPA Limited will retire and a resolution for their re-appointment as auditors of the Company will be proposed at the forthcoming annual general meeting.
SCOPE OF WORK OF CCIF CPA LIMITED
The figures in respect of the Group’s consolidated balance sheet, consolidated income statement and the related notes thereto for the year ended 30 April 2008 as set out in the preliminary announcement have been agreed by the Group’s auditors, CCIF CPA Limited, to the amounts set out in the Group’s draft consolidated financial statements for the year. The work performed by CCIF CPA Limited in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by CCIF CPA Limited on the preliminary announcement.
PUBLICATION OF FINANCIAL INFORMATION
The results announcement is published on the websites of the Stock Exchange (www.hkex.com.hk) and the Company (www.thevongroup.com). The Company’s 2008 annual report containing all the information required by the Listing Rules will be despatched to shareholders and will be available on the above websites in due course.
By order of the Board VONgROUP LIMITED Vong Tat Ieong, David Executive Director
Hong Kong, 25 August 2008
As at the date of this announcement, the board of the Company comprises three executive Directors, namely: Mr. Vong Tat Ieong, David, Mr. Wong Chi Man and Mr. Xu Siping; and three independent non-executive Directors, namely: Mr. Fung Ka Keung, David, Dr. Lam Lee G., and Ms. Wong Man Ngar, Edna.
* For identification purpose only
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