The Board of Directors (the "Directors") of Yau Lee Holdings Limited (the "Company") is pleased to announce that the unaudited results of the Company and its subsidiaries (the "Group") for the six months ended 30th September, 2001:-
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
FOR THE SIX MONTHS ENDED 30TH SEPTEMBER, 2001
Unaudited
Six months ended
30th September,
2001 2000
Note HK$'000 HK$'000
Turnover 2 405,333 927,154
Cost of sales (348,713) (844,770)
---------- ----------
Gross profit 56,620 82,384
General and administrative expenses (49,918) (52,142)
Other revenue, net 4,991 5,197
---------- ----------
Profit from operations 11,693 35,439
Finance costs (1,619) (4,088)
---------- ----------
Profit before share of profit of
associated companies and taxation 10,074 31,351
Share of profit of associated
companies, net 940 388
---------- ----------
Profit before taxation 3 11,014 31,739
Taxation 4
Company and subsidiaries (3,580) (5,439)
Associate companies (319) (517)
---------- ----------
Profit after taxation 7,115 25,783
Minority interest (971) (162)
---------- ----------
Profit attributable to shareholders 6,144 25,621
Dividends - (7,084)
---------- ----------
Profit retained for the period 6,144 18,537
========== ==========
Earnings per share 5 1.39 cents 5.79 cents
========== ==========
| The profit attributable to shareholders represents the recognised gains of the Group for the six months ended 30th September, 2001. |
CONSOLIDATED BALANCE SHEET
AS AT 30TH SEPTEMBER, 2001
Unaudited Audited
30th September, 31st March,
2001 2001
HK$'000 HK$'000
Non-current assets
Property, plant and equipment 174,765 180,613
Properties under development 6 312,897 -
Development costs 4,370 3,751
Patents 2,518 1,238
Long-term trade debtors 13,203 26,850
Loans to employees 4,580 4,556
Interest in associates 52,858 41,499
Other investments 9,889 2,431
-------- --------
575,080 260,938
-------- --------
Current assets
Inventories 12,846 9,887
Gross amount due from customers
for contract work 211,877 184,801
Trade debtors, net 7 125,543 220,227
Prepaid tax 1,280 452
Prepayments, deposits and
other receivables 18,894 26,992
Short term investments 210 4,694
Time deposits, cash and bank
balances 176,593 265,418
-------- --------
Total current assets 547,243 712,471
-------- --------
Current liabilities
Payables to suppliers and
subcontractors 8 57,133 143,067
Dividend payable - 6,173
Provision for taxation 11,734 10,252
Gross amount due to customers
for contract work 59,044 84,749
Current portion of hire purchase
obligations 5,881 6,919
Accruals, retention payable and
other liabilities 118,518 95,426
Bank loan 53,500 -
Bank overdraft 45,527 -
-------- --------
Total current liabilities 351,337 346,586
-------- --------
Net current assets 195,906 365,885
-------- --------
Total assets less current liabilities 770,986 626,823
-------- --------
Non-current liabilities
Due to minority shareholders, net 6,058 5,076
Obligations under hire purchase
contracts - Repayable after
one year 81 797
Deferred taxation 10,647 10,394
Bank loan 137,500 -
-------- --------
154,286 16,267
-------- --------
Net assets 616,700 610,556
======== ========
Capital and reserves
Share capital 9 88,190 88,190
Share premium 415,430 415,430
Capital reserve 369 369
Capital redemption reserve 359 359
Retained profit 112,352 106,208
-------- --------
Shareholders' equity 616,700 610,556
======== ========
Notes:
1. Accounting Policies
The unaudited financial statements are prepared in accordance with the Hong Kong Statements of Standard Accounting Practice Number 25 - Interim Reporting issued by the Hong Kong Society of Accountants and the accounting principles generally accepted in Hong Kong. The accounting policies adopted are consistent with those followed in the Group's annual financial statements for the year ended 31st March, 2001.
2. Turnover
The Group's turnover and profits for the six months ended 30th September, 2001 were derived principally from the contracting of building construction, maintenance and decoration projects carried out in Hong Kong.
Six months ended 30th September,
2001 2000
Turnover Gross profit Turnover Gross profit
HK$'000 HK$'000 HK$'000 HK$'000
Contracting of building
construction, maintenance
and decoration projects 386,996 54,100 904,976 77,575
Sale of building materials 15,450 2,226 21,407 4,610
Others 2,887 294 771 199
-------- -------- -------- --------
405,333 56,620 927,154 82,384
======== ======== ======== ========
3. Profit before taxation
Profit before taxation is arrived at after charging (crediting) the following:
Six months ended
30th September,
2001 2000
HK$'000 HK$'000
Depreciation
Owned assets 9,074 10,061
Assets held under finance lease 608 1,803
Amortisation of development costs 100 -
(Profit) loss on disposal of fixed assets (26) 351
4. Taxation
Hong Kong profits tax has been provided at the rate of 16% (2000: 16%) on the estimated assessable profit for the period. Overseas taxation has been calculated on the estimated assessable profit for the period at the rates prevailing in the respective jurisdictions.
5. Earnings per share
Earnings per share has been calculated using the unaudited consolidated profit attributable to shareholders for the period of HK$6,144,000 (2000: HK$25,621,000) and of the 440,959,600 shares (2000: 442,746,100 shares). No diluted earnings per share are disclosed as the share options outstanding at 30th September, 2001 and 30th September, 2000 are anti-dilutive.
6. Properties under development
Properties under development which are not due for completion within one year from the balance sheet date are stated at cost less provision for diminution in value or provision for foreseeable losses upon completion of the relevant development projects, if any. Cost of property in the course of development comprises land costs, development and construction costs, attributable interest and other related direct expenses capitalized during the development period. On completion, the properties held under development are transferred to investment properties or land and buildings.
7. Trade debtors, net
Trade debts are due after 21 days to one year depending on the nature of services or products.
The aging analysis of trade debtors at the period end is as follows:
30th September, 31st March,
2001 2001
HK$'000 HK$'000
Not yet due 114,559 208,585
Overdue by:
0-30 days 4,918 6,471
31-90 days 3,102 2,130
91-180 days 1,445 1,293
Over 180 days 1,519 1,748
---------- ----------
125,543 220,227
========== ==========
8. Payables to suppliers and subcontractors
The aging analysis of payables to suppliers and subcontractors at the period end is as follows:
30th September, 31st March,
2001 2001
HK$'000 HK$'000
Not yet due 52,748 132,661
Overdue by:
0-30 days 4,364 10,400
31-90 days - 6
91-180 days - -
Over 180 days 21 -
---------- ----------
57,133 143,067
========== ==========
9. Share capital
There were no movements in the share capital of the Company for the period.
INTERIM DIVIDEND
The Board of Directors of the Company ("the Directors") does not recommend the payment of an interim dividend for the six months ended 30th September, 2001 (2000: HK1.6 cents).
REVIEW AND OUTLOOK
The Group recorded a turnover of HK$405,333,000 for the six months ended 30th September, 2001, as compared to HK$927,154,000 of the same period last year while the profit before taxation has decreased by 65% from HK$31,739,000 in 2000 to HK$11,014,000 this year. The declines in profit and turnover were mainly caused by the significant contraction of the public construction market since 2000. This has resulted in intensified competition that caused continuous drop in tender prices for public contracts.
Despite the difficult market condition, the Group was able to secure four new contracts with a total value of HK$961 million. However the total value of contracts in hand has dropped to HK$1,883 million at 30th September, 2001 from HK$3,281 million at 31st March, 2001.
The significant drop in public construction output has also adversely affected the Group's pre-fabricated building components business. Being able to foresee the market decline, the Group has, in order to maintain competitiveness, developed and launched new product lines at the beginning of the year. These new products were well received by clients. Apart from targeting the public housing market, the Group has also begun marketing precast products to private housing developers.
As mentioned in the 2000/01 Annual Report, the Group has purchased a piece of land in Causeway Bay for development of a commercial property for investment. Subsequent to the publishing of the 2000/01 Annual Report, the Group has also acquired the property adjacent to the original one for HK$24,800,000 making the total consideration paid for the combined site to HK$299,800,000. As a result, the site area available for development is enlarged from 8,885 sq.ft. to 10,417 sq.ft. with developable gross floor area of 155,000 sq.ft. The expected time for completion of the development is the end of 2003.
The Group's wholly owned subsidiary company, VHSoft Technologies Co. Ltd. (VHSoft), which specialises in construction IT services has started to generate revenue. Promotion efforts have received encouraging feedback. We expect the operation will be able to breakeven in year 2002/03.
As the difficult situation of the construction industry is expected to prevail in the foreseeable future, a number of cost control measures have been taken to maintain the Group's competitiveness. From January 2002 employees' salaries will be cut by up to 15% according to their income level and position. Targets for cost savings have also been set for various operating units.
Despite the unfavorable economic conditions the Group did not compromise on its commitment to quality, safety and environment protection. This was evidenced by the winning of various awards in these aspects. Apart from awards, the Group has also obtained the ISO14000 certification in October this year.
Due to current economic condition, the outlook for the second half of this financial year is not optimistic. However the management believes the Group, armed with ample experience and innovative products and technologies, will be able to face the challenges ahead and continue to move forward when opportunities arise.
FINANCIAL REVIEW
At 30th September, 2001, the Group's cash in hand was HK$176,593,000 compared with HK$265,418,000 at 31st March, 2001, bank borrowings increased from Nil at 31st March, 2001 to HK$236,527,000 at 30th September, 2001. This was mainly due to the acquisition of a piece of land in Causeway Bay as mentioned above. In financing for such acquisition, a HK$137,500,000 bank loan was raised during the period as stated under non-current liabilities in the above balance sheet which is expected to be repaid following the completion of this project at the end of 2003.
Taking into account of this acquisition, the Group's liquidity had slightly decreased as evidenced by the current ratio (total current assets: total current liabilities) from 2.06 last year to 1.56 this year. The Group's gearing ratio, calculated on the basis of net bank borrowings (i.e. total bank borrowings and overdraft less time deposits, cash and bank balances) over shareholders' equity had increased from Nil to 9.72%, but remains at a very prudent level. The Group's interest burden was also kept at a very low level. It is mainly due to prudent approach in financial management adopted by the Group. The interest cover [(profit before taxation + interest expenses)/interest expenses] of the Group remained constant at 7.8 times this period as compared to 7.84 times at 31st March, 2001.
PURCHASE, SALE OR REDEMPTION OF SHARES
There was no purchase, sale or redemption of the Company's shares by the Company or any of its subsidiaries during the six months ended 30th September, 2001.
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 Listing Rules of the Stock Exchange of Hong Kong Limited throughout the period under review.
By order of the Board
Wong Ip Kuen
Chairman
Hong Kong, 13th December, 2001
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