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Bossini International Holdings Limited
(Incorporated in Bermuda with limited liability)

FINANCIAL RESULTS

The Board of Directors (the "Board") of Bossini International Holdings Limited (the "Company") announces the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 September 2000. The results, together with the comparative figures for the corresponding period in 1999, are summarised below:

Condensed consolidated profit and loss account

                                                     Six months ended
                                                       30 September
                                                    2000              1999
                                             (Unaudited)       (Unaudited)
                                   Notes         HK$'000           HK$'000

TURNOVER                             2           690,828           558,634
Cost of sales                                   (402,687)         (334,516)
                                             -----------       -----------
Gross profit                                     288,141           224,118

Other revenue                        3             7,578             6,111
Selling and distribution costs                  (204,906)         (137,774)
Administrative expenses                          (54,270)          (39,312)
Other operating expenses                         (20,641)          (17,764)
                                             -----------       -----------
PROFIT FROM OPERATING ACTIVITIES     4            15,902            35,379
Finance costs                                       (821)             (908)
Share of losses of associates                          -              (141)
                                             -----------       -----------
PROFIT BEFORE TAXATION                            15,081            34,330
Taxation                             5            (3,969)           (5,706)
                                             -----------       -----------
PROFIT BEFORE MINORITY INTERESTS                  11,112            28,624
Minority interests                                  (466)               (4)
                                             -----------       -----------
NET PROFIT ATTRIBUTABLE TO
  SHAREHOLDERS                                    10,646            28,620
                                             ===========       ===========
DIVIDENDS                            6                 -            12,343
                                             ===========       ===========
RELEASE FROM REVALUATION RESERVE     7               202               202
                                             ===========       ===========
BASIC EARNINGS PER SHARE             8        3.88 cents       10.43 cents
                                             ===========       ===========

Condensed consolidated statement of recognised gains and losses

                                                     Six months ended
                                                       30 September
                                                    2000              1999
                                             (Unaudited)       (Unaudited)
                                                 HK$'000           HK$'000

Exchange differences on translation of the     
  financial statements of foreign entities
  and gains not recognised in the profit
  and loss account                                    46               181

Net profit attributable to shareholders           10,646            28,620
                                             -----------       -----------
Total recognised gains and losses                 10,692            28,801

Capital reserve on acquisition of subsidiaries   (23,415)              (48)

Goodwill written back on disposal of
  a subsidiary                                         -               144
                                             -----------       -----------
                                                 (12,723)           28,897
                                             ===========       ===========

Condensed consolidated balance sheet

                                                   As at             As at
                                       30 September 2000     31 March 2000
                                             (Unaudited)         (Audited)
                                  Notes         HK$'000           HK$'000

NON-CURRENT ASSETS
Fixed assets                                    165,114           131,876
Intangible assets                                 6,437             8,582
                                             ----------        ----------
                                                171,551           140,458
                                             ----------        ----------

CURRENT ASSETS
Inventories                                     212,864           165,301
Debtors                             9            13,719             5,972
Bills receivable                                 10,908             8,815
Deposits paid                                    57,868            46,157
Prepayments and other receivables                46,665            46,332
Time deposits                                    50,038            85,000
Cash and bank balances                           31,026            16,349
                                             ----------        ----------
                                                423,088           373,926
                                             ----------        ----------

CURRENT LIABILITIES
Creditors and accruals              10          205,817            98,135
Bills payable                                     1,076            14,539
Tax payable                                      11,287            11,818
Dividend payable                                 19,201            19,201
Bank loans and overdrafts                        38,886            40,051
                                             ----------        ----------
                                                276,267           183,744
                                             ----------        ----------

NET CURRENT ASSETS                              146,821           190,182
                                             ----------        ----------

TOTAL ASSETS LESS
  CURRENT LIABILITIES                           318,372           330,640

MINORITY INTERESTS                                  455                 -
                                             ----------        ----------
                                                317,917           330,640
                                             ==========        ==========

CAPITAL AND RESERVES
Share capital                                    27,430            27,430
Reserves                                        290,487           303,210
                                             ----------        ----------
                                                317,917           330,640
                                             ==========        ==========

Condensed consolidated cash flow statement

                                                     Six months ended
                                                       30 September
                                                    2000              1999
                                             (Unaudited)       (Unaudited)
                                                 HK$'000           HK$'000

NET CASH INFLOW FROM OPERATING ACTIVITIES         34,434            54,299

RETURNS ON INVESTMENTS AND
  SERVICING OF FINANCE                             1,874             1,756

TAXATION                                          (4,506)              (73)

INVESTING ACTIVITIES                             (50,807)          (19,814)
                                             -----------       -----------

NET CASH INFLOW/(OUTFLOW)
  BEFORE FINANCING ACTIVITIES                    (19,005)           36,168

FINANCING ACTIVITIES                              (6,596)            8,925
                                             -----------       -----------

INCREASE/(DECREASE) IN CASH AND
  CASH EQUIVALENTS                               (25,601)           45,093

Cash and cash equivalents at beginning
  of period                                       96,079            77,481
Effect of foreign exchange rate 
  changes, net                                       (33)              (77)
                                             -----------       -----------

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                   70,445           122,497
                                             ===========       ===========

ANALYSIS OF BALANCES OF CASH AND
  CASH EQUIVALENTS
Cash and bank balances                            31,026            22,910
Time deposits                                     50,038           106,937
Bank overdrafts                                   (8,834)           (7,350)
Short term bank and trust receipt loans
  repayable within three months from
  date of advance                                 (1,785)                -
                                             -----------       -----------
                                                  70,445           122,497
                                             ===========       ===========

Notes:

1. Significant accounting policies

(a) Basis of preparation

The condensed interim financial statements are prepared in accordance with Hong Kong Statement of Standard Accounting Practice ("SSAP") No. 25 "Interim financial reporting". The accounting policies and basis of preparation used in the preparation of the interim financial statements are the same as those used in the annual financial statements for the year ended 31 March 2000.

(b) Comparative figures

Certain comparative figures have been reclassified to conform with the current presentation as required under SSAP No.1 "Presentation of financial statements".

2. Turnover and contribution to profit from operating activities

The Group's turnover and profit from operating activities were derived predominantly from the retail and export sales of garments.

An analysis of the Group's turnover and contribution to profit from operating activities by geographical area of operations for the period ended 30 September 2000, together with the comparative figures for the corresponding period in 1999, is as follows:

                                                Contribution to profit from
                                  Turnover           operating activities
                          Six months ended            Six months ended
                              30 September               30 September
                              2000          1999         2000         1999
                           HK$'000       HK$'000      HK$'000      HK$'000

The People's Republic of China
  Hong Kong                498,436       427,138       11,845       26,081
  Elsewhere                 96,563        74,846       (2,715)      (1,146)
Others                      95,829        56,650        6,772       10,444
                          --------      --------     --------     --------
                           690,828       558,634       15,902       35,379
                          ========      ========     ========     ========

3. Other revenue

                                             Six months ended 30 September
                                                        2000          1999
                                                     HK$'000       HK$'000

Interest income                                        2,700         2,664
Royalty income                                           646           516
Rental income                                            254           151
Others                                                 3,978         2,780
                                                  ----------    ----------
                                                       7,578         6,111
                                                  ==========    ==========

4. Profit from operating activities

Profit from operating activities is arrived at after charging:

                                             Six months ended 30 September
                                                        2000          1999
                                                     HK$'000       HK$'000

Interest expense                                         821           908
Depreciation                                          24,954        14,307
Amortisation of intangible assets                      2,145             -
                                                  ==========    ==========

5. Taxation

Hong Kong profits tax has been provided at the rate of 16% (1999: 16%) on the estimated assessable profits arising in Hong Kong during the period ended 30 September 2000. Taxes on profits assessable elsewhere have been calculated at the rates of taxation prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

                                             Six months ended 30 September
                                                        2000          1999
                                                     HK$'000       HK$'000

Hong Kong                                              2,235         4,180
Elsewhere                                              1,734         1,526
                                                  ----------    ----------
Taxation charge for the period                         3,969         5,706
                                                  ==========    ==========

6. Dividends

                                             Six months ended 30 September
                                                        2000          1999
                                                     HK$'000       HK$'000

Interim dividend: Nil (1999: 4.5 cents per share)          -        12,343
                                                  ==========    ==========

7. Release from revaluation reserve

The revaluation reserve arising from revaluation of fixed assets is realised and transferred directly to retained earnings on a systematic basis, as the corresponding asset is used by the Group. The amount realised is the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset's original cost.

8. Basic earnings per share

Basic earnings per share is calculated based on the net profit attributable to shareholders for the period of HK$10,646,000 (1999: HK$28,620,000) and on 274,297,493 shares (1999: 274,297,493 shares) in issue during the period.

Diluted earnings per share has not been calculated for the six months ended 30 September 2000 and 1999 as no diluting events existed during these periods.

9. Debtors

Other than cash and credit card sales, the Group normally allows an average credit period of 60 days to its trade customers.

The age analysis of trade debtors is as follows:

                                                       As at         As at
                                                30 September      31 March
                                                        2000          2000
                                                     HK$'000       HK$'000

0-30 days                                              4,411         2,866
31-60 days                                             8,627            55
61-90 days                                               584         2,155
Over 90 days                                              97           896
                                                  ----------    ----------
Total                                                 13,719         5,972
                                                  ==========    ==========

10. Creditors and accruals

Included in creditors and accruals is a trade creditors balance of HK$90,828,000 (31 March 2000: HK$43,185,000).

The age analysis of trade creditors is as follows:

                                                       As at         As at
                                                30 September      31 March
                                                        2000          2000
                                                     HK$'000       HK$'000

0-30 days                                             71,537        37,588
31-60 days                                            17,684         3,124
61-90 days                                               655         1,705
Over 90 days                                             952           768
                                                  ----------    ----------
Total                                                 90,828        43,185
                                                  ==========    ==========

11. Related party transactions

The Group had the following transactions with related parties during the period:

                                                     Six months ended
                                                       30 September
                                                    2000              1999
                                      Notes      HK$'000           HK$'000


Rental paid for warehouse premises      (i)          620               620
Rental paid for office premises        (ii)        2,106             1,620
Rental paid for a retail outlet       (iii)          648               648
                                             ===========       ===========

Notes:

(i) The rental was paid to Laws Fashion Knitters Limited ("Laws Fashion"). Mr. Shuk Hoi LAW, Mr. Kar Po LAW and Mr. Ka Sing LAW, directors of the Company, have beneficial equity interests in Laws Fashion. Mr. Shuk Hoi LAW is also a director of Laws Fashion. The rental was determined by reference to open market rentals at the inception of the tenancy agreement.

(ii) The rental was paid to First On International Limited ("First On"). Mr. Shuk Hoi LAW, Mr. Kar Po LAW and Mr. Ka Sing LAW, directors of the Company, have beneficial equity interests in First On. Mr. Shuk Hoi LAW is also a director of First On. The rental was determined by reference to open market rentals at the inception of the tenancy agreement.

(iii) The rental was paid to Yatin Development Limited ("Yatin"). Mr. Shuk Hoi LAW, Mr. Kar Po LAW and Mr. Ka Sing LAW, directors of the Company, are also directors of, and have beneficial equity interests in, Yatin. The rental was determined by reference to open market rentals at the inception of the tenancy agreement.

12. Contingent liabilities

                                                       As at         As at
                                                30 September      31 March
                                                        2000          2000
                                                     HK$'000       HK$'000

Bank guarantees given in lieu of utility and
  property rental deposits                             4,012         3,132
                                                  ==========    ==========

13. Approval of the interim financial statements

The condensed consolidated interim financial statements were approved by the Board on 30 November 2000.

INTERIM DIVIDEND

The Board has resolved not to declare an interim dividend for the six months ended 30 September 2000 (1999: 4.5 cents per share).

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

The Group's consolidated turnover for the six months ended 30 September 2000 increased by 23.7%, from HK$558,634,000 for the corresponding period last year to HK$690,828,000. The net profit attributable to shareholders amounted to HK$10,646,000 (1999: HK$28,620,000).

The reduction in profits for the period was mainly due to the strategic increase in expenses for advertising programmes, shop renovation and human resources. Advertising expenditure incurred to promote and strengthen the image and popularity of the bossini brand during the period was HK$31,800,000, more than double that of the corresponding period last year.

To provide customers with a more comfortable and trendy shopping environment, the Group's strategy is to devote substantial resources to renovating its retail outlets in Hong Kong and Macau during the two financial years starting from 1999/2000. This renovation caused a sizeable increase of HK$10,647,000 in depreciation charges during the period compared with last year's corresponding period.

In addition, the Group has also focused on raising the morale and upgrading the service quality of its sales team by allocating resources to recruiting additional staff and improving their salary package. To further strengthen its human resources, the Group offered staff better and more diversified training programmes, targeted at enhancing customer service quality in line with the Group's quality pledge.

Although these expenditures have squeezed profits somewhat in the short term, the Group views them as strategically necessary long-term investments. In the long run, providing more value added services and raising service standards are vital to winning customer support and strengthening the Group's market position. The Group will benefit from these measures in future years.

Hong Kong

Despite the gradual recovery of the Hong Kong economy, local purchasing power was still weak during the period, with most people remaining cautious in their spending. Despite this difficult business environment, the Group still achieved a 12.7% increase in retail sales. Following the business direction stated in the 1999/2000 Annual Report, the Group increased the number of its outlets in Hong Kong and Macau from 36 at the end of March 2000 to 41 at the end of the period.

Taiwan

On 1 September 2000, the Group acquired the retail operations and business assets of its licensee in Taiwan for approximately HK$45,000,000. The transition presented no significant difficulty, with operations continuing to run smoothly following the take-over. As at 30 September 2000, the Group operated 45 retail outlets in Taiwan with a total floor area of approximately 64,000 square feet.

Other Markets

The business performance of the Group's two other major markets, Mainland China and Singapore, was quite stable. The Group invested more in advertising and promotion programmes during the period to expand its market. The results were satisfactory, with an increase of 29% and 41.4% in turnover in Mainland China and Singapore, respectively, compared to the corresponding period last year. As at 30 September 2000, the Group operated 63 outlets in Mainland China and 21 outlets in Singapore (1999: 69 and 16, respectively).

Outlook

The Group will continue proactively expanding its business in its major markets. The key focus will be on diversifying product lines, excelling in customer service and strengthening the value of its brand name. The Group is confident of achieving better results in the second half of the year.

Following the successful launch of the ladies' bodywear and handbag collection, the Group will continue to introduce new product lines. At the same time, the Group will maintain the high quality of its products in order to cater to market needs by offering superior value. Efforts to strengthen staff recruitment and training will continue to have a positive effect in further upgrading staff efficiency and the quality of customer service. At the same time, the Group will continue its promotion and advertising strategy to further accentuate the brand image of bossini.

The acquisition of the Taiwan business contributes to the geographical diversification of the Group. With numerous business opportunities and good potential for further development, Taiwan will be one of the Group's key markets. Indeed, it is expected to become the Group's second largest market by the financial year 2001/2002.

To keep pace with worldwide developments in information technology, the Group will continue to employ Internet technology to improve its operating efficiency and to allow convenient sharing of information and resources among staff and business associates.

Financial Position

The Group continued to maintain a prudent approach to managing its financial requirements. The Group relied on its internally generated cash flows and certain use of import and export-related banking facilities to finance its operations during the period.

As at 30 September 2000, the Group's total assets amounted to HK$594,639,000 (31 March 2000: HK$514,384,000) and its net cash balance was HK$42,178,000 (31 March 2000: HK$61,298,000). Even after the acquisition of the Taiwan operations and business assets, the Group recorded a current ratio of 1.53 (31 March 2000: 2.04).

DIRECTORS' INTERESTS IN SHARES

As at 30 September 2000, the interests of the Company's directors in the share capital of the Company as recorded in the register maintained by the Company pursuant to Section 29 of the Securities (Disclosure of Interests) Ordinance ("SDI Ordinance") were as follows:

Name of directorNature of interestNumber of shares
Mr. Shuk Hoi LAWPersonal80,688,000
Mr. Ka Sing LAWPersonal39,193,250
Mr. Kar Po LAWPersonal26,540,000

Save as disclosed above, none of the directors or their associates had any personal, family, corporate or other interests in the share capital of the Company or any of its associated corporations as defined in the SDI Ordinance.

At no time during the period was the Company or any of its subsidiaries a party to any arrangement to enable the Company's directors, their respective spouse or children under 18 years of age to acquire benefits by means of the acquisition of shares in the Company or any other body corporate.

SUBSTANTIAL SHAREHOLDERS

As at 30 September 2000, the following parties had registered an interest in the share capital of the Company that was required to be recorded in the register of interests kept by the Company pursuant to Section 16(1) of the SDI Ordinance.

NameNumber of shares
Mr. Shuk Hoi LAW80,688,000
Mr. Ka Sing LAW39,193,250

Save as disclosed above, no person had registered an interest in the share capital of the Company that was required to be recorded under Section 16(1) of the SDI Ordinance.

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

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

AUDIT COMMITTEE

The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal control and financial reporting matters including the review of the unaudited interim financials.

CODE OF BEST PRACTICE

None of the directors of the Company is aware of any information that would reasonably indicate that the Company is not, or was not for any part of the six months ended 30 September 2000, in compliance with the Code of Best Practice as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, except that the independent non-executive directors of the Company are not appointed for any specific terms, but are subject to retirement by rotation and re-election at annual general meeting in accordance with the Bye-laws of the Company.



By Order of the Board
Ka Sing LAW
Director

Hong Kong, 30 November 2000


Source: Bossini International Holdings Limited
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