Interim Results
for the six month period ended 30 June 1998
Group Results
The board of directors of Quality HealthCare Asia Limited (the "Company") hereby announces the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six month period ended 30 June 1998 with comparative figures for the previous corresponding period as follows:
Notes:
(1) Taxation
Hong Kong profits tax has been provided at the rate of 16% on the estimated assessable profits arising in Hong Kong during the period.
An over provision for Hong Kong profits tax of HK$39,000 was written back in 1997.
(2) Earnings/(loss) per share
The calculation of basic earnings per share is based on the profit attributable to shareholders of HK$16,111,000 (1997: Loss of HK$14,967,000) and on the weighted average of 560,826,768 ordinary shares (1997: Restated weighted average of 241,216,902 ordinary shares, as adjusted for the bonus element of the rights issue completed on 22 October 1997) in issue during the period.
The diluted earnings per share is based on the adjusted profit attributable to shareholders of HK$17,156,000 calculated on the assumption that the convertible notes of the Company (which would have a diluting effect on the earnings per share) had been converted on the date of issue. The diluted earnings per share is based on 655,824,988 shares which is the weighted average of shares in issue during the period plus the aggregate of (i) the weighted average of 6,288,186 shares deemed to be issued at no consideration if all outstanding share options have been exercised and (ii) the weighted average of 88,710,034 shares to be issued on conversion of all convertible notes. The exercise of the outstanding warrants of the Company would not have a diluting effect.
(3) Transfers between reserves
During the six month period ended 30 June 1998, the following movements in reserves were recorded:
i) Share premium account balance of HK$267,481,000 was transferred to the contributed surplus account pursuant to a special resolution passed on 1 May 1998;
ii) Contributed surplus of HK$32,434,000 was transferred to retained profits to eliminate the accumulated losses position at 31 December 1997; and
iii) Goodwill on consolidation of HK$287,648,000 was written off against goodwill reserve account;
Interim Dividend
The directors do not recommend the payment of an interim dividend for the six month period ended 30 June 1998 (1997: Nil).
Directors' Interest in Securities
As at 30 June 1998, the interests of the directors and their associates in the share capital of the Company and its associated corporations as recorded in the register required to be kept under Section 29 of the Securities (Disclosure of Interests) Ordinance (the "SDI Ordinance") were as set out below.
Cherish Enterprises Limited ("Cherish"), a company incorporated in the British Virgin Islands, is the registered shareholder of 267,896,615 shares and 31,366,440 warrants in the Company. Cherish, in turn, is 50% owned by Montel Limited ("Montel") which is also a company incorporated in the British Virgin Islands. Montel is the trustee of a trust of which the family of Brain O'Connor, a director of the Company, is a beneficiary. The other shareholders of Cherish are not directors of the Company or any of its subsidiaries.
Save as disclosed herein, none of the directors or their associates had any beneficial interests in the equity or debt securities of the Company or any of its associated corporations as defined in the SDI Ordinance.
Directors' Rights to Acquire Securities
Save as set out above, no rights have been granted to, or exercised by, any director of the Company or his spouse and children under 18 years of age, to subscribe for shares in or debentures of the Company during the period.
Substantial Shareholders
As at 30 June 1998, according to the register kept by the Company under Section 16(1) of the SDI Ordinance, no shareholder, other than Cherish Enterprises Limited whose interests are set out above under "Directors' Interests in Securities", had reported holding an interest in 10% or more of the issued share capital of the Company.
Purchase, Sale or Redemption of Shares or Warrants
There have been no purchases, sales or redemptions of the Company's shares or warrants by the Company or any of its subsidiaries during the period under review.
The Year 2000 issue has arisen because many computer systems and electronic devices which store date information based on a two-year sequence are unable to accurately process dates for the Year 2000 and beyond. Non-compliance of the Year 2000 issue by the Group, its suppliers, its customers and other business associates may cause disruption to the business operations of the Group.
The Group has carried out a risk analysis and assessment on the Year 2000 issue and the rectification programme is being carried out in four stages as follows: (a) scope analysis phase (b) compliance testing phase (c) rectification and testing phase
(d) implementation phase. The Group has completed the first phase and the second phase will be completed in November 1998. The target date for the completion of all four phases is in mid-1999.
The costs of the Year 2000 project have not been separately identified since upgraded computer hardware is Year 2000 compliant and the enhancements of the application systems already incorporate Year 2000 modifications. As at June 30, 1998, no material commitments had been contracted but not provided for in the financial statements for the six months ended June 30, 1998 and no material commitments have been authorised by the directors but not yet contracted for.
Compliance with the Code of Best Practice
The Group has complied with the Code of Best Practice set out in Appendix 14 of the Listing Rules of The Stock Exchange of Hong Kong Limited, which specifies the best practice to be followed by directors and non-executive directors for the six month period ended 30 June 1998.
On behalf of the Board
Hong Kong, 17 September 1998
Brian O'Connor, Chairman
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