INTERIM RESULTS
The Board of Directors (the "Directors") of Singamas Container Holdings Limited (the "Company") is pleased to announce the unaudited consolidated interim results of the Company and its subsidiaries (collectively referred to the "Group") for the six months ended 30th June, 2001 as follows:
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30th June, 2001
Six months ended
30th June,
2001 2000
(unaudited) (unaudited)
Notes US$'000 US$'000
Turnover 2 85,530 76,929
Other revenue 1,303 1,002
Changes in inventories of finished
goods and work in progress 10,306 1,784
Raw materials and consumables used (57,899) (51,942)
Staff costs (7,076) (6,356)
Depreciation and amortisation expenses (2,661) (2,512)
Other operating expenses (22,017) (13,707)
----------- -----------
Profit from operations 7,486 5,198
Finance costs (2,423) (2,077)
Investment income 201 273
Share of results of associates 638 301
----------- -----------
Profit before taxation 5,902 3,695
Taxation 3 (531) (493)
----------- -----------
Profit after taxation 5,371 3,202
Minority interests (1,783) (1,082)
----------- -----------
Net profit for the period 3,588 2,120
=========== ===========
Earnings per share 5 0.79 cent 0.46 cent
=========== ===========
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30th June, 2001
As at As at
30th June, 31st December,
2001 2000
(unaudited) (audited)
Notes US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 6 45,637 46,930
Patents 1,896 1,987
Interests in associates 17,305 10,318
Other assets 877 904
----------- -----------
65,715 60,139
----------- -----------
Current assets
Inventories 7 62,062 39,855
Accounts receivable 8 36,073 52,708
Prepayments and other receivables 9,293 8,898
Amount due from ultimate holding company 59 65
Amounts due from fellow subsidiaries 206 272
Amounts due from associates 424 1,514
Amount due from a related company 1,616 776
Tax recoverable 272 15
Pledged deposit 1,715 2,011
Bank balances and cash 21,168 16,544
----------- -----------
132,888 122,658
----------- -----------
Total assets 198,603 182,797
=========== ===========
EQUITY AND LIABILITIES
Capital and reserves
Share capital 5,854 5,854
Share premium 38,522 38,522
Accumulated profits 3,976 1,053
Other reserves 2,832 2,386
----------- -----------
51,184 47,815
Minority interests 28,733 28,271
----------- -----------
79,917 76,086
----------- -----------
Non-current liabilities
Bank borrowings 11,521 7,080
Obligations under finance leases and hire
purchase contracts 177 493
----------- -----------
11,698 7,573
----------- -----------
Current liabilities
Accounts payable 9 25,931 24,793
Accruals and other payables 15,349 15,848
Bills payable 14,883 7,163
Amount due to ultimate holding company 899 1,344
Amounts due to associates 749 27
Bank borrowings 47,896 48,472
Obligations under finance leases and hire
purchase contracts 691 863
Tax payable 590 628
----------- -----------
106,988 99,138
----------- -----------
Total equity and liabilities 198,603 182,797
=========== ===========
Notes:
1. Significant accounting policies
The condensed financial statements have been prepared under the historical cost convention.
The condensed financial statements have been prepared in accordance with Statement of Standard Accounting Practice ("SSAP") 25 "Interim Financial Reporting" issued by the Hong Kong Society of Accountants and with the disclosure requirements of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"). The accounting policies adopted are consistent with those followed in the Group's annual financial statements for the year ended 31st December, 2000, except as described below.
In the current period, the Group has adopted, for the first time, a number of new SSAPs issued by the Hong Kong Society of Accountants, which has resulted in the adoption of the following new accounting policies.
Segment reporting
SSAP 26 "Segment reporting", which has been adopted for the first time in this interim reporting period, has established principles for reporting the segmental analysis of financial information.
The adoption of this standard does not change the basis of identification of reportable segments in prior period.
Goodwill
In the current period, the Group has adopted SSAP 30 "Business combinations" and has elected not to restate goodwill (negative goodwill) previously eliminated against (credited to) reserves. Accordingly, goodwill arising on acquisitions of subsidiaries and associates prior to 1st January, 2001 continues to be held in reserves and will be charged to the income statement at the time of disposal of the relevant subsidiary or associate or at such time as the goodwill is determined to be impaired. Negative goodwill arising on acquisitions of subsidiaries and associates prior to 1st January, 2001 will be credited to income statement at the time of disposal of the relevant subsidiary or associate.
Goodwill arising on acquisitions after 1st January, 2001 is capitalised and amortised over its estimated useful life. Negative goodwill arising on acquisitions after 1st January, 2001 is presented as a deduction from assets and will be released to income statement based on an analysis of the circumstances from which the balance resulted.
Intangible assets
In the prior years, the Group has acquired technical know-how which is reported as patents and carried at cost less amortisation and impairment losses. The cost of intangible assets are amortised over their estimated useful lives on a straight-line basis.
Impairment of assets
SSAP 31 "Impairment of assets" has introduced a formal framework for the recognition of impairment losses in respect of the Group's assets.
Provisions
In accordance with SSAP 28 "Provisions, contingent liabilities and contingent assets", provisions are recognised when the Group has a present obligation as a result of a past event which it is probable will result in an outflow of economic benefits that can be reasonably estimated.
The adoption of the above new accounting policies has had no material effect on amounts reported in prior period/years.
2. Segment information
Contribution to
Turnover profit from operations
Six months ended Six months ended
30th June, 30th June, 30th June, 30th June,
2001 2000 2001 2000
US$'000 US$'000 US$'000 US$'000
Business segments
Container manufacturing 67,242 62,266 4,361 3,151
Container depot 12,316 9,601 2,177 1,261
Mid-stream 5,972 5,062 948 786
----------- ----------- ----------- -----------
85,530 76,929 7,486 5,198
=========== =========== =========== ===========
Contribution to
Turnover profit from operations
Six months ended Six months ended
30th June, 30th June, 30th June, 30th June,
2001 2000 2001 2000
US$'000 US$'000 US$'000 US$'000
Geographical segments
United States 34,396 20,866 3,158 1,086
Hong Kong 18,050 17,718 2,197 1,519
People's Republic of China
(other than Hong Kong
and Taiwan) 15,809 11,352 1,591 1,417
Europe 11,901 14,551 191 535
Others 5,374 12,442 349 641
----------- ----------- ----------- -----------
85,530 76,929 7,486 5,198
=========== =========== =========== ===========
3. Taxation
Hong Kong profits tax has been provided for at the rate of 16% (2000: 16%) on the estimated assessable profit for the period.
Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the jurisdictions in which the Group operates.
Six months ended
30th June, 30th June,
2001 2000
US$'000 US$'000
Company and subsidiaries:
Hong Kong profits tax 133 -
Overseas taxation 398 493
----------- -----------
531 493
=========== ===========
4. Interim Dividend
The directors do not recommend the payment of an interim dividend for the period ended 30th June, 2001 (2000: Nil).
5. Earnings per share
The calculation of earnings per share is based on net profit for the period of US$3,588,000 (2000: US$2,120,000) and 456,001,760 ordinary shares (2000: 456,001,760 ordinary shares) in issue throughout the period. Diluted earnings per share is not presented as the exercise price of the Company's outstanding share options was higher than average market price of shares for both periods.
6. Movements in property, plant and equipment
During the period, the Group spent US$2,534,000 (2000: US$2,394,000) to upgrade its manufacturing, container depot and mid-stream facilities.
7. Inventories
As at As at
30th June, 31st December,
2001 2000
US$'000 US$'000
Raw materials 31,707 19,806
Work in progress 2,596 2,063
Finished goods 27,759 17,986
----------- -----------
62,062 39,855
=========== ===========
As at 30th June, 2001, raw materials and finished goods totaling of US$389,000 (2000: US$250,000) were carried at net realisable value. The cost of inventories recognised as an expense during the period was US$69,121,000 (2000:US$65,437,000).
8. Accounts receivable
A defined credit policy is maintained within the Group. The general credit terms are agreed with each of its trade customers depending on the relationship with the Group and the creditworthiness of the customers.
The following is an aging analysis of accounts receivable:
As at As at
30th June, 31st December,
2001 2000
US$'000 US$'000
0 to 30 days 9,622 19,286
31 to 60 days 10,689 8,873
61 to 90 days 9,262 7,219
91 to 120 days 3,689 6,722
Over 120 days 2,811 10,608
----------- -----------
36,073 52,708
=========== ===========
9. Accounts payable
The following is an aging analysis of accounts payable:
As at As at
30th June, 31st December,
2001 2000
US$'000 US$'000
0 to 30 days 8,888 11,651
31 to 60 days 4,708 4,667
61 to 90 days 4,479 3,609
91 to 120 days 4,740 2,405
Over 120 days 3,116 2,461
----------- -----------
25,931 24,793
=========== ===========
BUSINESS REVIEW
During the period under review, the overall performance of the Group remains satisfactory. Consolidated turnover for the six months ended 30th June, 2001 was US$85,530,000, representing an increase of 11.2% over the corresponding period of last year. Consolidated profit after taxation and minority interests was US$3,588,000, improved by 69.2% over 2000. The positive results were mainly attributable to the good performance of the Group's container depot business. The mid-stream operation also recorded healthy improvement while the container manufacturing business remained stable.
Container Manufacturing Operations
Container manufacturing remained the Group's core business. For the first half of 2001, it recorded consolidated turnover of US$67,242,000, 8.0% more than the same period of last year, accounting for 78.6% of the Group's total turnover. Profit before taxation and minority interests was US$2,668,000, 57.6% higher than last year.
* During the period, the downturn of the U.S. economy depressed prices and slowed down new orders. Average selling prices for dry freight containers reduced by approximately 5% as compared with the same period last year. However, the cost of raw materials also dropped by approximately 5-6%, enabled the Group to maintain its overall profit margins.
* On 6th February, 2001, the Company entered into a joint venture agreement to acquire 40% equity interest in Shunde Shun An Da Pacific Container Co., Ltd. ("SSPC"), which mainly produces ISO dry freight containers and 45-foot/48-foot specialised containers.
* After four months' operation, SSPC began to contribute positively to the Group with monthly production capacity currently at around 11,000 twenty-foot equivalent units ("TEUs").
* The addition of SSPC enabled the Group to extend its manufacturing network to the Southern PRC to capture the market demand in that region.
* Shanghai Reeferco Container Co., Ltd. ("Shanghai Reeferco"), specialising in the production of environment friendly Chlorofluorocarbon free refrigerated containers ("reefers"), has reported growth in both turnover and profit.
* After upgrading production facilities and processes by entering into a technical collaboration agreement with Hyundai Mobis Company Limited in October 2000, the factory's efficiencies are greatly improved with daily production capacity increased from 12 units to 28 units. During the period under review, Shanghai Reeferco produced 5,502 TEUs.
Container Depot Operations
During the first half of 2001, the Group's container depot operations continued to perform well and achieved significant results. It recorded consolidated turnover of US$12,316,000 and a consolidated profit before taxation and minority interests of US$2,281,000, 28.3% and 86.3% more than last year.
* Shanghai, Qingdao, Ningbo and Xiamen were amongst the busiest ports in the PRC and they collectively achieved a growth rate of 19.9%. With a comprehensive container depot network along these coastal ports, the Group's PRC container depots benefited from this growth.
* The declining cargo throughput in Hong Kong increased the empty container storage business of the Group's container depots in Hong Kong.
* To extend its depot network coverage into other Asian countries, the Group entered into a shareholders' agreement on 12th February, 2001 with Pacific International Lines (Private) Ltd., Eastern Maritime (Thailand) Ltd. and a private investor to establish a new container depot, Singamas Falcon Logistics Co., Ltd. ("Singamas Falcon") in Bangkok, Thailand.
* The Group believes that trade activities in the area will grow over time with the economic recovery in Thailand and the increasing container throughput in the Asia Pacific region.
* The management expects Singamas Falcon will bring satisfactory contribution to the Group after its commencement of commercial operations in August.
Mid-stream Operation
During the period, the mid-stream operation achieved satisfactory results with a turnover of US$5,972,000 as compared to last year's US$5,062,000 and registered a profit before taxation of US$953,000, increased by 22.5% from 2000. It is expected that the Group's mid-stream operation will continue to perform well in the future.
PROSPECTS
In the view of falling business confidence in the region and the impact of a slowing US economy, the management will cautiously monitor the business environment and commit to maintain positive performance of the Group's business.
* The Group will focus on its existing business, implement prudent cost control strategies and continue to seek new business opportunities with joint co-operations or acquisitions of factories and depots at strategic locations.
* To enhance quality customer services, the Group has implemented the Company's website in May 2001. The website enables customers and associates to gain on-line access through Factory Online and Depot Online to track their orders and container movements at any time. The website has been installed in all the Group's factories, container depots and the mid-stream operation.
* To further improve its customer services, the Company intends to allow the placement of orders via the Internet to customers in the future.
AUDIT COMMITTEE
The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal controls and financial reporting matters including a review of the unaudited interim financial statements for the six months ended 30th June, 2001 ("Interim Report"). At the request of the Directors, the Group's external auditors have carried out a review of the Interim Report in accordance with Statement of Auditing Standards 700 "Engagements to review interim financial reports" issued by the Hong Kong Society of Accountants.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries have purchased, sold or redeemed any of the Company's listed securities during the period.
TRANSFERS TO RESERVES
Pursuant to the legal requirements in the PRC and the appropriation agreed in the subsidiaries and associates, aggregate amounts of US$250,000 and US$179,000 have been transferred to general reserve and development reserve of the Group, respectively during the period.
COMPLIANCE WITH THE 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 accounting period covered by this Interim Report, in compliance with the Code of Best Practice as set out in Appendix 14 of the Listing Rules.
DISCLOSURE OF INFORMATION ON THE STOCK EXCHANGE'S WEBSITE
Information that is required by paragraphs 46(1) to 46(6) of Appendix 16 of the Listing Rules will be released on The Stock Exchange of Hong Kong Limited's website on or about 20th September, 2001.
On Behalf of the Board
Chang Yun Chung
Chairman
Hong Kong, 6th September, 2001
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