Silver Grant International Industries Limited
(Incorporated in Hong Kong under the Companies Ordinance)




The board of directors ("Directors") of Silver Grant International Industries Limited (the "Company") are pleased to announce the unaudited consolidated results of the Company and its subsidiaries (together "the Group") for the six months ended 30th June 2000 (the "Period") together with comparative figures for the six months ended 30th June 1999 (the "Corresponding Period") are as follows:

Consolidated Income Statements

                                                     6 months    6 months
                                                   ended 30th  ended 30th
                                                    June 2000   June 1999
                                            Notes   unaudited   unaudited
                                                      HK$'000     HK$'000

Turnover                                      2        41,103      57,669
Direct operating expenses                              (8,723)     (7,725)
                                                   ----------  ----------
                                                       32,380      49,944
Other revenue                                 3         7,531      55,045
Administrative expenses                               (17,237)    (13,542)
Other operating expenses                      4        (2,008)          -
                                                   ----------  ----------
Profit from operations                                 20,666      91,447
Finance costs                                         (27,914)    (30,001)
Other income                                  5        62,404      66,454
Share of results of associates                          3,520     (25,643)
                                                   ----------  ----------
                                                       58,676     102,257
Taxation (charge) credit                      6          (723)        252
                                                   ----------  ----------
Net profit for the period                              57,953     102,509
                                                   ==========  ==========
Dividends                                                   -           -
                                                   ==========  ==========
Earnings per share - Basic                    7     4.9 cents  11.5 cents
                                                   ==========  ==========
Earnings per share - Diluted                  7           N/A   6.0 cents
                                                   ==========  ==========


  1. The unaudited consolidated interim results of the Group for the Period have been prepared in accordance with the accounting policies adopted in preparing the audited financial statements of the Group for the year ended 31st December 1999.

  2. Turnover for the Period represents the aggregate of rental income from leasing of properties, dividend income earned from investments in securities and the gross proceeds received and receivable from trading of securities.

  3. Other revenue in the Corresponding Period includes HK$35.4 million gain on disposal of investments.

  4. The amount represents unrealized loss on other investments.

  5. Other income for the Period includes, approximately, HK$56.7 million gain arising on the deemed disposal of the Group's interest in Silvernet Group Limited (formerly known as Righteous (Holdings) Limited) ("Silvernet") upon the issuance of new shares by Silvernet to strategic investors. Other income in the Corresponding Period represents profit on redemption and cancellation of convertible bonds.

  6. Taxation (charge) credit
                                                           2000     1999
                                                        HK$'000  HK$'000
    The (charge) credit comprises:
    Company and subsidiaries
    Hong Kong Profits Tax
    Charge for the Period                                     -        -
    Tax refund of a prior year                                -      209
                                                         ------   ------
                                                              -      209
                                                         ------   ------
    Share of taxation of associates
    Hong Kong Profits Tax                                     -       43
    Income tax in the People's Republic of
       China ("PRC") excluding Hong Kong                   (723)       -
                                                         ------   ------
                                                           (723)      43
                                                         ------   ------
                                                           (723)     252
                                                         ======   ======

    No provision for Hong Kong Profits Tax has been made, as the Group has no assessable profit for the Period. The tax credits for the Corresponding Period was a result of tax refund of a prior year.

    No deferred tax has been provided, as there is no significant timing difference arising during the Period or as at the period end date.

  7. Earnings per share

    The calculation of earnings per share is based on the net profit for the Period of HK$57,953,000 (1999: HK$102,509,000) and on the weighted average number of 1,188,505,741 (1999:892,343,500) ordinary shares in issue during the Period.

    No diluted earnings per share has been presented as the exercise of outstanding employee's shares options and outstanding warrants and the conversion of outstanding convertible bonds have no dilutive effect on the earnings per share for the Period.


The turnover of the Group for the Period was HK$41.1 million, representing a decrease of approximately 29% from that of the Corresponding Period. The decrease was mainly due to decreased volume in quoted securities trading activities. Net profits for the Period was HK$58.0 million, resulting in earnings per share of 4.9 cents. Net profits and earnings per share have decreased by approximately 43% and 57% respectively, comparing to that of the Corresponding Period.

The Group has revised the presentation of the consolidated income statements. As a result, corresponding comparative figures for the Corresponding Period have been restated to conform to the Period's presentation.


Property Investment

The south residential block of East Gate Plaza ("East Gate Plaza") has contributed the largest stable and recurring income to the Group for the Period. Total income from East Gate Plaza amounted to approximately HK$34.4 million or equivalent to 15% annualized return, before expenditure.

The Directors note that the "Property Restructuring Policy" of the PRC is close to finalization. The property sector will become one of the very important constituent and most encouraged investments of the PRC economy. Besides, the expected joining of China to the World Trade Organization ("WTO") by the end of year 2000 will further trigger demand for high quality residential properties and office premises. The Directors also note that both property rental and selling prices in the city of Beijing and Shanghai has improved and indicated a sustained rising trend. Therefore, the Directors are thinking of making further investment in the PRC property sector so as to enhance the recurring income to the Group.


During the Period, the Group has increased its investment in an associated company, China Infra-structure Investment Limited ("CIIL"), by 10% to 50%. The investment portfolio of CIIL remains the same for the Period. CIIL is currently holding investment in nine infrastructure projects including three bridges and six roads. All those projects are in operation except the Wuhan Bridge and the Zhaoqing Bridge, which are still under construction. The completion of the Wuhan Bridge and the Zhaoqing Bridge are scheduled to be in the third and fourth quarters of year 2000 respectively. The management of CIIL has concentrated its effort and resources in strengthening project control and internal control with particular emphasis on toll collection and cash flow management. The operating projects have started to contribute net cash inflow after serving debt and interest to CIIL.

The Directors believe that infrastructure development is fundamental to PRC's economic growth. This is particularly true after China joins the WTO, which will trigger more vigorous economic activities. Therefore the Directors has intention to further increase the Group's interest in CIIL. The Directors are also considering the possibility of a separate listing of CIIL by the end of year 2000 or in early 2001.

PRC Retailing

The efforts of the management of Beijing Wangfujing Retails Management Co., Ltd. ("Wangfujing") spent on streamlining merchandise and rationalizing cost structure has improved the performance of retailing business. The retail outlet in Wuhan had recorded net profit and Wangfujing's operations, as a whole, was able to record a net profit for the Period. Despite the foregoing, the improvement in the performance of Wangfujing's operations does not meet the Directors' expectation. Therefore, the Directors are currently evaluating the effect of China joining the WTO that may have on the Group's retailing business and the prospect of continuing the retailing business. The Directors will take appropriate adjustment policies accordingly once they arrive at a decision.

Industrial Investments

During the Period, the Group has shared approximately, HK $3.0 million profit from Jiangxi Copper Company Limited ("JCC"). JCC is a 10% indirect owned associate of the Company which shares are listed on the Stock Exchange of Hong Kong Limited ("SEHK") and London Stock Exchange. JCC has significant improvement in its profit comparing to a loss of approximately HK$4.0 million in the Corresponding Period. World copper prices have been increasing in first half year of 2000. If copper prices continue to rise, the Directors believe the Group's investment in JCC will have significant contribution to the Group's profit going forward.

As at 30th June 2000, the Group was still holding 49.0 million shares in Qingling Motors Co. Ltd. ("Qingling"), representing approximately 2.5% of Qinglng's registered capital. Qingling's shares are listed on the SEHK. The Group maintains its intention to hold the shares for long term.

High Technology Investment

On 9th March 2000, the Group acquired approximately 44% controlling interest in Silvernet, a company listed on the SEHK, at a cost of HK$110.0 million. Subsequent to that, Silvernet had placed new shares to E.M. Warburg Pincus & Co. LLC, and Merrill Lynch & Co. to raise approximately HK $220.0 million for the purposes of expanding the business of Silvernet. The Group's interest in Silvernet was diluted as a result of the placement and the Group is holding a controlling interest of approximately 35% in Silvernet as at 30th June 2000.

Silvernet has made several investments in the high-technology area. Those investments include a LCD and related products manufacturer, a PRC company engaged in data-base marketing through mail order and the internet, a PRC based travel portal focusing on business customers and a Korea based ASP. The latest investment of Silvernet is a PRC based manufacturer engaged in the manufacturing and sale of digital control system, industrial data acquisition system and other control systems which are used to form control system for power plants and large scale manufacturing plants. Silvernet is in the investment stage. Major shareholders of Silvernet are committed to source quality investments in the high technology area for the purpose of making Silvernet a high growth company.

The Directors are confident that by investing in Silvernet, the Group will enjoy high profit growth on top of the stable and recurring income in the future.

Raising of capital

During the Period, the Company had issued a total number of 392,321,200 new ordinary shares of which 53,200 shares were issued pursuant to warrant holders exercising their warrants. Gross proceeds, before expenditures, of HK$339.9 million in total was received. HK$110.0 million was invested in Silvernet and the rest was used as working capital of the Group.


The Directors decided not to recommend an interim dividend for the Period (1999: Nil).


The Directors are satisfied that the issue of the financial and operating system risk posted by the inability of computer systems, computer applications, software and hardware devices in accurately calculate date/time data prior to, through and beyond year 2000 has been properly solved and the year 2000 issue will post no material adverse problem to the Group. No disruption in operations was reported when transiting into the new millennium. No other problem was encountered during the Period and up to current date.

Total cost spent in relation to tackle the year 2000 issue amounted to less than HK$0.2 million. These cost were charged to the profit and loss account at the time of incurring the expenditure.


The financial assistance given to and guarantee given for the benefits of affiliated companies by the Group in aggregate exceed 25 per cent of the Group's net asset value of approximately HK$1,631 million as at 31st December 1999.

In accordance with the requirement under Practice Note 19 of the Listing Rules, details of all the financial assistance given to, guarantee given for the benefits of the affiliated companies of the Group as at 30th June 2000 are as follows:

   Affiliated    Percentage            Guarantees  Guaranteed  securities
   companies    of interest  Advances       given  loan drawn  given
                        (%)   (HK$'m)     (HK$'m)     (HK$'m)

1  International        50%    151.9*         330         330  60 million
   Copper Industry                                             shares of
   (China)                                                     the
   Investment                                                  Company**
   Limited ("ICI")

2  CIIL                 50%     619.3          93          54

Advances to affiliated companies were funded by internal resources and bank borrowings of the Group. The advances are unsecured, non-interest bearing and have no fixed repayment dates, except the one marked with "*", a portion of which in the sum of HK$58.2 million bears interest at prime rate.

**The shares are provided by Silver Grant International Holdings Limited, a substantial shareholder of the Company.

The proforma balance sheet of affiliated companies as at 30th June 2000 are summarized as follows:

                                                       ICI        CIIL
                                                   HK$'000     HK$'000 

Fixed assets                                             -         567
Investments                                        735,048   1,913,173
Other assets                                             -     102,000 
Current assets                                           -     230,764
Current liabilities                               (348,275)   (239,363) 
Non-current liabilities                           (238,271) (1,820,136) 
                                                ----------  ----------
Net assets                                         148,502     187,005 
                                                ==========  ==========
Net assets attributable
   to the Group                                     74,251      93,503
                                                ==========  ==========


During the Period, the Group repurchased and cancelled certain convertible bonds of an aggregate principal amount of US$2.5 million at a total consideration of approximately US$2.2 million.

Save as disclosed above, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the Period.

By order of the Board
GAO Jian Min
Managing Director

Hong Kong, 15th September 2000

Source: Silver Grant International Industries Limited
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