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PROSTEN TECHNOLOGY HOLDINGS LIMITED
(Incorporated in the Cayman Islands with limited liability)

RESULTS ANNOUNCEMENT
For the year ended 31 March 2000

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "EXCHANGE")

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks rising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Exchange. Listed companies are not generally required to issue paid announcement in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement, for which the directors of Prosten Technology Holdings Limited collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to Prosten Technology Holdings Limited. The directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: * (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

Summary

Prosten Technology Holdings Limited ("The Company"), which was listed on the Growth Enterprise Market ("GEM") of the Stock Exchange of Hong Kong Limited (the "Exchange") on 28 March, 2000, is a broadband data networks and Internet backbone solutions provider. Its principal business includes the design and configuration of broadband data networks and Internet backbone in the PRC using the latest technologies such as ATM/FR and IP. The Group has a focused customer base for its broadband data networks services, which includes provincial data communications carriers. Its Internet backbone solutions are provided to a broad range of industries including telecommunications, research institutes, transport and public utilities.

The audited pro forma combined profit attributable to shareholders for the year ended 31 March 2000 was HK$32,236,000, which exceeded the forecast as set out in the prospectus of the Company of 21 March 2000 by 7.4%. Pro forma combined earnings per share for the year ended 31 March 2000 was HK7.6 cents. The directors do not recommend the payment of a final dividend in respect of the period from 22 November 1999 (date of incorporation of the Company) to 31 March 2000.

Results

The Board of Directors (the "Board") of Prosten Technology Holdings Limited is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively referred to as the "Group") for the period from 22 November 1999 (date of incorporation of the Company) to 31 March 2000 together with the comparative audited pro forma combined results for the two years ended 31 March 2000:

AUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT

                                   Consolidated                  Pro forma
                                        For the                   combined
                                    period from                   (Note 1)
                                    22 November      For the       For the
                                        1999 to   year ended    year ended
                                       31 March     31 March      31 March
                                           2000         2000          1999
                            Notes       HK$'000      HK$'000       HK$'000

TURNOVER                      2          13,981      206,766       161,133
Cost of sales                            (7,983)    (141,296)     (118,729)
                                   ------------  -----------   -----------
Gross profit                              5,998       65,470        42,404

Other revenue                               471        1,210           529
Distribution costs                         (244)      (2,923)       (3,112)
Administrative expenses                  (2,334)     (28,597)      (21,504)
                                   ------------  -----------   -----------
PROFIT FROM OPERATING
  ACTIVITIES                              3,891       35,160        18,317
Finance costs                 3             (61)        (745)         (821)
                                   ------------  -----------   -----------
PROFIT BEFORE TAX                         3,830       34,415        17,496
Tax                           4            (410)      (2,179)       (2,492)
                                   ------------  -----------   -----------
NET PROFIT FROM ORDINARY
  ACTIVITIES ATTRIBUTABLE
  TO SHAREHOLDERS                         3,420       32,236        15,004
Dividends                     5               -      (20,000)      (13,000)
                                   ------------  -----------   -----------
RETAINED PROFIT FOR
  THE PERIOD                              3,420       12,236         2,004
                                   ============  ===========   ===========
EARNINGS PER SHARE            6
  Basic                             HK1.3 cents  HK7.6 cents   HK3.5 cents
                                   ============  ===========   ===========

Notes:

1. GROUP REORGANISATION AND BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The Company was incorporated in the Cayman Islands on 22 November 1999 as an exempted company with limited liability under the Companies Law (1998 Revision) of the Cayman Islands. Pursuant to a reorganisation scheme to rationalise the structure of the Group in preparation for the public listing of its shares in March 2000 (the "Reorganisation"), the Company became the holding company of the companies now comprising the Group on 7 March 2000. The shares of the Company were listed on GEM on 28 March 2000.

The Group's financial statements are presented using the following bases:

i. The consolidated profit and loss account includes the results of the Company for the period from 22 November 1999 (date of incorporation of the Company) to 31 March 2000 and the post-acquisition results of its subsidiaries for the period from 7 March 2000 (date of completion of the Reorganisation) to 31 March 2000 in accordance with the new Hong Kong Statement of Standard Accounting Practice ("HKSSAP") 27 "Accounting for group reconstructions".

ii. For information purposes, the pro forma combined profit and loss accounts for the two years ended 31 March 2000 include the results of the Company and its subsidiaries with effect from 1 April 1998 or since their respective dates of incorporation/establishment, where this is a shorter period, on a combined basis as if the current Group structure had been in existence throughout the two years ended 31 March 2000.

Although the reorganised Group structure did not legally exist until 7 March 2000, the directors consider that it is appropriate to present pro forma combined profit and loss accounts on the bases as set out in note (ii) above since the principal activities of the Group have been carried out by those subsidiaries prior to and after the completion of the Reorganisation.

The financial statements have been prepared in accordance with generally accepted accounting principles in Hong Kong and comply with accounting standards issued by the Hong Kong Society of Accountants.

2. Turnover and Revenue

Turnover represents the net invoiced value of goods sold, after allowance for returns and trade discounts and business tax where applicable, and services rendered. All significant intra-Group transactions have been eliminated on consolidation.

An analysis of turnover and revenue is as follows:

                                                Group
                                   Consolidated  Pro forma combined
                                        For the    (Note 1)
                                    period from
                                    22 November      For the       For the
                                        1999 to   year ended    year ended
                                       31 March     31 March      31 March
                                           2000         2000          1999
                                        HK$'000      HK$'000       HK$'000

Sale of goods and
  services rendered                      13,981      206,766       161,133
                                   ------------  -----------   -----------
Turnover                                 13,981      206,766       161,133
Interest income                             471        1,130           417
                                   ------------  -----------   -----------
Revenue                                  14,452      207,896       161,550
                                   ============  ===========   ===========

3. Finance costs

                                                Group
                                   Consolidated  Pro forma combined
                                        For the    (Note 1)
                                    period from
                                    22 November      For the       For the
                                        1999 to   year ended    year ended
                                       31 March     31 March      31 March
                                           2000         2000          1999
                                        HK$'000      HK$'000       HK$'000

Interest on bank loan wholly
  repayable within five years                61          716           785
Interest on finance leases                    -           29            36
                                   ------------  -----------   -----------

                                             61          745           821
                                   ============  ===========   ===========

4. Tax

                                                Group
                                   Consolidated  Pro forma combined
                                        For the    (Note 1)
                                    period from
                                    22 November      For the       For the
                                        1999 to   year ended    year ended
                                       31 March     31 March      31 March
                                           2000         2000          1999
                                        HK$'000      HK$'000       HK$'000
Group:
  Hong Kong                                   -          984         1,447
  Elsewhere                                  55          870           797
                                   ------------  -----------   -----------
                                             55        1,824         2,244
Underprovision in
  prior years                                 -            -           248
Deferred Tax                                355          355             -
                                   ------------  -----------   -----------
Tax charge for the
  period/year                               410        2,179         2,492
                                   ============  ===========   ===========

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. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

5. Dividends

No dividend has been paid or declared by the Company since the date of its incorporation.

                                                Group
                                   Consolidated  Pro forma combined
                                        For the    (Note 1)
                                    period from
                                    22 November      For the       For the
                                        1999 to   year ended    year ended
                                       31 March     31 March      31 March
                                           2000         2000          1999
                                        HK$'000      HK$'000       HK$'000

Dividends paid by the
  Company's subsidiaries
  to their then
  shareholders prior to
  the listing of
  the Company                                 -       20,000        13,000
                                   ------------  -----------   -----------
                                              -       20,000        13,000
                                   ============  ===========   ===========

The directors do not recommend the payment of a final dividend in respect of the period.

6. Earnings per share

The calculation of basic earnings per share for the period from 22 November 1999 (date of incorporation) to 31 March 2000, together with the pro forma combined figure for the year ended 31 March 2000, is based on the following data:

                                                Consolidated     Pro forma
                                                     For the      combined
                                                 period from      (Note 1)
                                                 22 November       For the
                                                     1999 to    year ended
                                                    31 March      31 March
                                                        2000          2000
                                                     HK$'000       HK$'000

Earnings
--------
Net profits attributable
  to Shareholders,
  used in the basic
  earnings per share
  calculations                                         3,420        32,236
                                                 ===========   ===========
Shares
--------
  Weighted average number
  of shares in issue for
  the purpose of basic
  earnings per share
  calculation                                    258,320,549   426,885,246
                                                 ===========   ===========

The weighted average number of shares used to calculate both the consolidated earnings per share for the period from 22 November 1999 to 31 March 2000 and the pro forma earnings per share for the year ended 31 March 2000 include the pro forma issued share capital of the Company, comprising 1,000,000 shares issued on incorporation of the Company, 1,000,000 shares issued as part of the consideration for the acquisition of the entire issued share capital of Prosten (BVI), the capitalisation issue of 423,000,000 shares as further described in note 21 and the 86,250,000 shares issued during the public listing.

The calculation of the pro forma earnings per share for the year ended 31 March 1999 is based on the pro forma combined profit attributable to shareholders of the Company of HK$15,004,000 and on the pro forma weighted average number of shares in issue of 425,000,000 during the year.

Diluted earnings per share for the period and year ended 31 March 2000 and year ended 31 March 1999 have not been calculated because no diluting events existed during these years.

AUDIT COMMITTEE

The Company set up an Audit Committee (the "Committee") on 7 March 2000 with written terms of reference for the purpose of reviewing and providing supervision on the financial reporting process and internal control of the Group. The Committee comprises two independent non-executive directors.

PURCHASE, SALE OR REDEMPTION OF SHARES

Other than in connection with the Company's initial public offering by way of placement, neither the Company, nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities during the period.

CLOSURE OF THE REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Monday, 24 July 2000 to Friday, 28 July 2000, both days inclusive, during which period no transfer of shares can be registered. In order to qualify for attending 2000 Annual General Meeting of the Company, all transfers accompanied by the relevant share certificates must be lodged with the Company's Branch Share Registrar in Hong Kong, Tengis Limited at 4th Floor Hutchison House, 10 Harcourt Road, Central, Hong Kong not later than 4:00 p.m. on Friday, 21 July 2000.

YEAR 2000 COMPLIANCE

The Board advises that all accounting and financial applications in the Group are fully Year 2000 compliant. Up to the date of this report, the Year 2000 issue has not created any material adverse impact on the business operations in any functional areas.

REVIEW OF OPERATIONS

During the period under review, the Group has achieved significant growth in its revenues and net profit. This is mainly attributable to favourable developments in the PRC telecommunication market and the Group's strategy to focus on higher value-added broadband network businesses.

Owing to increased demand for e-commerce and internet services, a number of local telecommunication authorities in the PRC implemented programs to expand their network capacity, in particular on the broadband side. As a result, the Group's broadband data network and internet backbone business registered a 24% growth in sales.

In addition, the Group found that customers were more willing to invest in e-commerce applications and pay consultants for internet solutions than before. The directors believe that this is partly due to the rapid increase in the number of Internet service provider and Internet content provider in PRC. Also there were more enterprises realized the importance of a successful e-commerce strategy to their future business prospects. The Group was able to capitalize on these opportunities as it started to re-position itself and develop its Internet Management System ("IMS") (including user management, user authentication, billing and settlement, statistics and network management) three years ago. Therefore its revenues derived from application software and e-commerce/IT consultancy services recorded increases by 33% and thirteen times, respectively in the financial year under review.

The Company obtained net proceeds of approximately HK$363 million from the new issue of shares by way of placing. As the proceeds was received just before the balance sheet date, no proceeds was applied for the intended uses during the period and all the above net proceeds were placed on short term deposits with financial institutions in Hong Kong at the balance sheet date. However, approximately HK$7 million was set aside for the acquisition of hardware and software for setting up a broadband ISP in Hong Kong.

BUSINESS OBJECTIVES AND FUTURE PLANS ACTUAL RESULTS AND PROSPECTS

Broadband data networks and Internet backbone solutions
1.Final testing of the application launching stage of Phase II of the Yunan ATM/FR broadband network project.Final testing completed
2.Final testing of the Hainan government's online project of combining the "163" and "169" Internet networks.Final testing completed
3.Bid for tender for development of e-commerce site under the "179" project from a provincial PTA under MII.Tender submitted and results to be known soon
Applications software development
1.Prepare for the completion of the development of network monitoring system which is an extended function of the IMSPreparation work completed
2.Prepare for the completion and delivery of the IMS tailored for Hainan province.IMS delivered satisfactorily
3.Finalise the trial run of the Internet Classified SystemTrial run finalised
e-commerce solutions and related IT consultancy services
1.Finalise feasibility study on the integration of the IMS for the future "179" project.Study finalised and results satisfactorily
Broadband ISP
1.Commence order and purchase hardware for the proposed broadband ISP to be set up in Hong Kong.Order placed/hardware installed
Sales and marketing
1.Identify premises for establishment of representative office in Kunming,Yunnan province for development of the south-western and southern market (including Sichuan) of China.Representative office premises have been leased
2.Identify appropriate office premises in Hong Kong to be leased for installation of equipment in connection with the Group's launching of broadband ISP services, which premises will also be used as the Group's functional headquarters in Hong Kong.Hong Kong office has been leased and installation completed
3.Identify additional premises or renovate existing premises in Beijing to accommodate additional sales and marketing staff to be employed.Just signed agreement to lease
Resources employment and administration
1.Recruit additional technical staff for developing applications software in Guangzhou.Already recruited
2.Recruit additional staff to carry out marketing and quality control functions.Already recruited
3.Install demonstration laboratory in Guangzhou office to illustrate to customers the operation of e-commerce related software on the IBM platforms.Demonstration laboratory already installed
4.Strengthen the administration and finance functions in Hong Kong by recruiting additional experienced accounting staff.CFO and more accounting staff already on board

PROSPECTS

Apart from the rapid growth in the number of Internet users in the PRC, China's accession to the WTO is expected to speed up enterprises' e-commerce activities. Also, the restructuring of the China Telecommunication group last year, resulting in the establishment of several new telecommunication entities in the PRC, are expected to create additional telecommunication network demand. All these macro developments are favourable to the Group's business environment.

The Group has already been a leading broadband data network solutions provider in the PRC and will continue to expand to capture more market share. It believes that e-commerce application softwares and IT consulting services will be fast growing business sectors in the industry and it will commit more resources in an attempt to capitalize on the growth.

Since the Group's listing in March 2000, it has already recruited more than 30 staff with most of them in the marketing and technical departments, on top of existing 120 members. In addition, more offices including Nanjing and Wuhan have been set up in the PRC to expand its sales network. In order to strengthen its technical expertise, the Group has been negotiating with several internationally reputable technology providers and intends to team up with them to develop business in the PRC.

Baring unforeseen circumstances, the Group expects to achieve better revenues in the coming financial year than that of last year.

APPRECIATION

On behalf of the Board, I would like to express our sincere thanks to all our shareholders for their going support of the Group and to my colleagues for their invaluable contributions throughout the year.


Yip Seng Mun
Chairman

Hong Kong, 29 June 2000


Source: Prosten Technology Holdings Limited
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