WH Group Limited — Annual Report 2002

Jul 30, 2002

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PREMIUM LAND LIMITED （上海策略置地有限公司）[*]

(Incorporated in Bermuda with limited liability)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31ST MARCH, 2002

The board of directors (the “Board”) of Premium Land Limited (the “Company”) announced the audited consolidated results of the Company and its subsidiaries (together “the Group”) for the year ended 31st March, 2002 together with comparative figures for 2001 as follows:–

RESULTS

Notes Turnover 3 Cost of sales Other revenue Administrative expenses Other operating expenses (Loss) profit from operations Finance costs Amortisation of goodwill arising on acquisition of an associate Impairment loss of goodwill on acquisition of an associate Loss on disposal of subsidiaries 4 Loss on deemed disposal of interest in an associate Share of results of associates Loss before taxation Taxation 5 Loss before minority interests Minority interests Loss for the year Loss per share 6 Basic (HK cents) Diluted (HK cents)

2002 2001 HK$’000 HK$’000 80,028 514,658 (87,101) (338,668) (7,073) 175,990 5,665 12,588 (55,587) (78,262) (22,190) (96,138) (79,185) 14,178 (7,774) (85,469) (711) – (19,768) – (44,260) (864,078) – (1,797) (9,124) (35,215) (160,822) (972,381) – (4,096) (160,822) (976,477) 9,653 (48,820) (151,169) (1,025,297) (8.39) (65.53) N/A (65.61)

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Notes:

1. Principal Accounting Policies

In the current year, the Group adopted for the first time a number of new and revised Statements of Standard Accounting Practice issued by the Hong Kong Society of Accountants. Adoption of these standards has led to a number of changes in the Group’s accounting policies. In addition, the new and revised standards have introduced additional and revised disclosure requirements which have been adopted in these financial statements. Comparative amounts and disclosures for the prior year have been restated in order to achieve a consistent presentation.

2. Segment Information

Business Segments 2002

		Continuing operations	Continuing operations	Continuing operations		Discontinued operations	Discontinued operations	Discontinued operations	Discontinued operations
						Publishing of
	Trading of					newspaper
	building		Property		Securities		and
	materials and	development			trading	magazine and
	renovation		and	Property	and	advertising			Software
	services	investment		rental	investment		income	development			Unallocated	Consolidated
	HK$’000		HK$’000	HK$’000	HK$’000		HK$’000		HK$’000		HK$’000		HK$’000
INCOME STATEMENT
FOR THE YEAR ENDED
31ST MARCH, 2002
REVENUE
External sales	8,856		–	3,847	29,376		37,940			9	–		80,028
Segment results	(90)		–	3,402	(18,130)		(29,710)		(14,306)		–		(58,834)
Other revenue	–		–	–	–		958			–	4,707		5,665
Other operating expenses	(352)		–	–	–		–			–	–		(352)
Unallocated corporate
expenses													(25,664)
Loss from operations													(79,185)
Finance costs													(7,774)
Amortisation of goodwill
arising on acquisition
of an associate	–		(711)	–	–		–			–	–		(711)
Impairment loss on
goodwill on acquisition
of an associate	–		(19,768)	–	–		–			–	–		(19,768)
Loss on disposal of
subsidiaries	–		–	–	–		(5,058)		(40,347)		1,145		(44,260)
Share of results of
associates	–		(9,229)	107	–		–			–	(2)		(9,124)
Loss before minority interests													(160,822)

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2001

2001
	Continuing operations					Discontinued operations
					Publishing of
					newspaper
						and
	Property			Securities		magazine
	development			trading		and
	and	Property		and	advertising			Software
	investment	rental	investment			income	development		Unallocated	Consolidated
	HK$’000	HK$’000		HK$’000		HK$’000		HK$’000	HK$’000		HK$’000
INCOME STATEMENT
FOR THE YEAR ENDED
31ST MARCH, 2001
REVENUE
External sales	412,513	72,487		5,098		24,560		–	–		514,658
Segment result	140,755	67,587		(6,889)		(24,087)		(12,573)	–		164,793
Other revenue											12,588
Other operating expenses	–	–		(5,418)		(685)		–	(90,035)		(96,138)
Unallocated corporate expenses											(67,065)
Profit from operations											14,178
Finance costs											(85,469)
Loss on disposal of subsidiaries	(878,326)	–		–		–		–	14,248		(864,078)
Loss on deemed disposal of interest
in an associate	(1,797)	–		–		–		–	–		(1,797)
Share of results of associates	(35,102)	(113)		–		–		–	–		(35,215)
Loss before taxation											(972,381)
Taxation											(4,096)
Loss before minority interests											(976,477)

Geographical segments

All of the Group’s operations are principally located in Hong Kong except that the software development division was located in the North America. Group administration is carried out in Hong Kong.

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The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods:

Hong Kong North America Other revenue (Loss) profit from operations	Sales revenue by geographical market 2002 2001 HK$’000 HK$’000 80,019 514,658 9 – 80,028 514,658	Contribution to loss from operations 2002 2000 HK$’000 HK$’000 (91,024) 14,163 (14,305) (12,573) (105,329) 1,590 5,665 12,588 (99,664) 14,178	Contribution to loss from operations 2002 2000 HK$’000 HK$’000 (91,024) 14,163 (14,305) (12,573) (105,329) 1,590 5,665 12,588 (99,664) 14,178
			1,590 12,588
			14,178

The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and intangible assets, analysed by the geographical area in which the assets are located:

Hong Kong North America	Carrying amount of segment assets 2002 2001 HK$’000 HK$’000 409,155 376,491 6,417 7,911 415,572 384,402	Additions to property, plant and equipment and intangible assets 2002 2000 HK$’000 HK$’000 35,664 250,715 – 7,462 35,664 258,177	Additions to property, plant and equipment and intangible assets 2002 2000 HK$’000 HK$’000 35,664 250,715 – 7,462 35,664 258,177
			258,177

3. Turnover

Turnover represents the aggregate of the net amount received and receivable from third parties and is summarized as follows:

Publishing of newspaper and magazine and advertising income Securities trading and investment Renovation services Property rental Trading of building materials Software development Property development and investment	2002 HK$’000 37,940 29,376 6,667 3,847 2,189 9 – 80,028	2001 HK$’000 24,560 5,098 – 72,487 – – 412,513
		514,658

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4. Loss on Disposal of Subsidiaries

The loss on disposal of subsidiaries for the year ended 31st March, 2002 principally arose from the disposal of the Group’s entire interest in Actiwater Resources Limited (“Actiwater”) and Kavix Limited (“Kavix”). For the year ended 31st March, 2001, the loss on disposal of subsidiaries principally arose from the disposal of an approximate 63.68% interest in Asean in January 2001 at a consideration of approximately HK$573 million, details of which were set out in the circular dated 2nd January, 2001 issued by the Company.

5. Taxation

The charge comprises: Overseas taxation Current year Underprovision in prior years Share of taxation attributable to associates	2002 HK$’000 – – – – –	2001 HK$’000 30 347
		377 3,719
		4,096

No provision for Hong Kong Profits Tax has been made in the financial statements as the Company and its subsidiaries have no assessable profit for the year.

Overseas taxation for the year ended 31st March, 2001 was calculated at the rates prevailing in the respective jurisdictions.

6. Loss per share

The calculation of the basic and diluted loss per share for the year is based on the following data:

	2002		2001
	HK$’000		HK$’000
Loss for the purposes of basic loss per share	(151,169) (1,025,297)
Effect of dilutive potential ordinary shares:
– adjustment to the share of results of Asean Resources Holding Limited
based on dilution of its earnings per share	–		(1,230)
– adjustment to the share of results of the Former Associate
based on dilution of its loss per share	–		(158)
Loss for the purposes of diluted loss per share	(151,169) (1,026,685)
	2002		2001
	Number of	Number of
	shares		shares
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share	1,801,598,435	1,564,735,970

The weighted average number of ordinary shares for the purpose of basic and diluted loss per share for 2002 and 2001 has been adjusted for the effect of shares subdivision proposal approved by the shareholders on 24th April, 2002.

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For the year ended 31st March, 2002, the computation of diluted loss per share does not assume the exercise of the Company’s outstanding share options as the Group incurred a loss for the year.

For the year ended 31st March, 2001, the computation of diluted loss per share did not assume the conversion of the Company’s convertible redeemable notes and share options which were surrendered in February 2001 as the Group incurred a loss for the year.

DIVIDENDS

The Board does not recommend the payment of dividend for the year ended 31st March, 2002. (2001: Nil)

CHANGE OF COMPANY NAME

The Company changed its name from “Sing Pao Media Group Limited (成報傳媒集團有限公司 )” to “Premium Land Limited (策略置地有限公司 )” in July 2001 and changed its Chinese name from “ 策略置地有限公司 ” to “上海策略置地有限公司 ” in March 2002 respectively.

RESULTS

The Group recorded a total turnover of approximately HK$80 million in the financial year ended 31st March, 2002 with a decrease of approximately 84% as compared to that of the last year of approximately HK$514.7 million.

The Group’s loss for the year ended 31st March, 2002 was approximately HK$151 million. The loss was significantly reduced by 85% as compared to that of the last year of approximately HK$1,025 million. The loss was mainly resulted from as to approximately HK$44 million arising from the loss on disposal of subsidiaries, and as to approximately HK$20 million impairment loss of goodwill on acquisition of associate.

BUSINESS REVIEW AND OUTLOOK

The decrease in turnover was mainly attributable to the disposal of Asean Resources Holdings Limited in January 2001 which substantially reduced the revenues generated from the business of property developments and investments, and attributable to the disposal of the Actiwater Resources Limited which decreased the revenue generated from the media business in July 2001. The media business of the Group during the year under review and upon the date of disposal included the followings:

– “Sing Pao” name and production facilities

A publication right of a Chinese newspaper in Hong Kong with over 62 years’ history under the name of “Sing Pao Daily News” and “成報 ”, together with a data library and related printing machinery and equipment

– Magazine and Internet business

“Wide Angle” magazine, which is a public affairs magazine focused mainly on political and military news since 1972, and a 60% equity interest in a joint venture operating an Internet portal which provides news and information mainly related to China.

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In July 2001, a subsidiary of Capital Strategic Investment Limited (“Capital Strategic”) purchased approximately 60% of the entire issued share capital of the Company from China Strategic Holdings Limited (“China Strategic”) and Star East Holdings Limited (“Star East”) where the Group at the same time sold its media business back to China Strategic and Star East. The gross proceeds of HK$110 million from the disposal of the media business interests are being used as the general working capital for the Group.

After the completion of the disposal of media business, the principal assets of the Group continue to be properties and securities. The Group continue to be engaged in property investment, development and related businesses, and securities trading and investment.

To expand the business in the PRC property market, in January 2002, the Group entered into a conditional sale and purchase agreement to acquire 51% interest in Shanghai Hualong Constructions Stock Co. Limited, a company established in Shanghai, PRC. This company is one of the leading construction companies in Shanghai and is reputable in building high quality properties. This acquisition not only broadened the Group’s presence in PRC but also served as our base for further development in the PRC via its existing network.

The joining of WTO is expected to bring in considerable economic growth in the PRC which in turn will lead to increasing demand in property, domestic, industrial and commercial. Having this in mind, the Board has been actively seeking and would continue to seek investment opportunities and strategic partnership in the PRC market.

FINANCIAL POSITION

The Group’s total bank and other borrowings as at 31st March, 2002, amounted to approximately HK$180 million compared with approximately HK$108 million as at 31st March, 2001. Cash and bank balances and short-term listed investments amounted to approximately HK$171 million as at 31st March, 2002 compared with approximately HK$75 million as at 31st March, 2001.

Net gearing ratio of the Group which is expressed as a percentage of net borrowings to the shareholders’ fund was approximately 4% as at 31st March, 2002 compared with approximately 16% as at 31st March, 2001.

The annual revaluation of the Group’s investment properties was carried out by RHL Appraisal Limited, an independent property valuer. The total value as at 31st March, 2002 amounted to approximately HK$84 million compared with approximately HK$85 million as at 31st March, 2001.

At 31st March, 2002, an investment property with a carrying value of approximately HK$80 million (2001: HK$80 million) and a bank deposit of approximately HK$2 million (2001: nil) have been pledged to banks to secure banking facilities granted to the Group.

As at 31st March, 2002, the Group provided guarantees for banking and credit facilities utilised by subsidiaries, and did not have any contingent liabilities.

Shareholders’ fund of the Group as at 31st March, 2002 was approximately HK$224 million compared with approximately HK$211 million as at 31st March, 2001.

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EMPLOYEES AND REMUNERATION POLICY

The Group has 13 employees as at 31st March, 2002. Employees’ remuneration packages are reviewed and determined by reference to market terms and individual qualification. A new share option scheme was adopted on 24th April, 2002 which enhances staff motivation and performance, thereby encouraging them to contribute further to the success of the Group.

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

The Company has not redeemed any of its shares during the period. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company’s listed securities during the period.

EXPOSURE TO FLUCTUATION IN EXCHANGE RATES AND ANY RELATED HEDGES

The business of the Group were mainly conducted in Hong Kong during the year and most transactions were settled in Hong Kong dollars. The exposure to fluctuations in exchange rates was, therefore, insignificant.

CODE OF BEST PRACTICE

None of the Directors of the Company is aware of any information that would reasonably indicate that for any part of the period from 1st April, 2001 to 31st March, 2002 the Company is not, or was not in compliance with Appendix 14 of the Rules Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

PUBLICATION OF RESULTS ON THE STOCK EXCHANGE WEBSITE

All information required by paragraph 45(1) to 45(3) of Appendix 16 of Listing Rules will be published on the Stock Exchange’s Website in due course.

By the order of the Board Dong Bo, Frederic Chairman

Hong Kong, 29th July, 2002

• for identification purposes only

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Members of Premium Land Limited (the “Company”) will be held at Gemini & Libra Rooms, 33rd Floor, Rosedale on the Park, 8 Shelter Street, Causeway Bay, Hong Kong on Friday, 30 August 2002 at 9:00 a.m. for the following purposes:–

1. To receive and consider the Reports of the Directors and the Auditors, and the audited financial statements of the Company and of the Group for the year ended 31st March 2002.

2. To re-elect Directors and to authorize the Board of Directors to fix their remuneration.

3. To re-appoint Auditors and to authorize the Board of Directors to fix their remuneration.

To consider as special business and, if thought fit, pass with or without amendments, the following resolutions as ordinary resolutions:–

1. “ THAT

2. (A) subject to paragraph (C) below, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as defined in paragraph (D) of this Resolution) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require the exercise of such powers, subject to and in accordance with all applicable laws, be and is hereby generally and unconditionally approved in substitution for and to the exclusion of any existing authority previously granted;

3. (B) the approval in paragraph (A) of this Resolution shall authorize the Directors during the Relevant Period to make or grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require the exercise of such powers after the end of the Relevant Period;

4. (C) the aggregate nominal amount of share capital of the Company allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approvals in paragraphs (A) of this Resolution, otherwise than pursuant to

   • (i) a Rights Issue (as defined in paragraph (D) of this Resolution), or

   • (ii) the exercise of rights of subscription or conversion under the terms of any warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company;

   • (iii) an issue of shares under any option scheme or similar arrangement for the time being adopted for the grant of issue to officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company, or

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• (iv) any scrip dividend scheme or similar arrangement providing for the allotment of shares of the Company in lieu of the whole or part of a dividend on shares of the Company in accordance with the bye-laws of the Company,

shall not exceed 20 per cent of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution and the said approval shall be limited accordingly; and

• (D) for the purpose of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable law or the bye-Laws of the Company to be held; and

• (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares or other securities of the Company open for a period fixed by the Directors to holders of shares or any class thereof whose names appear in the register of members of the Company on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusion or other arrangement as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or the requirements of any recognized regulatory body or any stock exchange in any territory applicable to the Company).”

5. “ THAT :

• (A) subject to paragraph (B) of this Resolution, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as defined in paragraph (C) of this Resolution) of all the powers of the Company to repurchase its issued shares in the capital of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or any other stock exchange on which the shares of the Company may be listed and recognized by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose subject to and in accordance with all applicable laws and the requirements of The Rules Governing the Listing of Securities on the Stock Exchange or of any other applicable stock exchange as amended from time to time be and is hereby generally and unconditionally approved in substitution for and to the exclusion of any existing authority previously granted;

• (B) the aggregate nominal amount of shares of the Company which may be repurchased by the Company pursuant to the approval in paragraph (A) of this Resolution shall not exceed 10 per cent of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution and the said approval shall be limited accordingly; and

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• (C) for the purpose of this Resolution:

“Relevant Period” means the period from the date of the passing of this Resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the Company;

• (b) the expiration of the period within the next annual general meeting of the Company is required by any applicable law or the bye-laws of the Company to be held; or

• (c) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.”

• “ THAT subject to the passing of Ordinary Resolutions Nos. 4 and 5 set out in the notice convening this meeting, the general mandate granted to the directors of the Company to exercise the powers of the Company to allot shares pursuant to Ordinary Resolution No. 4 set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution No. 5 set out in the notice convening this meeting, provided that such extended amount shall not exceed 10 per cent of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution.”

By Order of the Board Dong Bo, Frederic Chairman

29th July, 2002

Principal Place of Business in Hong Kong Room 2804-5 Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

Notes:

1. Every member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

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

3. A form of proxy for use at the above meeting is enclosed herewith.

4. An explanatory statement as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in connection with the proposed Repurchase Mandate under Resolution No. 5 above will be sent to the shareholders of the Company together with the 2002 Annual Report of the Company.

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

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