(incorporated in Bermuda with limited liability)

For the six months ended 30 September 2001


The Board of Directors (the "Board") of Bossini International Holdings Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 September 2001. The results, together with the comparative figures for the corresponding period in 2000, are summarised below:

Condensed consolidated profit and loss account

                                            Six months ended 30 September
                                                        2001         2000
                                                  (Unaudited)  (Unaudited)
                                         Notes       HK$'000      HK$'000

TURNOVER                                   2         700,365      690,828
Cost of sales                                       (380,066)    (402,687)
                                                ------------  -----------
Gross profit                                         320,299      288,141

Other revenue                              3           2,336        7,578
Selling and distribution costs                      (255,197)    (204,906)
Administrative expenses                              (66,854)     (54,270)
Other operating expenses                             (33,794)     (20,641)
                                                ------------  -----------
PROFIT/(LOSS) FROM OPERATING ACTIVITIES    4         (33,210)      15,902
Finance costs                              5          (1,840)        (821)
                                                ------------  -----------
PROFIT/(LOSS) BEFORE TAXATION                        (35,050)      15,081
Taxation                                   6            (201)      (3,969)
                                                ------------  -----------
PROFIT/(LOSS) BEFORE MINORITY INTERESTS              (35,251)      11,112
Minority interests                                         -         (466)
                                                ------------  -----------
  TO SHAREHOLDERS                                    (35,251)      10,646
                                                ============  ===========
RELEASE FROM REVALUATION RESERVE           7             202          202
                                                ============  ===========
BASIC EARNINGS/(LOSS) PER SHARE            8    (12.85 cents)  3.88 cents
                                                ============  ===========


1. Significant accounting policies

Basis of preparation

The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Statement of Standard Accounting Practice ("SSAP") No. 25 "Interim financial reporting". The accounting policies and basis of preparation used in the preparation of the interim financial statements are the same as those used in the annual financial statements for the year ended 31 March 2001, except that the Group has changed certain of its accounting policies following the adoption of new and revised SSAPs which became effective for accounting periods commencing on or after 1 January 2001.

The Group has adopted the transitional provisions of SSAP 30 "Business Combinations" such that goodwill previously eliminated against reserves need not be restated and will be charged to the profit and loss account at the time of disposal of the subsidiary/business or at such time the goodwill is determined to be impaired. Goodwill arising on acquisition after 1 April 2001 is capitalised and amortised on a straight-line basis over its estimated useful life. Any impairment of goodwill will be recognised as an expense in the profit and loss account immediately.

The adoption of the other new and revised SSAPs has no significant effect to the results of the Group in the current and prior periods.

2. Segment information

An analysis by activity is not presented as the Group is predominantly engaged in the retailing and distribution of garments.

An analysis of the Group's turnover and contribution to profit/(loss) from operating activities by geographical area of operations for the period ended 30 September 2001, together with the comparative figures for the corresponding period in 2000, is as follows:

                                              Contribution to profit/(loss)
                                Turnover        from operating activities
                            Six months ended        Six months ended
                               30 September           30 September
                              2001       2000         2001       2000
                           HK$'000    HK$'000      HK$'000    HK$'000

People's Republic of China
  Hong Kong                405,958    498,436      (24,752)    11,845
  Elsewhere                 92,296     96,563       (1,380)    (2,715)
Singapore                   82,241     80,125       (1,836)     4,518
Taiwan                     119,870     15,704       (5,242)     2,254
                          --------   --------     --------   --------
                           700,365    690,828      (33,210)    15,902
                          ========   ========     ========   ========

3. Other revenue

                             Six months ended 30 September
                                         2001         2000
                                      HK$'000      HK$'000

Interest income                           849        2,700
Royalty income                              -          646
Rental income                             254          254
Others                                  1,233        3,978
                                      -------      -------
                                        2,336        7,578
                                      =======      =======

4. Profit/(loss) from operating activities

Profit/(loss) from operating activities is arrived at after charging:

                             Six months ended 30 September
                                         2001         2000
                                      HK$'000      HK$'000

Depreciation                           27,942       24,954
Amortisation of intangible assets       2,145        2,145
                                      =======      =======

5. Finance costs

                             Six months ended 30 September
                                         2001         2000
                                      HK$'000      HK$'000

Interest on bank loans, overdrafts and
  other loans wholly repayable
  within five years                     1,840          821
                                      =======      =======

6. Taxation

No provision for Hong Kong profits tax has been made as the Group had no assessable profits arising in Hong Kong during the period ended 30 September 2001. Hong Kong profits tax was provided at the rate of 16% on the estimated assessable profits arising in Hong Kong during the period ended 30 September 2000. Taxes on profits assessable elsewhere have been calculated at the rates of taxation prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

                             Six months ended 30 September
                                         2001         2000
                                      HK$'000      HK$'000

Hong Kong                                   -        2,235
Elsewhere                                 201        1,734
                                      -------      -------
Taxation charge for the period            201        3,969
                                      =======      =======

7. Release from revaluation reserve

The revaluation reserve arising from revaluation of fixed assets is realised and transferred directly to retained earnings on a systematic basis, as the corresponding asset is used by the Group. The amount realised is the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset's original cost.

8. Basic earnings/(loss) per share

Basic loss per share is calculated based on the net loss attributable to shareholders for the period of HK$35,251,000 (2000: net profit of HK$10,646,000) and on 274,297,493 shares (2000: 274,297,493 shares) in issue during the period.

Diluted earnings/(loss) per share for the six months ended 30 September 2001 and 2000 has not been calculated as no diluting events existed during these periods.

9. Comparative figures

Certain comparative figures have been reclassified to conform with the current period's presentation.


The Board has resolved not to declare an interim dividend for the six months ended 30 September 2001 (2000: Nil).


Business Review

The Group's consolidated turnover for the six months ended 30 September 2001 was HK$700,365,000, representing an increase of 1.4% as compared to the figure of HK$690,828,000 for the corresponding period last year. However, in spite of the Group achieving a 4 percentage point improvement in gross margin, sales fell short of expectations, while operating costs were not immediately brought down in line with the disappointing level of sales. This combination of factors put considerable pressure on net profit, driving the Group into a loss-making position. The net loss attributable to shareholders for the period was HK$35,251,000, equivalent to a loss per share of HK12.85 cents, whereas in the same period last year a profit of HK$10,646,000 was recorded, resulting in an earnings per share of HK3.88 cents.

The unsatisfactory results of the period derived from both external and internal adverse forces.

Externally, the global economic slow-down exacerbated economic conditions in Asia during the period. The performance of most retail markets in Asia (including Hong Kong) remained soft. Moreover, a lack of public confidence in the economic outlook and a rise in the unemployment rate led people to be more prudent in their spending. Unavoidably, the Group was adversely affected by these unfavourable external forces.

Internally, the products offered by the Group during the period were not sufficiently distinctive in style to further stimulate customers' desire to spend in the face of economic adversity. At the same time, the Group's advertising during the period did not achieve the desired effect, failing to convey a simple, clear message. The overall market downturn and the unsatisfactory response to our products, advertising and promotions adversely affected the comparable-store sales for the period, which fell by 18 percent compared to the same period last year.

On the other hand, the Group believes that quality customer service is one of the keys to success for a retail fashion chain. Accordingly, the Group invested substantially in its human resources during the period, hiring a professional consultancy firm to carry out a series of extensive training programmes for the front-end staff in Hong Kong. Through these training activities and the introduction of more effective performance assessments, the Group has achieved great advances in improving its service quality. Following the training, our shops earned a positive response from a full-scale survey in assessing the level of service standards.


Despite the uncertain economic prospects of the Asian region and the continuing difficult business environment, the Group is confident that the measures it has taken to address identified problems will gradually take effect. Consequently, results for the second half of the financial year should become steady, and improved profitability is expected in the next financial year.

As a fashion retailer and distributor, the Group clearly understands that product design is the soul of its business. In view of this, the Group has restructured its product design team. In October this year, an executive director was appointed to head the team. Besides, another executive director was recruited to oversee the buying and image-building functions of the Group. The Group is confident that their experience and talents will stimulate the generation of a new look fashionable casual wear from the 2002 Spring season and onwards, giving our customers the trendy styles, high quality and competitive pricing they expect from our products.

The Group has implemented various measures to control its operating costs and to reinforce operating efficiency as follows:

(1) the establishment of a back-up office in Shenzhen to support the headquarters in Hong Kong and to further reduce operating costs;

(2) cutting manpower and related costs;

(3) actively negotiating with landlords to obtain reduced shop rentals;

(4) expanding the sourcing channels for our products to enjoy more competitive purchasing costs;

(5) adjusting the Group's advertising strategies and focus while heightening their effectiveness, making reasonable reductions in advertising and promotion expenditures; and

(6) increasing the application of information technology to improve work efficiency.

The Group's overall business strategy continues to be the development of a diversified international market. Within this strategic framework, the Group is adjusting the scale of its operations in different territories in response to changes in the economic environment, thereby improving the operational efficiency of its distribution network.

In response to the continued economic depression in the local retail market, the Group has decided to consolidate the number of outlets in Hong Kong and Macau from 36 at 30 September 2001 to 33 by the end of the financial year.

The clothing market in Mainland China will still be the main focus of expansion. Mainland China's entry into the World Trade Organisation, the country's steady economic growth and rising living standards will increase the demand for fashionable casual wear. To satisfy this growing demand, the Group expects to complete its planned expansion to 120 outlets by the end of the financial year.

Taiwan is another market with good potential. However, given the current economic stagnation there, the Group will suspend its expansion plan for the time being and will maintain its scale of operations at around 60 outlets. In view of the continued economic slowdown in Singapore, the Group also plans to maintain its operational scale at 30 September 2001 of 27 outlets.

As the Group's business strategy progresses, Hong Kong's proportion of the Group's business will gradually reduce. The Group will develop a diversified market in order to reduce its reliance on the contribution of a single market, which will be beneficial to maintaining the stability and growth capability of the Group in the long term.

Financial Position

The Group relied on its internally generated cash flows, bank borrowings, and import and export-related banking facilities to finance its business development during the period. As at 30 September 2001, the Group had unused banking facilities (including trade finance, revolving loans and guarantees) totalling HK$264,019,000 (31 March 2001: HK$276,854,000).

As at 30 September 2001, the Group maintained a current ratio of 1.44 (31 March 2001: 1.98) while its total debt to equity ratio was 1.05 (31 March 2001: 0.63). The latter was calculated by dividing the total liabilities of HK$303,429,000 (31 March 2001: HK$203,673,000) by the total shareholders' equity of HK$287,725,000 (31 March 2001: HK$322,387,000).


Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the period.


The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal control and financial reporting matters including the review of the unaudited interim financial statements.


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 six months ended 30 September 2001, in compliance with the Code of Best Practice as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), except that the independent non-executive directors of the Company are not appointed for any specific terms, but are subject to retirement by rotation and re-election at annual general meeting in accordance with the Company's Bye-laws.


A detailed interim results announcement containing all the information required by paragraphs 46(1) to 46(6) of Appendix 16 of the Rules Governing the Listing of Securities on the Stock Exchange will be published on the website of the Stock Exchange in due course.

By Order of the Board
Ka Sing LAW

Hong Kong, 29 November 2001

The full text of this announcement will be available on the Internet at

Source: Bossini International Holdings Limited
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