INTERIM RESULTS
The Directors are pleased to present the Group's interim report and condensed accounts for the six months ended 30th September 2000. The Group reported a profit attributable to shareholders of HK$15.6 million for the period under review. The consolidated results of the Group for the six months ended 30th September 2000, the consolidated balance sheet as at 30th September 2000, the condensed consolidated cash flow statement and the condensed statement of recognised gains and losses of the Group for the six months ended 30th September 2000, all of which are unaudited, along with the relevant explanatory notes, are set out below.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2000
Unaudited
Six Months ended
30th September
2000 1999
Note HK$'000 HK$'000
Turnover 2 593,174 550,213
Cost of sales (261,136) (220,980)
------- -------
Gross profit 332,038 329,233
Other income 16,515 19,565
Selling expenses (176,807) (186,666)
General and administrative expenses (77,034) (80,705)
Other operating expenses (72,457) (75,319)
Profit on repurchase of convertible notes 4,228 34,580
Foreign exchange gain on convertible notes 5,365 7,133
Net profit/(loss) on sales of land and buildings 17,799 (15,410)
Net unrealised (loss)/gain on marketable securities (11,541) 9,015
Operating profit 3 38,106 41,426
Finance costs (21,642) (20,405)
------- -------
Profit before taxation 16,464 21,021
Taxation 4 (780) (559)
------- -------
Profit after taxation 15,684 20,462
Minority interests - (83)
------- -------
Profit attributable to shareholders 15,684 20,379
======= =======
Earnings per share 6 cents cents
- basic 1.68 2.18
- diluted 1.66 2.17
======= =======
CONSOLIDATED BALANCE SHEET
AT 30TH SEPTEMBER 2000 AND 31ST MARCH 2000
Unaudited
30th September 31st March
2000 2000
Note HK$'000 HK$'000
Fixed assets 957,963 1,047,772
Investment securities 4,299 4,299
Trademarks and patents 28,459 29,606
Current assets
Stocks 379,770 361,912
Debtors and prepayments 7 351,675 328,073
Marketable securities 10,722 22,265
Cash and bank balances 63,007 45,082
--------- ---------
805,174 757,332
--------- ---------
Current liabilities
Bank overdrafts and short term loans
Secured 100,207 55,396
Unsecured 4,913 25,009
Creditors and accruals 8 331,676 322,118
Convertible notes 9 240,459 275,652
Current portion of other
long term liabilities 11 8,662 36,358
Taxation payable 10,952 14,024
--------- ---------
696,869 728,557
--------- ---------
Net current assets 108,305 28,775
--------- ---------
Employment of funds 1,099,026 1,110,452
--------- ---------
Financed by:
Share capital 10 93,634 93,634
Reserves 631,246 631,262
--------- ---------
Shareholders' funds 724,880 724,896
Minority interests 1,749 1,670
Deferred taxation 134 149
Loans from shareholders 3,892 3,892
Other long term liabilities 11 368,371 379,845
--------- ---------
Funds employed 1,099,026 1,110,452
========= =========
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2000
Unaudited
HK$'000
Net cash inflow from operating activities 21,257
Net cash outflow from returns on
investments and servicing of finance (19,528)
Net tax paid (2,132)
Net cash inflow from investing activities 72,054
Net cash outflow from financing (71,755)
----------
Decrease in cash and cash equivalents (104)
Cash and cash equivalents at 1st April (35,323)
Effect of foreign exchange rate changes (6,686)
----------
Cash and cash equivalents at 30th September (42,113)
==========
Analysis of balances of cash and cash equivalents:
Cash and bank balances 63,007
Bank overdrafts and short term loans
Secured (100,207)
Unsecured (4,913)
----------
(42,113)
==========
CONDENSED STATEMENT OF RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2000
Unaudited
Six Months ended
30th September
2000 1999
HK$'000 HK$'000
Exchange losses arising from translation
of overseas subsidiary
companies not recognised in the profit
and loss account (15,700) (6,815)
Profit attributable to shareholders 15,684 20,379
------- -------
Total recognised (losses)/gains (16) 13,564
======= =======
NOTES TO CONDENSED INTERIM ACCOUNTS
1. Principal accounting policies
These unaudited consolidated condensed interim accounts ("interim accounts") are prepared in accordance with Statement of Standard Accounting Practice ("SSAP") No. 25, "Interim Financial Reporting", issued by the Hong Kong Society of Accountants, (as applicable to condensed interim accounts), and Appendix 16 of the Listing Rules of The Stock Exchange of Hong Kong Limited. As a result of adoption of SSAP 2.101 "Presentation of financial statements", the presentation and classification of certain comparative figures have been adjusted or extended to conform with the current period's presentation.
The accounting policies adopted in the preparation of these interim accounts are consistent with those used in the annual accounts for the year ended 31st March 2000.
2. Turnover and profit before taxation
The analysis of the Group's turnover and profit before taxation by activities and geography are as follows:
Profit before
Turnover taxation
Unaudited Unaudited
Six months ended Six months ended
30th September 30th September
2000 1999 2000 1999
HK'000 HK'000 HK'000 HK'000
Analysis by activities:
Investment 906 24,729 (7,115) 52,702
Property 58,970 19,211 20,734 (15,544)
Retailing and trading 533,298 506,273 15,871 (3,749)
Group administration overheads - - (13,026) (12,388)
------- ------- ------- -------
593,174 550,213 16,464 21,021
======= ======= ======= =======
Profit before
Turnover taxation
Unaudited Unaudited
Six months ended Six months ended
30th September 30th September
2000 1999 2000 1999
HK'000 HK'000 HK'000 HK'000
Geographical analysis:
Hong Kong 385,461 300,478 17,619 9,278
South East and Far East Asia 117,820 107,574 (1,075) (224)
Europe 71,964 118,071 11,951 23,365
North America 10,262 17,719 (499) 646
Others 7,667 6,371 1,494 344
Group administration overheads - - (13,026) (12,388)
------- ------- ------- -------
593,174 550,213 16,464 21,021
======= ======= ======= =======
3. Operating profit
Unaudited
Six Months ended
30th September
2000 1999
HK$'000 HK$'000
Operating profit is stated after charging:
Depreciation
Owned fixed assets 23,319 22,452
Leased fixed assets 168 169
Amortisation of trademarks and patents 1,042 1,046
Loss on disposal of fixed assets 1,539 646
Provision for stock obsolescence
and stocks written off 3,354 4,100
Provision for doubtful debts
and bad debts written off 1,141 4,273
======= =======
and after crediting:
Gain on sales of marketable securities - 10,404
======= =======
4. Taxation
Hong Kong profits tax has been provided at the rate of 16% (1999: 16%) on the estimated assessable profit for the period less relief for available tax losses. Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.
The amount of taxation charged to the consolidated profit and loss account represents:
Unaudited
Six Months ended
30th September
2000 1999
HK$'000 HK$'000
Hong Kong profits tax (405) -
Overseas taxation (169) (367)
Under provision in prior periods (206) (192)
------- -------
(780) (559)
======= =======
5. Interim dividends
The Directors have resolved not to declare an interim dividend for this period (1999: nil).
6. Earnings per share
The calculation of basic earnings per share is based on the Group's profit attributable to shareholders of HK$15,684,000 (1999: HK$20,379,000) and on the weighted average number of 936,340,023 shares (1999: 936,340,023 shares) in issue during the period.
The calculation of diluted earnings per share is based on profit attributable to shareholders of HK$15,684,000 (1999: HK$20,379,000) and on the weighted average number of 936,340,023 shares (1999: 936,340,023 shares) in issue during the period plus the weighted average number of 5,857,627 shares (1999: 4,230,769 shares) deemed to have been issued at no consideration pursuant to the relevant outstanding options having been exercised.
7. Debtors and prepayments
The Group allows an average credit period of 60 days to its trade debtors. Included in debtors and prepayments are trade debtors (net of provision for doubtful debts) with the following aging analysis:
Unaudited
30th September 31st March
2000 2000
HK$'000 HK$'000
Trade debtors
1-60 days 24,426 20,565
Over 60 days 20,426 13,863
---------- ----------
44,852 34,428
Deposits, prepayments and other debtors 306,823 293,645
---------- ----------
351,675 328,073
========== ==========
8. Creditors and accruals
Included in creditors and accruals are trade creditors with the following aging analysis:
Unaudited
30th September 31st March
2000 2000
HK$'000 HK$'000
Trade creditors
1-60 days 92,092 58,349
Over 60 days 116,279 113,830
---------- ----------
208,371 172,179
Accrued expenses and other payables 123,305 149,939
---------- ----------
331,676 322,118
========== ==========
9. Convertible notes
During the period, Swiss Francs Convertible Notes (the "Notes") amounting to SFr 6.2 million were repurchased at an average discount of 12%. At the balance sheet date, forward contracts for purchase of SFr 40.47 million at an average exchange rate of HK$4.5818 to SFr 1 had been arranged. Therefore, the same amount of the Notes outstanding were converted at the average exchange rate while the unhedged balance of the Notes were converted at current rate of the closing date.
10. Share capital
There was no change in the Company's share capital during the half year ended 30th September 2000. During the period, no further share options were granted by the Company and no share options outstanding as at 31st March 2000 were exercised by the option holders.
11. Other long term liabilities
Unaudited
30th September 31st March
2000 2000
Note HK$'000 HK$'000
Bank loans, secured (a) 273,590 308,478
Obligations under finance leases (a) 1,037 5,319
Loan from a related company (b) 32,000 32,000
Retention money payable 70,406 70,406
---------- ----------
377,033 416,203
Amount payable within one year
included under current liabilities 8,662 36,358
---------- ----------
368,371 379,845
========== ==========
(a) The bank loans and obligations under finance leases are repayable as follows:
Bank loans, secured Obligations under
finance leases
Unaudited Unaudited
30th September 31st March 30th September 31st March
2000 2000 2000 2000
HK$'000 HK$'000 HK$'000 HK$'000
Within one year 8,018 32,317 644 4,041
In the second year 8,466 18,378 393 1,255
In the third to
fifth year 243,581 252,213 - 23
After the fifth year 13,525 5,570 - -
---------- ---------- ---------- ----------
273,590 308,478 1,037 5,319
========== ========== ========== ==========
(b) The loan is unsecured, carries interest at prime rate and is repayable after 30th September 2001.
12. Contingent liabilities
Group Company
Unaudited Unaudited
30th September 31st March 30th September 31st March
2000 2000 2000 2000
HK$'000 HK$'000 HK$'000 HK$'000
(a) Guarantees to secure banking
facilities for:
Subsidiary companies - - 902,341 674,841
Third parties - 1,190 - -
Other guarantees
Subsidiary companies - - 240,459 491,450
========== ========== ========== ==========
(b) Bills discounted 901 1,093 - -
========== ========== ========== ==========
(c) Liability not provided for
in respect of employees
who have completed the
required number of years
of service under the Employment
Ordinance to be eligible for long
service payments on termination
of their employment 8,669 8,150 - -
========== ========== ========== ==========
(d) The status of the Group's litigation, arbitrations and liability for latent defects in respect of the sale of Titus Square were fully disclosed in the Annual Report 2000 except that determinations of the arbitrations are anticipated in the later part of 2001.
13. Commitments
(a) Commitments in respect of expenditure on leasehold improvements
Unaudited
30th September 31st March
2000 2000
HK$'000 HK$'000
Contracted but not provided for 5,501 8,218
========== ==========
(b) Operating lease commitments payable in the next twelve months, analysed according to the period in which the leases expire, are as follows:
Land and buildings Plant and machinery
Unaudited Unaudited
30th September 31st March 30th September 31st March
2000 2000 2000 2000
HK$'000 HK$'000 HK$'000 HK$'000
Within one year 46,582 48,907 383 398
In the second to
fifth year 162,622 114,026 172 315
After the fifth year - 225 - -
-------- -------- -------- --------
209,204 163,158 555 713
======== ======== ======== ========
(c) The details of a subsidiary company's commitment to repurchase a property previously sold were fully disclosed in the Annual Report 2000 except that the relevant subsidiary company and the purchaser had agreed to extend the exercise date of the option for one year to 27th February 2002.
14. Related party transactions
Unaudited
Six Months ended
30th September
2000 1999
HK$'000 HK$'000
Purchases of goods from a related company 16,269 4,062
Rental income from related companies 975 975
Interest income from a related company 2,235 2,181
Interest expense paid to a related company 1,499 857
Management fee receivable from a related company - 980
======= =======
The terms of these related party transactions had not changed from those disclosed in the Annual Report 2000.
15. Subsequent events
After 30th September 2000, the Group's Notes in a total nominal sum of SFr 23,300,000 were repurchased at an average discount of 10% and were subsequently cancelled.
MANAGEMENT DISCUSSION AND ANALYSIS
REVIEW OF GROUP OPERATIONS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2000.
The Group reported a profit attributable to shareholders of HK$15.6 million compared to HK$20.4 million last year.
Retail and Trading Division
The results of the Group's Retail and Trading Division have largely improved. A profit of HK$15.9 million was recorded compared to a loss of HK$3.8 million over the same period last year. All our local retail chains recorded favourable growth both in terms of turnover and operating results. Turnover at City Chain, Optical 88 and Hipo.fant improved by 39%, 14% and 31% respectively.
City Chain Hong Kong and Macau reported a profit of HK$6.6 million this year, a substantial turnaround from the same period last year when losses of HK$12.9 million were reported. However, turnover and profits of our watch operations in South East Asia and Taiwan were undermined by political instability in Indonesia and Taiwan. Therefore, turnover for this region only improved by 7%. Watch operations in the PRC reported a healthy16% increase in turnover as a result of an improvement in sales at department stores and an increase in the number of adidas watch counters.
During the period under review, we continued to build upon City Chain's reputation further consolidating its market position in Hong Kong and regionally as a forefront fashion and trend setting watch chain. Shop renovations undertaken to create a fresh and sophisticated look and the introduction of new watch brands has helped us further to improve results. To meet the challenges of the e-commerce revolution and to complement our aspirations to become a formidable leader in the watch industry, City Chain launched its own cybermall, www.citychain.com in December this year. www.citychain.com provides latest news on watch trends and also offers on-line sales. Continuing to take advantage of relatively low rentals, more stores were opened at selected prime sites.
Optical 88 also reported improved profits compared to the same period last year. We continued to increase our market share by opening more shops. We will continue with our franchising strategy as this has proven to be successful.
Hipo.fant continued to report favourable growth and improvement during the period. Increase in turnover was due to several reasons; an increase in number of outlets and favourable response to our products. Breakeven figures were recorded compared to a loss for the same period last year.
The Group's total stores increased from 356 as at 31st March 2000 to 403 as at 30th November 2000.
Our export division and overseas subsidiaries recorded a 37% fall in turnover during the period dragging down profits. This was due partly to the strength of the US$ resulting in high unit export prices and partly to the life cycle of previous product ranges. We see turnover improving as new and more price competitive products are launched in the later half of the year.
Property Investment
During the period, two shop properties were disposed of at an aggregate sales proceeds of HK$107 million. The net profit was about HK$18 million. Stelux House continues to contribute stable income and leases due for renewal have been renewed at satisfactory rents.
Prospects
We are optimistic that the Group's core business - retail and trading will continue to post positive results for the second half of the year as we benefit from largely improved consumer sentiment in the region and reengineering efforts to the City Chain brand and image.
FINANCIAL RESOURCES
Financing and cash management activities of the Group are coordinated at head office for the best utilisation of the Group's financial resources.
The Group's bank borrowings at balance sheet date were HK$379 million (at 31st March 2000: HK$389 million), out of which, HK$113 million were repayable within 12 months. 39% (at 31st March 2000: 42%) of the Group's borrowings (including bank borrowings and the Notes) were denominated in Swiss Francs and the other borrowings were denominated in Hong Kong Dollars. The Notes carry a fixed interest rate of 1.75% per annum. All other borrowings are on a floating rate basis at either bank prime lending rates or short-term inter-bank offer rates. 60% (at 31st March 2000: 55%) of the Group's borrowings were of secured.
The Group's gearing ratio at 30th September 2000 was 0.85 (at 31st March 2000: 0.92), which was calculated based on the Group's borrowings of HK$619 million (at 31st March 2000: HK$665 million) and the shareholders' funds of HK$725 million (at 31st March 2000: HK$725 million.)
Additional banking facilities net of repayment upon refinancing during the period amounted to HK$123 million. The additional banking facilities were utilised for investment in new retail outlets and working capital. Net cash inflow from disposal of land and building and investment properties during the period amounted to HK$44 million.
After 30th September 2000, Notes amounting to SFr 23.3 million were repurchased at an average price of 90%. The Notes outstanding as of the reporting date (SFr 29.4 million) will be due for redemption on 31st March 2001, and the currency exposure has been fully hedged at an average exchange rate of HK$4.525 to SFr 1.
The Group does not engage in speculative derivative trading.
CAPITAL STRUCTURE OF THE GROUP
There was no change in the capital structure of the Group during the period.
SIGNIFICANT INVESTMENTS HELD
Stelux House is fully leased and contributes stable rental income to the Group.
CHANGES IN THE COMPOSITION OF THE ENTERPRISE DURING THE INTERIM PERIOD
There was no change in the composition of the Group during the interim period.
NUMBER AND REMUNERATION OF EMPLOYEES, REMUNERATION POLICIES, BONUS AND SHARE OPTION SCHEMES AND TRAINING SCHEMES
The Group's remuneration policies are reviewed on a regular basis and remuneration packages are in line with market practices in the relevant countries where the Group operates. As of 30th September 2000, the Group had 1814 employees. Details of the outstanding share options were disclosed in the Annual Report 2000.
DETAILS OF THE CHARGES ON GROUP ASSETS
At 30th September 2000, certain of the Group's land and buildings amounting to HK$231,088,000 (at 31st March 2000: HK$285,373,000) and investment properties amounting to HK$565,037,000 (at 31st March 2000: HK$604,000,000) were pledged to secure banking facilities granted to the Group.
PURCHASE, SALES OR REDEMPTION OF LISTED SECURITIES
During the period, there was no purchase, sale or redemption by the Company, or any of its subsidiary companies, of the Company's listed securities except that a wholly owned subsidiary company had repurchased Swiss Francs 6.2 million of the unlisted Swiss Francs Convertible Notes issued by the same subsidiary as follows:
Nominal amount
Issuer Description repurchased Consideration paid
------ ----------- -------------- ------------------
Stelux Holdings 1.75 percent Swiss Francs Swiss Francs
Limited Swiss Francs 6,200,000 5,434,000
125,000,000 (average of 88 per cent
Convertible of nominal value)
Notes due 2001
DIRECTORS' INTERESTS
As at 30th September 2000, the interests of the directors and their associates in the shares and options of the Company and its associated corporations as recorded in the register maintained under section 29 of the Securities (Disclosure of Interests) Ordinance ("SDI Ordinance") were as follows:-
(a) The Company - Ordinary shares
Number of shares
------------------------------------------------------------
Personal Family Corporate
interests interests interests Total
---------- ----------- ----------- -----------
Mr Wong Chue Meng 12,114,080 527,570,666(1) 609,471,959(1) 630,716,964*
Mr Wong Chong Po 3,600,000 - 518,439,741(2) 522,039,741
Mr Joseph C. C. Wong 5,077,211 10,000 - 5,087,211
Mr Sakorn Kanjanapas 391,056 - - 391,056
(b) The Company - Number of options to subscribe for ordinary shares of HK$0.1 each
Number of options
------------------------------------------------------------
Personal Family Corporate
interests interests interests Total
---------- --------- --------- ----------
Mr Joseph C. C. Wong 11,000,000 - - 11,000,000
Mr Chu Kai Wah, Anthony 3,000,000 - - 3,000,000
Mr Lee Shu Chung, Stan 3,000,000 - - 3,000,000
Mrs Sudarat Sagarino 3,000,000 - - 3,000,000
Mr Wong Yuk Woon 3,000,000 - - 3,000,000
(c) The Company - Swiss Francs Convertible Notes due 2001
Amount of notes
---------------------------------------------------------------
Personal Family Corporate
interests interests interests Total
------------- --------- --------- -------------
Mr Joseph C. C. Wong SFr 3,000,000 - - SFr 3,000,000
(d) Subsidiary companies
(i) City Chain (Thailand) Company Limited - Preference shares (3)
Mr Wong Chue Meng - - 208,800 208,800
Mr Wong Chong Po 200 - 208,800 209,000
Mr Joseph C. C. Wong 200 - 208,800 209,000
Mr Sakorn Kanjanapas 200 - 208,800 209,000
(ii) Stelux Watch (Thailand) Company Limited - Preference shares (4)
Mr Wong Chong Po 600 - - 600
Mr Joseph C. C. Wong 600 - - 600
Mr Sakorn Kanjanapas 600 - - 600
(iii) Optical 88 (Thailand) Company Limited - Preference shares (5)
Mr Wong Chue Meng - - 225,000 225,000
Mr Wong Chong Po 5,000 - 225,000 230,000
Mr Joseph C. C. Wong 5,000 - 225,000 230,000
Mr Sakorn Kanjanapas 5,000 - 225,000 230,000
* Total interests excluding duplication as explained in the respective notes.
Number of shares
---------------------------------------------------------------
Personal Family Corporate
interests interests interests Total
------------- --------- --------- -------
By virtue of the SDI Ordinance and his interests in the ultimate holding company, Yee Hing Company Limited, Thong Sia Company Limited, Active Lights Company Limited and Yee Hing International Limited, Mr Wong Chue Meng is deemed to have family and corporate interests in the shares of the Company and its associated corporations at 30th September 2000 as follows:
(1) This includes the duplication of corporate interests of 518,439,741 shares through Yee Hing Company Limited, Active Lights Company Limited and Yee Hing International Limited in which Mr Wong Chue Meng is deemed to have both family and corporate interests.
By virtue of the SDI Ordinance, Mr Wong Chong Po is deemed to have corporate interests in the shares of the Company and its associated corporations at 30th September 2000 as follows:
(2) Mr Wong Chong Po has beneficial interests in Yee Hing Company Limited which has corporate interests in the Company.
By virtue of the SDI Ordinance and their family and corporate interests in the Company stated above, Mr Wong Chue Meng, Mr Wong Chong Po, Mr Joseph C.C. Wong and Mr Sakorn Kanjanapas are deemed to have corporate interests in City Chain (Thailand) Company Limited at 30th September 2000 as follows:
(3) City Chain (Thailand) Company Limited is deemed to be a wholly owned subsidiary company of the Company as all its ordinary shares carrying voting rights are held by a wholly owned subsidiary of the Company. The interests of these directors in the ordinary shares of City Chain (Thailand) Company Limited are therefore equivalent to their respective personal, family and corporate interests in the Company. The preference shares held by certain directors represent preference shares issued by City Chain (Thailand) Company Limited which do not carry any voting rights and which are not entitled to any profit sharing but are only entitled to annual fixed dividends.
By virtue of the SDI Ordinance and their family and corporate interests in the Company stated above, Mr Wong Chong Po, Mr Joseph C.C. Wong and Mr Sakorn Kanjanapas are deemed to have corporate interests in Stelux Watch (Thailand) Company Limited at 30th September 2000 as follows:
(4) Stelux Watch (Thailand) Company Limited is deemed to be a wholly owned subsidiary company of the Company as all its ordinary shares carrying voting rights are held by a wholly owned subsidiary of the Company. The interests of these directors in the ordinary shares of Stelux Watch (Thailand) Company Limited are therefore equivalent to their respective personal, family and corporate interests in the Company. The preference shares held by certain directors represent preference shares issued by Stelux Watch (Thailand) Company Limited which do not carry any voting rights and which are not entitled to any profit sharing but are only entitled to annual fixed dividends.
By virtue of the SDI Ordinance and their family and corporate interests in the Company stated above, Mr Wong Chue Meng, Mr Wong Chong Po, Mr Joseph C.C. Wong and Mr Sakorn Kanjanapas are deemed to have corporate interests in Optical 88 (Thailand) Company Limited at 30th September 2000 as follows:
(5) Optical 88 (Thailand) Company Limited is deemed to be a wholly owned subsidiary company of the Company as all its ordinary shares carrying voting rights are held by a wholly owned subsidiary of the Company. The interests of these directors in the ordinary shares of Optical 88 (Thailand) Company Limited are therefore equivalent to their respective personal, family and corporate interests in the Company. The preference shares held by certain directors represent preference shares issued by Optical 88 (Thailand) Company Limited which do not carry any voting rights and which are not entitled to any profit sharing but are only entitled to annual fixed dividends.
Save as disclosed above, none of the directors of the Company was interested in the shares, options and convertible notes of the Company or any of the Company's associated corporations as at 30th September 2000.
SUBSTANTIAL SHAREHOLDERS
Save as disclosed in Directors' Interests above, so far as the Directors are aware, there are no other parties which were, directly or indirectly, interested in 10 per cent or more of the nominal value of the share capital of the Company as at 30th September 2000 as recorded in the register required to be kept by the Company under section 16(1) of the SDI Ordinance.
CODE OF BEST PRACTICE
In the opinion of the Directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited throughout the period except that the independent non-executive directors of the Company are not appointed for a specific term.
AUDIT COMMITTEE
The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed the internal controls and financial reporting matters related to the preparation of the unaudited condensed financial statements for the six months ended 30th September 2000.
On behalf of the Board
Joseph C. C. Wong
Managing Director
HONG KONG, 21st December 2000
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