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CORPORATE INFORMATION
EXECUTIVE DIRECTORS
PRINCIPAL BANKERS
Mon Chung Hung (Chairman) Koo Di An, Louise (Deputy Chairman) Siu Yuk Shing, Marco Li Ho Cheong
Hang Seng Bank 83 Des Voeux Road Central, Hong Kong
NON-EXECUTIVE DIRECTORS Lam Hon Mo, Frederick Lau Chun Kay
COMPANY SECRETARY
The Hongkong and Shanghai Banking Corporation Limited 3-10/F, Way Foong House 82 Nathan Road Tsimshatsui Kowloon Hong Kong
Ang Teck Leng
REGISTERED OFFICE Clarendon House 2 Church Street Hamilton HM11 Bermuda
PRINCIPAL PLACE OF BUSINESS Units 2002-2006, 20/F Greenfield Tower Concordia Plaza 1 Science Museum Road Tsimshatsui, Kowloon Hong Kong
SOLICITOR LIU, CHAN and LAM Room 2102, 21/F Admiralty Centre, Tower 1 18 Harcourt Road Queensway, Hong Kong
AUDITORS PricewaterhouseCoopers 22nd Floor, Prince’s Building Central, Hong Kong
PRINCIPAL REGISTRARS AND TRANSFER OFFICE The Bank of Bermuda Limited 6 Front Street Hamilton HM11 Bermuda
BRANCH REGISTRARS AND TRANSFER OFFICE Hong Kong Registrars Limited 2nd Floor, Vicwood Plaza 199 Des Voeux Road Central Hong Kong
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RESULTS For the year ended December 31, 2000, the Group achieved a 13% increase in turnover to HK$241,130,000 as compared to that of last year under a difficult market environment. Net profit after tax was HK$4,710,000, representing a decline of 80% from that of last year. Earnings per share was HK2.4 cents. The increase in turnover was attributed to a broadened customer base and an increased number of sales orders from established customers. The decrease in net profit after tax was due to lower selling price and increased costs particularly the material costs, fuel cost, and interest expense. Net profits after tax in 1999 also included net exceptional gains of HK$8,860,000.
DIVIDENDS No interim dividend was paid during the year (1999: HK2 cents per share). The Directors recommend a final dividend of HK1 cent per share for the year ended December 31, 2000. (1999: HK2 cents per share)
BUSINESS AND OPERATION REVIEW During the year, the sale of AC power supply cords was about 70% of the Group’s turnover. Sales of wire harness and cable wires were about 15% and 14% of the turnover respectively and 1% was contributed by the Group’s trading operation. The market remained highly competitive. Keen competition had put strong pressure on product pricing which eroded the profit margin of the Group. Coupled with the increase in operating costs, the Group has reported a much lower net profit for the year. Despite the tough operating environment, the Group has managed to broaden its customer base, launched new products and developed new markets. During the year, new markets were opened in South Africa, Northern China and South America. The Group has also successfully secured renowned multi-national customers in Japan and in the US. These achievements positively contributed to the Group’s turnover in 2000. The Group relied on product innovation to enhance its competitiveness in the industry. It developed and launched new products such as high temperature PVC flexible cord and environment-friendly products like Lead free power cords. These products were well received by customers. They have not only augmented the sales and profitability but also effectively expanded our product range to meet the increasing demand of customers in the coming years.
CHAIRMAN’S STATEMENT
It is my pleasure to present the annual report of Perennial International Limited (the “Company”) and its subsidiaries (the “Group”) on behalf of the Board of Directors (the “Board”) for the year ended December 31, 2000.
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CHAIRMAN’S STATEMENT
The Group has demonstrated its ability to cope with the changes brought by the advancement of information technology. It has successfully tendered for orders via the Internet and used the EDI program to confirm sales orders with major customers.
FUTURE AND PROSPECTS To stay afloat in the competitive wire industry, the Group will continue to explore and develop new markets and to widen our customer base. At the same time, we will continue to focus on providing the best product quality and services as well as timely delivery of products to our customers to further strengthen the bond with them. The Group will endeavor to make use of Internet technology to enhance its operational efficiency. We will continue to invest in our manufacturing facilities, upgrade our existing plant and machinery, and to conduct more in-house training for our workers to boost productivity. With the successful implementation of a semiautomation manufacturing process in the factory, the Group believes that production efficiency will be improved. Production wastage can be curtailed, cost will be greatly improved and the Group’s profitability is expected to increase in the years ahead.
ACKNOWLEDGEMENT I would like to express my appreciation to our shareholders and business clients for their continuous support and to our employees for their endeavors and dedication.
Chairman MON CHUNG HUNG Hong Kong, 23rd April 2001
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At the end of December 2000, the consolidated indebtedness of the Group, including short-term debts of HK$38,855,000, was HK$54,005,000. All of the borrowings are denominated in Hong Kong dollars. The cash and bank deposits amounted to HK$2,613,000. The Group’s consolidated trade receivable balance was HK$52,512,000, representing 22% of the year’s turnover of HK$241,130,000. This represents a further improvement over the last year’s figure of 25%. The Group adopted a stringent credit policy to minimize credit risk. Reduced level of trade receivable has helped to mitigate the risk of bad debts, strengthen liquidity, and reduce interest expenses. The percentage of doubtful debts was only 0.78% of trade receivable. The interest coverage ratio was 4.5 times as compared to 28.9 times in 1999.
CAPITAL STRUCTURE As at December 31, 2000, the consolidated shareholders’ equity of the Group was HK$127,920,000, a growth of 2% over that of the previous year. The debt to equity ratio, calculated by dividing Total Liabilities to Shareholders’ Equity, was approximately 71%.
PLEDGE OF ASSETS At 31st December 2000, the Group’s banking facilities amounting to approximately HK$74 million (1999: HK$42 million) were secured by legal charges over certain land and buildings of the Group with a total net book value of HK$41,120,000 (1999: HK$2,500,000) and corporate guarantees given by the Company
CONTINGENT LIABILITIES At 31st December 2000, the Group has contingent liabilities of HK$854,000 in respect of 12 employees that would be eligible for long services payment on termination of their employment under the Employment Ordinance. In the opinion of the Directors, the amount is unlikely to crystallise in the foreseeable future.
EMPLOYEES’ REMUNERATION POLICY As at December 31, 2000, the Group employed approximately 1,400 full time management, administrative and production staff in Hong Kong and the PRC. The Group follows market practice on remuneration packages. Employee’s remuneration is reviewed and determined by senior management annually depending on the employee’s performance, experience and industry practice. The Group invests in its human capital, besides providing on the job training for workers, the Group reimburses the staff for fees paid to attend pre-approved external business courses or seminars.
MANAGEMENT DISCUSSION AND ANALYSIS
LIQUIDITY AND FINANCIAL RESOURCES
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REPORT OF THE DIRECTORS
The Directors submit their report together with the audited accounts for the year ended 31st December 2000.
PRINCIPAL ACTIVITIES AND GEOGRAPHICAL ANALYSIS OF OPERATIONS The principal activity of the Company is investment holding. Its subsidiaries are principally engaged in the manufacturing and trading of electric cable and wire products. An analysis of the Group’s turnover and contribution to operating profit/(loss) for the year by principal activities and markets is set out in note 2 to the accounts.
FIVE YEAR FINANCIAL SUMMARY A summary of the results, assets and liabilities of the Group for the last five years is set out below: 1996 HK$’000
1997 HK$’000
1998 HK$’000
1999 HK$’000
2000 HK$’000
233,230
266,653
219,393
212,785
241,130
30,803
31,726
16,950
23,269
4,710
Total assets
182,745
204,851
178,895
194,343
219,056
Total liabilities
(89,923)
(72,023)
(41,450)
(69,143)
(91,136)
92,822
132,828
137,445
125,200
127,920
Turnover
Profit attributable to shareholders
Shareholders’ funds
The results, assets and liabilities of the Group for the year ended 31st December 1996 has been prepared as if the group structure, at the time when the Company’s shares were listed on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”), had been in existence throughout the year concerned.
ANALYSIS OF THE GROUP’S PERFORMANCE An analysis of the Group’s performance is shown in the Chairman’s Statement on pages 7 to 8.
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The percentages of purchases and sales attributable to the Group’s major suppliers and customers are as follows: 2000 %
1999 %
Purchases – the largest supplier – five largest suppliers combined
13 42
13 39
Sales – the largest customer – five largest customers combined
15 27
13 24
None of the Directors, their associates or any shareholder (which to the knowledge of the Directors own more than 5% of the Company’s share capital) had an interest in the major suppliers or customers noted above.
RESULTS AND APPROPRIATIONS The results for the year are set out in the consolidated profit and loss account on page 19. The Directors recommend the payment of a final dividend of HK$0.01 per ordinary share, totalling HK$1,989,580.
RESERVES Movements in the reserves of the Group and the Company during the year are set out in note 18 to the accounts.
DISTRIBUTABLE RESERVES At 31st December 2000, the distributable reserves of the Company amounted to HK$95,324,000 (1999: HK$96,982,000).
DONATIONS Charitable donations made by the Group during the year amounted to HK$724,670.
FIXED ASSETS Details of the movements in fixed assets are set out in note 10 to the accounts.
REPORT OF THE DIRECTORS
MAJOR CUSTOMERS AND SUPPLIERS
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REPORT OF THE DIRECTORS
PRE-EMPTIVE RIGHTS There are no provisions for pre-emptive rights under the Company’s Bye-laws and there are no restrictions against such right under the laws in Bermuda.
PURCHASE, SALE AND REDEMPTION OF THE COMPANY’S LISTED SECURITIES The company has not redeemed any of its shares during the year. Neither the Company nor any of its subsidiaries has purchased, redeemed or sold any of the Company’s shares during the year.
ANALYSIS OF BANK LOANS, OVERDRAFTS AND OTHER BORROWINGS The Group’s bank loans, overdrafts and other borrowings as at 31st December 2000 are repayable over the following periods:
On demand or not exceeding one year More than one year but not exceeding two years More than two years but not exceeding five years More than five years
Bank overdrafts HK$’000
Bank loans HK$’000
Other borrowings HK$’000
Total HK$’000
11,265
3,835
23,755
38,855
–
3,915
747
4,662
– –
2,737 7,632
119 –
2,856 7,632
11,265
18,119
24,621
54,005
SUBSIDIARIES Details of the Company’s subsidiaries as at 31st December 2000 are set out in note 26 to the accounts.
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The Directors during the year were: Executive Directors MON Chung Hung (Chairman) KOO Di An, Louise (Deputy Chairman) SIU Yuk Shing, Marco LI Ho Cheong SHU Hong Kin KO Chun Hay, Kelvin
(resigned on 1st October 2000) (resigned on 1st August 2000)
Independent Non-Executive Directors LAM Hon Mo, Frederick LAU Chun Kay MON Chung Hung and SIU Yuk Shing Marco retire in accordance with clause 12 of the Company’s Bye-laws and, being eligible, offer themselves for re-election.
BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT The biographical details of the Directors and senior management of the Company are set out as follows: Executive Directors
Mr Mon Chung Hung, aged 51, is the Chairman of the Company. He is the founder of the Group and has over 20 years of experience in the electric cable and wire industry. He is responsible for the Group’s overall strategic planning and policy making. Ms Koo Di Ann, Louise , aged 49, is the Deputy Chairman and the Administration Director of the Company. She joined the Group in 1979 and is responsible for the overall administration of the Group. She is the wife of Mr Mon. Mr Siu Yuk Shing, Marco , aged 42, is the Sales Director and is responsible for sales of the Group’s products and product development. He joined the Group in 1986 and has over 10 years of experience in the electric cable and wire industry. Mr Li Ho Cheong, aged 49, is the Marketing Director of the Company and is responsible for marketing of the Group’s products and developing overseas clients and also developing new cables for the computer sector. He joined the Group in 1997 and has over 18 years of experience in the cable and wire industry.
REPORT OF THE DIRECTORS
DIRECTORS
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REPORT OF THE DIRECTORS
Independent Non-Executive Directors
Mr Lam Hon Mo, Frederick , aged 53, has been a practising solicitor in Hong Kong for over 20 years. He is a senior partner of Liu, Chan and Lam, a firm of solicitors in Hong Kong. Mr Lau Chun Kay , MIEE, MHKIE, aged 51, is a non-executive director of Delta Electrical & Engineering Services Ltd., and a non-executive director of Yew Sang Hong (Holdings) Ltd. He holds a master degree in business administration and a Bachelor degree in electrical engineering from the University of Hong Kong, and is a Registered professional engineer. Mr Lau is also the President of Hong Kong Electrical Contractors’ Association Limited, and a Vice-President of the Hong Kong Federation of Electrical and Mechanical Contractors Ltd. He has over 30 years of experience in management and engineering. Senior management
Ms Wong Wai Ping , aged 49, is the Group’s General Manager – Sales and Marketing and is responsible for the Group’s overall management and operation. She has over 26 years of experience in the electric cable and wire industry and electronics and communications industry. She joined the Group in 1993. Mr Yung Yiu Cheong , aged 39, is the Group’s Assistant General Manager – Operation and is responsible for the smooth running of the operating system of the Group. He holds a bachelor degree in electrical engineering from University of Aberdeen (Scotland). Prior to joining the Group in August 1999, he worked with a multi-national company and had more than 10 years industrial experience. He is also appointed as the Management Representative for the ISO9002 system. Mr Ang Teck Leng, CPA of ICPAS, MBA, aged 45, is the Group’s Financial Controller and the Company Secretary of the Company. He is responsible for the group’s finance, accounting and company secretarial functions. He joined the Group in July 2000. He has over 20 years of working experience in managing the financial and accounting functions of companies ranging from shipping, construction, manufacturing, and telecommunication industry. Mr Thien Nam Yu , aged 31, is the Assistant General Manager – Manufacturing and is responsible for supervising and monitoring the daily operations of one of the Group’s factory plants in Mainland China. He holds a bachelor degree in mechanical engineering from Xian Jiaotong University in Mainland China. Prior to joining the Group in 1994, he had 2 years of experience in the chemical processing industry. Mr Chau Jian Zhong , aged 47, is the Deputy Plant Manager and is responsible for supervising and monitoring the daily operations of the Group’s electric cable division in Mainland China. He joined the Group in 1992 and has over 10 years of experience in factory operation.
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DIRECTORS’ SERVICE CONTRACTS On 1st January 2000, MON Chung Hung, KOO Di An, Louise, SIU Yuk Shing, Marco and SHU Hong Kin entered into service contracts with the Company for a term of three years. Except for SHU Hong Kin, who resigned on 1st October 2000, each will continue thereafter until terminated by either party concerned with not less than three months’ notice in writing. On 1st November 1997, LI Ho Cheong entered into a service contract with the Company, for a term of three years and two months and will continue thereafter until terminated by either party concerned with not less than three months’ notice in writing. None of the above service contracts have any provisions regarding payment of compensation. Apart from the above, none of the Directors proposed for re-election has an unexpired service contract with the Company which is not determinable by the Company within one year and without payment of compensation other than under normal statutory obligations.
DIRECTORS’ INTERESTS IN CONTRACTS During the year, the Group paid legal fees of approximately HK$1.5 million to LIU, CHAN and LAM, of which Mr. LAM Hon Mo is a senior partner. Apart from the above, no contracts of significance in relation to the Group’s business to which the Company, its holding company or its subsidiaries was a party, and in which a Director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.
REPORT OF THE DIRECTORS
Mr Shu Hon Tai, aged 57, is the Deputy Plant Manager and is responsible for supervising and monitoring the daily operations of the Group’s plastic resins division in Mainland China. He joined the Group in 1997 and has over 14 years of experience in factory operation.
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REPORT OF THE DIRECTORS
DIRECTORS’ INTEREST IN EQUITY OR DEBT SECURITIES At 31st December 2000, the interests of the Directors and chief executives of the Company in the shares and share options of the Company as recorded in the register maintained under Section 29 of the Securities (Disclosure of Interests) Ordinance (the “SDI Ordinance”) and other interests of the Directors in the Company were as follows: (a)
Ordinary shares
Name MON Chung Hung SIU Yuk Shing LAU Chun Kay LI Ho Cheong
Number of ordinary shares beneficially held Corporate Personal Family Other interest interest interest interest 140,760,000 – – –
3,000,000 300,000 138,000 318,000
– – – –
– – – –
The corporate interest of Mr MON Chung Hung is beneficially owned by Spector Holdings Limited, the entire issued share capital of which is owned as to 99.9 per cent by Mr MON Chung Hung and as to the remaining 0.1 per cent by Ms KOO Di An, Louise. (b)
Share options Pursuant to a share option scheme approved at a special general meeting of the Company held on 5th December 1996, the Directors may, at their discretion, invite employees and directors of the Group to take up options to subscribe for shares in the Company subject to the terms and conditions stipulated therein. As at 31st December 2000, no options have been granted under this scheme.
Apart from the above, at no time during the year was the Company or its subsidiaries a party to any arrangements to enable the Directors or chief executives and their associates to acquire benefits by means of acquisition of shares in, or debentures of, the Company or any other body corporate.
SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN THE SHARE CAPITAL OF THE COMPANY As at 31st December 2000, the register of substantial shareholders maintained under Section 16(1) of the SDI Ordinance shows that the Company had been notified of the following substantial shareholders’ interests, being 10% or more of the Company’s issued share capital. Name of shareholder Spector Holdings Limited
Number of ordinary shares 140,760,000
The share capital of the above company is owned as to 99.9 per cent by Mr MON Chung Hung and as to the remaining 0.1 per cent by Ms KOO Di An, Louise.
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No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year.
COMPLIANCE WITH THE CODE OF BEST PRACTICE OF THE LISTING RULES The Code of Best Practice has been complied with by the Company throughout the year except that Independent Non-Executive Directors are not appointed for a specific term as recommended under Appendix 14 of the Listing Rules. According to the Bye-laws of the Company, Independent Non-Executive Directors of the Company will retire by rotation every year and their appointments will be reviewed when they are due for re-election. In the opinion of the Directors, this meets the same objectives as the Code of Best Practice.
AUDIT COMMITTEE The written terms of reference which describe the authority and duties of the Audit Committee were prepared and adopted with reference to “A Guide for The Formation of An Audit Committee” published by the Hong Kong Society of Accountants. The Audit Committee provides an important link between the Board and the Company’s auditors in matters coming within the scope of the group audit. It also reviews the effectiveness of the external audit and of internal controls and risk evaluation. The Committee comprises two independent non-executive directors, namely Mr. LAM Hon Mo, Frederick and Mr. LAU Chun Kay. Two meetings were held in respect of the current financial year.
AUDITORS The accounts have been audited by PricewaterhouseCoopers who retire and, being eligible, offer themselves for re-appointment.
By order of the Board
MON Chung Hung Chairman Hong Kong, 23rd April 2001
REPORT OF THE DIRECTORS
MANAGEMENT CONTRACTS
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REPORT OF THE AUDITORS
TO THE SHAREHOLDERS OF PERENNIAL INTERNATIONAL LIMITED (incorporated in Bermuda with limited liability) We have audited the accounts on pages 19 to 48 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Company’s Directors are responsible for the preparation of accounts which give a true and fair view. In preparing accounts which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently. It is our responsibility to form an independent opinion, based on our audit, on those accounts and to report our opinion to you.
BASIS OF OPINION We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the circumstances of the Company and the Group, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the accounts are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts. We believe that our audit provides a reasonable basis for our opinion.
OPINION In our opinion the accounts give a true and fair view of the state of affairs of the Company and the Group as at 31st December 2000 and of the profit and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance. PricewaterhouseCoopers Certified Public Accountants Hong Kong, 23rd April, 2001
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For the year ended 31st December 2000
2000 HK$’000
1999 HK$’000
2
241,130
212,785
(193,452)
(161,703)
Cost of sales Gross profit Other revenue
2
Realisation of reserve arising from issue of warrants upon expiry of warrants Write back/(provision) for unlisted investment securities and related litigation costs and provision
12(a)
Distribution expenses Administrative expenses Other operating expenses
47,678
51,082
103
431
–
23,280
2,569
(14,420)
(5,191)
(4,148)
(32,919)
(28,242)
(1,798)
(1,140)
Operating profit
3
10,442
26,843
Finance costs
4
(4,928)
(1,326)
5,514
25,517
Profit before taxation Taxation
5(a)
(804)
(2,248)
Profit attributable to shareholders
6
4,710
23,269
Dividends
7
(1,990)
(7,961)
Profit for the year retained
18
2,720
15,308
Earnings per share
8
2.4 cents
11.7 cents
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Turnover
Note
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As at 31st December 2000
CONSOLIDATED BALANCE SHEET
Note
2000 HK$’000
1999 HK$’000
Fixed assets
10
131,314
93,141
Investment securities
12
15
15
–
5,625
13 14
27,209 52,512
26,847 53,629
15
4,197 1,196 2,613
5,695 1,529 7,862
87,727
95,562
26,623 5,883 22,243 1,512 1,990 687 3,835 11,125 140
23,566 11,604 18,597 3,673 3,979 2,460 – 1,757 –
74,038
65,636
13,689
29,926
145,018
128,707
Deposit for purchase of properties Current assets Inventories Trade receivables Deposits, prepayments and other receivables Bills receivable Bank balances and cash
Current liabilities Trade payables Accrued charges and other payables Trust receipt loans – secured Obligations under hire purchase contracts Dividends payable Taxation Bank loan – secured Bank overdrafts – secured Bank overdrafts – unsecured
16 23 19(b)
19(a) 23
Net current assets
Share capital
17
19,896
19,896
Reserves
18
108,024
105,304
127,920
125,200
17,098
3,507
145,018
128,707
Shareholders’ funds Long-term liabilities
Mon Chung Hung Director
19
Siu Yuk Shing Director
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As at 31st December 2000
Investments in subsidiaries
11
Current assets Amounts due from subsidiaries Deposits, prepayments and other receivables Tax recoverable Bank balances and cash
Current liabilities Amounts due to subsidiaries Accrued charges and other payables Taxation Dividends payable Bank overdrafts – unsecured
Net current assets
2000 HK$’000
1999 HK$’000
62,748
62,748
70,488
100,296
206 41 10
11 – 41
70,745
100,348
– 154 – 1,990 140
26,110 107 33 3,979 –
2,284
30,229
68,461
70,119
131,209
132,867
Share capital
17
19,896
19,896
Reserves
18
111,313
112,971
131,209
132,867
Shareholders’ funds
Mon Chung Hung Director
Siu Yuk Shing Director
BALANCE SHEET
Note
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For the year ended 31st December 2000
CONSOLIDATED CASH FLOW STATEMENT
Net cash inflow from operating activities
Note
2000 HK$’000
1999 HK$’000
20(a)
22,229
17,693
103 (4,347) (581) (3,979)
431 (722) (604) (11,954)
(8,804)
(12,849)
(2,680)
(736)
(44,552) 36 –
(11,326) – (5,625)
Returns on investments and servicing of finance Interest received Interest paid on bank loans and overdrafts Interest element of hire purchase contracts Dividends paid Net cash outflow from returns on investments and servicing of finance Taxation Hong Kong profits tax paid Investing activities Purchase of fixed assets Proceeds from disposal of fixed assets Deposit for purchase of properties Purchase of investment securities and related litigation costs
–
(8,566)
Net cash outflow from investing activities
(44,516)
(25,517)
Net cash outflow before financing
(33,771)
(21,409)
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For the year ended 31st December 2000
Financing Purchase of own shares New bank loans Inception of hire purchase contracts Repayment of bank loans Repayment of capital element of hire purchase contracts
2000 HK$’000
1999 HK$’000
20(b) – 21,000 860 (2,881)
(192) – – –
(3,611)
(5,528)
15,368
(5,720)
Decrease in cash and cash equivalents
(18,403)
(27,129)
Cash and cash equivalents at 1st January
(12,492)
14,637
Cash and cash equivalents at 31st December
(30,895)
(12,492)
2,613 (22,243) (11,265)
7,862 (18,597) (1,757)
(30,895)
(12,492)
Net cash inflow/(outflow) from financing activities
Analysis of the balances of cash and cash equivalents: Bank balances and cash Trust receipt loans Bank overdrafts
CONSOLIDATED CASH FLOW STATEMENT
Note
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For the year ended 31st December 2000
CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES
Note
2000 HK$’000
1999 HK$’000
Revaluation deficit on leasehold land and buildings
18
–
Profit for the year
18
4,710
23,269
4,710
19,188
Total recognised gains and losses
(4,081)
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PRINCIPAL ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these consolidated accounts are set out below: (a)
Basis of preparation The accounts have been prepared in accordance with generally accepted accounting principles in Hong Kong and comply with accounting standards issued by the Hong Kong Society of Accountants. The accounts are prepared under the historical cost convention as modified by the revaluation of leasehold land and buildings.
(b)
Consolidation The consolidated accounts include the accounts of the Company and its subsidiaries made up to 31st December. The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from the effective date of acquisition or up to the date of disposal, as appropriate. All significant intercompany transactions and balances within the Group are eliminated on consolidation. The gain or loss on the disposal of a subsidiary represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any goodwill or capital reserve which was not previously charged or recognised in the consolidated profit and loss account. In the Company’s balance sheet the investments in subsidiaries are stated at cost less provision, if necessary, for any permanent diminution in value. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.
(c)
Revenue recognition Revenue from the sale of goods is recognised upon delivery of goods to customers net of sales returns and discounts allowed. Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.
NOTES TO THE ACCOUNTS
1
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NOTES TO THE ACCOUNTS
1
PRINCIPAL ACCOUNTING POLICIES (continued) (d)
Fixed assets Leasehold land and buildings are stated at valuation less accumulated depreciation, or are stated at cost less accumulated depreciation in respect of additions in the intervening years between independent valuations, which are performed every three years. In the intervening years, the Directors review the carrying value of the properties and adjustment is made where there has been a material change in the fair value. Increases in valuation are credited to the land and buildings revaluation reserve. Decreases in valuation are first offset against increases on earlier valuations in respect of the same property and are thereafter debited to operating profit. Any subsequent increases are credited to operating profit up to the amount previously debited. Upon the disposal of a property, the relevant portion of the realised revaluation reserve in respect of previous valuations is transferred from the revaluation reserve to retained earnings. Amortisation of leasehold land is calculated to write off its valuation over the unexpired period of the lease. Depreciation on leasehold buildings is calculated to write off their costs or valuation on a straight line basis over the unexpired periods of the leases or their expected useful lives to the Group whichever is shorter. The principal annual rates used for this purpose are 2.5% – 5%. Other tangible fixed assets are stated at cost less accumulated depreciation. Depreciation on other tangible fixed assets is calculated at rates sufficient to write off their cost over their estimated useful lives on a reducing balance basis. The principal annual rates are as follows: Leasehold improvements Plant and machinery Furniture and fixtures Office equipment Motor vehicles Company boat
15% 20% 15% – 20% 20% 15% – 20% 15%
Major costs incurred in restoring fixed assets to their normal working condition are charged to the profit and loss account. Improvements are capitalised and depreciated over their expected useful lives to the Group. The carrying amounts of fixed assets are reviewed regularly to assess whether their recoverable amounts have declined below their carrying amounts. Expected future cash flows have not been discounted in determining the recoverable amount.
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PRINCIPAL ACCOUNTING POLICIES (continued) (d)
Fixed assets (continued) The gain or loss on disposal of a fixed asset is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account.
(e)
Assets under leases
(i)
Hire purchase contracts Contracts that substantially transfer to the Group all the rewards and risks of ownership of assets, other than legal title, are accounted for as hire purchase contracts. At the inception of a hire purchase contract, the fair value of the asset is recorded together with the obligation, excluding the interest element, to pay future rentals. Repayments are treated as consisting of capital and interest elements. Finance charges are debited to the profit and loss account in proportion to the capital balances outstanding. Assets held under hire purchase contracts are depreciated over the shorter of their estimated useful lives (note 1(d)) or contract periods.
(ii)
Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals applicable to such operating leases are charged to the profit and loss account on a straight line basis over the lease term.
(f)
Investment securities Investment securities are stated at cost less any provision for diminution in value. The carrying amounts of individual investments are reviewed at each balance sheet date to assess whether the fair values have declined below the carrying amounts. When a decline other than temporary has occurred, the carrying amount of such investments is reduced to its fair value. The amount of the reduction is recognised as an expense in the profit and loss account.
NOTES TO THE ACCOUNTS
1
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NOTES TO THE ACCOUNTS
1
PRINCIPAL ACCOUNTING POLICIES (continued) (g)
Inventories Inventories are stated at the lower of cost and net realisable value. In general, costs are assigned to individual items on the first-in first-out basis and are arrived at as follows: (i)
Raw material purchased for use in the manufacturing process – invoiced price and shipping costs.
(ii)
Work in progress and finished manufactured goods – costs of direct materials, direct labour and an appropriate proportion of production overheads.
(iii)
Finished goods purchased for resale – invoiced price and shipping costs.
Net realisable value is the price at which inventories can be sold in the normal course of business after allowing for cost of realisation and, where appropriate, the cost of conversion from their existing state to a finished condition. (h)
Accounts receivable Provision is made against accounts receivable to the extent which they are considered to be doubtful. Accounts receivable in the balance sheet are stated net of such provision.
(i)
Deferred taxation Deferred taxation is accounted for at the current taxation rate in respect of timing differences between profit as computed for taxation purposes and profit as stated in the accounts to the extent that a liability or an asset is expected to be payable or recoverable in the foreseeable future.
(j)
Translation of foreign currencies Transactions in foreign currencies are translated at exchange rates ruling at the transaction dates. Monetary assets and liabilities expressed in foreign currencies at the balance sheet date are translated at rates of exchange ruling at the balance sheet date or forward contract rates where the monetary assets or liabilities are hedged by forward contracts. Exchange differences arising in these cases are dealt with in the profit and loss account. The accounts of overseas subsidiaries expressed in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Exchange differences arising are dealt with as a movement in reserves.
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PRINCIPAL ACCOUNTING POLICIES (continued) (k)
Borrowing costs All borrowing costs are charged to the profit and loss account in the year in which they are incurred.
2
TURNOVER, REVENUE AND SEGMENT INFORMATION The Group is principally engaged in the manufacturing and trading of electric cable and wire products. Revenues recognised during the year are as follows:
Turnover Sale of goods Other revenue Interest income Total revenues
2000 HK$’000
1999 HK$’000
241,130
212,785
103
431
241,233
213,216
NOTES TO THE ACCOUNTS
1
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NOTES TO THE ACCOUNTS
2
TURNOVER, REVENUE AND SEGMENT INFORMATION (continued) An analysis of the group’s turnover and contribution to operating profit/(loss) for the year by principal activities and markets is as follows: Turnover 2000 1999 HK$’000 HK$’000 Principal activities: Manufacturing of cable and wire products Trading of cable and wire products Investment holding
Principal markets: Hong Kong Mainland China Europe Singapore America Thailand Australia New Zealand Others
240,979
208,297
151 –
4,488 –
241,130
212,785
164,693 29,932 3,290 11,899 11,098 9,527 4,736 2,360 3,595
155,747 21,395 15,892 – 7,459 5,002 4,112 1,075 2,103
241,130
212,785
Operating profit/(loss) 2000 1999 HK$’000 HK$’000
8,468 (595) 2,569 10,442
18,522 (408) 8,729 26,843
No analysis of the contribution to trading results by principal market has been prepared as no contribution to the profit from any of the above principal markets is substantially out of line with the normal ratio of profit or loss to turnover.
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OPERATING PROFIT Operating profit is stated after charging the following:
Cost of inventories Depreciation Owned fixed assets other than leasehold land Fixed assets held under hire purchase contracts Amortisation of leasehold land Provision for bad and doubtful debts Operating lease rentals in respect of land and buildings Auditors’ remuneration Staff costs Loss on disposal of fixed assets
4
2000 HK$’000
1999 HK$’000
150,406
123,869
9,073 1,996 681 407
8,923 2,139 441 –
466 577 25,599 218
410 491 20,849 310
2000 HK$’000
1999 HK$’000
4,347 581
722 604
4,928
1,326
FINANCE COSTS
Interest on bank loans and overdrafts Interest element of hire purchase contracts
NOTES TO THE ACCOUNTS
3
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NOTES TO THE ACCOUNTS
5
TAXATION (a)
Hong Kong profits tax has been provided at the rate of 16% (1999: 16%) on the estimated assessable profit for the year. The amount of taxation charged to the consolidated profit and loss account represents: 2000 HK$’000 Hong Kong profits tax Over-provision in previous year Transferred (from)/to deferred taxation account (note 5(b))
1,316 (409)
2,422 (478)
(103)
304
804
(b)
1999 HK$’000
2,248
Deferred taxation for the year has been provided as follows: 2000 HK$’000
1999 HK$’000
Provision at 1st January Transferred (to)/from profit and loss account (note 5(a))
2,051
1,747
Provision at 31st December (note 19)
1,948
(103)
304 2,051
Deferred taxation represents the net tax effect of timing differences arising from accelerated depreciation allowances which is expected to crystallise in the foreseeable future. There was no material unprovided deferred taxation for the year.
6
PROFIT ATTRIBUTABLE TO SHAREHOLDERS The profit attributable to shareholders is dealt with in the accounts of the Company to the extent of HK$332,000 (1999: HK$23,579,000).
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DIVIDENDS
Interim, paid, of HK$Nil (1999: HK$0.02) per ordinary share Final, proposed, of HK$0.01 (1999: HK$0.02) per ordinary share
8
2000 HK$’000
1999 HK$’000
–
3,982
1,990
3,979
1,990
7,961
EARNINGS PER SHARE The calculation of earnings per share is based on the profit attributable to shareholders of HK$4,710,000 (1999: HK$23,269,000) and on the weighted average number of 198,958,000 (1999: 199,085,331) ordinary shares in issue during the year.
9
DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS (a)
The aggregate amounts of emoluments payable to Directors of the Company during the year are as follows:
Fees Basic salaries, housing allowances, other allowances and benefits in kind Discretionary bonuses
2000 HK$’000
1999 HK$’000
–
–
5,854 1,125
5,730 2,616
6,979
8,346
Directors’ salaries disclosed above include HK$60,000 (1999: HK$60,000) paid to an independent non-executive director. Another independent nonexecutive director did not receive any emolument during the year (1999: HK$Nil). No Directors waived their emoluments in respect of the years ended 31st December 1999 and 2000.
NOTES TO THE ACCOUNTS
7
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NOTES TO THE ACCOUNTS
9
DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS (continued) The emoluments of the Directors fell within the following bands:
Emoluments bands
HK$nil – HK$1,000,000 HK$1,000,001 – HK$2,000,000 HK$2,000,001 – HK$3,000,000 HK$3,000,001 – HK$4,000,000
(b)
Number of executive directors 2000 1999 5 – 1 –
3 2 – 1
6
6
The five individuals whose emoluments were the highest in the Group for the year include 4 (1999: 4) Directors whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining 1 (1999: 1) individual during the year are as follows:
Basic salaries, housing allowances, other allowances and benefits in kind Bonuses
2000 HK$’000
1999 HK$’000
936 –
936 369
936
1,305
The emoluments fell within the following bands: Number of individual 2000 1999 HK$nil – HK$1,000,000 HK$1,000,001 to HK$1,500,000
1 –
– 1
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Land and buildings Outside In Hong Kong, Hong Kong, held under held under lease of between lease of between Leasehold 10 to 50 years 10 to 50 years improvements HK$’000 HK$’000 HK$’000
Plant and machinery HK$’000
Furniture and fixtures HK$’000
Office equipment HK$’000
Motor vehicles HK$’000
Company boat HK$’000
Total HK$’000
Cost or valuation: At 1st January 2000 Additions Disposals
2,500 39,210 –
46,000 5,174 –
– 1,894 –
54,253 1,712 –
6,175 799 (172 )
2,326 1,092 (172 )
3,960 296 (79 )
3,261 – –
118,475 50,177 (423 )
At 31st December 2000
41,710
51,174
1,894
55,965
6,802
3,246
4,177
3,261
168,229
Accumulated depreciation: At 1st January 2000 Charge for the year Disposals
– 590 –
– 2,065 –
– 166 –
18,028 7,171 –
2,685 737 (101 )
1,039 394 (31 )
1,595 448 (37 )
1,987 179 –
25,334 11,750 (169 )
At 31st December 2000
590
2,065
166
25,199
3,321
1,402
2,006
2,166
36,915
Net book value: At 31st December 2000
41,120
49,109
1,728
30,766
3,481
1,844
2,171
1,095
131,314
At 31st December 1999
2,500
46,000
–
36,225
3,490
1,287
2,365
1,274
93,141
The analysis of the cost or valuation at 31st December 2000 of the above assets is as follows: At cost At 1999 professional valuation
39,210 2,500
5,174 46,000
1,894 –
55,965 –
6,802 –
3,246 –
4,177 –
3,261 –
119,729 48,500
41,710
51,174
1,894
55,965
6,802
3,246
4,177
3,261
168,229
NOTES TO THE ACCOUNTS
10 FIXED ASSETS – GROUP
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NOTES TO THE ACCOUNTS
10 FIXED ASSETS – GROUP (continued) (a)
Certain leasehold land and buildings were revalued by DTZ Debenham Tie Leung Limited, independent professional valuers, on an open market value basis at 31st December 1999. The carrying amount of these land and buildings that would be included in the accounts if these land and buildings were carried forward at cost less depreciation is HK$24,894,497 (1999: HK$26,044,000).
(b)
At 31st December 2000, land and buildings with a net book value of HK$41,120,000 (1999: HK$2,500,000) were pledged to a bank to secure bank loans granted to the Group (note 23(a)).
(c)
Included in the total amount of fixed assets at 31st December 2000 are assets held under hire purchase contracts with an aggregate net book value of HK$5,537,780 (1999: HK$11,022,000).
11 INVESTMENTS IN SUBSIDIARIES Company 2000 1999 HK$’000 HK$’000 Unlisted shares, at cost
62,748
Details of the Company’s subsidiaries are set out in note 26.
62,748
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Group
Investments at cost Shares listed in Hong Kong Unlisted shares (note (a))
Provision for diminution in value Shares listed in Hong Kong Unlisted shares (note (a))
Market value of listed shares
(a)
2000 HK$’000
1999 HK$’000
146 –
146 4,500
146
4,646
(131) –
(131) (4,500)
(131)
(4,631)
15
15
19
21
In 1999, Perennial Investments (H.K.) Limited (“Perennial Investments”), a subsidiary of the Company, was in legal dispute with Union Bridge Investment Limited (“Union Bridge”) in relation to its investment in Popbridge Industrial Limited (“Popbridge”). Full provision was made for the investment in Popbridge of HK$4,500,000 in view of the uncertainty over the future prospects of this investment. The litigation in relation to Popbridge was settled out of court by a Deed made on 4th October 2000. Under the terms of the Deed, Perennial Investments relinquished its rights over the shares in Popbridge. It was agreed that Union Bridge shall pay Perennial Investments the amount of HK$4,500,000 by way of nine equal and consecutive monthly instalments of HK$500,000 each commencing from 3rd January 2001. Subsequent to year end and up to the date of this report, Perennial Investments received HK$2,000,000 which represents four instalment payments from Union Bridge. As a result, provision to the extent of the amount received of HK$2,000,000 was written back in 2000. In addition, an over provision for litigation costs of HK$569,000 was also written back in 2000.
NOTES TO THE ACCOUNTS
12 INVESTMENT SECURITIES
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NOTES TO THE ACCOUNTS
13 INVENTORIES Group
Raw materials Work in progress Finished goods
2000 HK$’000
1999 HK$’000
18,750 3,594 4,865
19,510 2,131 5,206
27,209
26,847
At 31st December 2000, none of the inventories are carried at net realisable value (1999: HK$Nil).
14 TRADE RECEIVABLES At 31st December 2000, the ageing analysis of trade receivables were as follows: Group
Current – 3 months 4 – 6 months Over 7 months
2000 HK$’000
1999 HK$’000
47,574 4,051 887
45,638 6,347 1,644
52,512
53,629
Payment terms with customers are largely on credit with the exception of new customers, which are on cash on delivery basis. Invoices are normally payable within 60 to 90 days of issuance.
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Included in deposits, prepayments and other receivables is a loan to a Director as follows:
Terms of the loan
Name
Mr LI Ho Cheong
Unsecured, interest bearing at 3% per annum and repayable on demand
Maximum amount outstanding during the year HK$’000
Amount outstanding at 31st December 2000 HK$’000
Amount outstanding at 31st December 1999 HK$’000
305
305
–
At 31st December 2000, the amount of interest due but not yet paid amounted to HK$4,875.
16 TRADE PAYABLES At 31st December 2000, the ageing analysis of trade payables were as follows: Group
Current – 3 months 4 – 6 months Over 7 months
2000 HK$’000
1999 HK$’000
22,327 3,596 700
22,185 1,381 –
26,623
23,566
NOTES TO THE ACCOUNTS
15 DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
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NOTES TO THE ACCOUNTS
17 SHARE CAPITAL Company 2000 1999 HK$’000 HK$’000 Authorised: Ordinary shares of HK$0.10 each
50,000
50,000
Issued and fully paid: Ordinary shares of HK$0.10 each
19,896
19,896
18 RESERVES Group Share Arising on premium consolidation HK$’000 HK$’000
Land and buildings revaluation HK$’000
Arising from issue of warrants HK$’000
Capital redemption HK$’000
Retained earnings HK$’000
Total HK$’000
57,327
117,515
At 1st January 1999 Repurchase of own shares Realisation upon expiry of warrants Revaluation deficit on leasehold land and buildings Profit attributable to shareholders Dividends
16,043
11,808
8,987
23,280
70
(158)
–
–
–
34
(34)
(158)
–
–
–
–
–
(23,280)
–
–
(4,081)
–
–
–
(4,081)
– –
– –
– –
– –
– –
23,269 (7,961)
23,269 (7,961)
At 31st December 1999
15,885
11,808
4,906
–
104
72,601
105,304
15,885
11,808
4,906
–
104
72,601
105,304
– –
– –
– –
– –
– –
4,710 (1,990)
4,710 (1,990)
15,885
11,808
4,906
–
104
Opening reserves as at 1st January 2000 Profit attributable to shareholders Dividends At 31st December 2000
(23,280)
75,321
108,024
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Company Share premium HK$’000
Contributed surplus (note 18(a)) HK$’000
Arising from issue of warrants HK$’000
Capital redemption HK$’000
Retained earnings HK$’000
Total HK$’000
At 1st January 1999 Repurchase of own shares Realisation upon expiry of warrants Profit attributable to shareholders Dividends
16,043
62,548
23,280
70
18,850
120,791
(158)
–
–
34
(34)
(158)
–
–
(23,280)
–
–
(23,280)
– –
– –
– –
– –
23,579 (7,961)
23,579 (7,961)
At 31st December 1999
15,885
62,548
–
104
34,434
112,971
15,885
62,548
–
104
34,434
112,971
– –
– –
– –
– –
332 (1,990)
332 (1,990)
15,885
62,548
–
104
32,776
111,313
Opening reserves as at 1st January 2000 Profit attributable to shareholders Dividends At 31st December 2000
(a)
The contributed surplus of the Company arose when the Company issued shares in exchange for the shares of subsidiaries being acquired in connection with the reorganisation of the Group prior to its listing on the Stock Exchange, and represents the difference between the nominal value of the Company’s shares issued and the value of net assets of the subsidiaries acquired. Under the Companies Act of 1981 of Bermuda (as amended), the contributed surplus is distributable to the shareholders. At Group level, the contributed surplus is reclassified into its component reserves of the underlying subsidiaries.
NOTES TO THE ACCOUNTS
18 RESERVES (continued)
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NOTES TO THE ACCOUNTS
19 LONG-TERM LIABILITIES Group
Bank loans – secured (note 19(a)) Obligations under hire purchase contracts (note 19(b)) Deferred taxation (note 5(b))
(a)
2000 HK$’000
1999 HK$’000
14,284
–
866 1,948
1,456 2,051
17,098
3,507
Bank loans – secured Group
Bank loans – secured (note 23) Wholly repayable within five years Not wholly repayable within five years
Less: Amount repayable within one year included in current liabilities
Bank loans are repayable in the following periods – Within one year – More than one year but not exceeding two years – More than two years but not exceeding five years – More than five years
2000 HK$’000
1999 HK$’000
6,750 11,369
– –
18,119
–
(3,835)
–
14,284
–
3,835
–
3,915
–
2,737 7,632
– –
18,119
–
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(b)
Obligations under hire purchase contracts Group
Obligations under hire purchase contracts are repayable in the following periods: – Within one year – More than one year but not exceeding two years – More than two years but not exceeding five years
Less: Amount payable within one year included in current liabilities
2000 HK$’000
1999 HK$’000
1,512
3,673
747
999
119
457
2,378
5,129
(1,512)
(3,673)
866
1,456
NOTES TO THE ACCOUNTS
19 LONG-TERM LIABILITIES (continued)
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NOTES TO THE ACCOUNTS
20 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (a)
Reconciliation of profit before taxation to net cash inflow from operating activities Group 2000 HK$’000 Profit before taxation Interest income Interest on bank loans and overdrafts Interest element of hire purchase contracts Loss on disposal of fixed assets Amortisation of leasehold land Depreciation of owned fixed assets other than leasehold land Depreciation of fixed assets held under hire purchase contracts Realisation of reserves arising from issue of warrants (Write back)/provision for unlisted investment securities and related litigation costs and provision Provision for diminution in value of listed investment securities Increase in inventories Decrease/(increase) in trade receivables, deposits, prepayments and other receivables Decrease/(increase) in bills receivable (Decrease)/increase in trade payables, accrued charges and other payables Decrease in bills payable Net cash inflow from operating activities
1999 HK$’000
5,514 (103) 4,347 581 218 681
25,517 (431) 722 604 310 441
9,073
8,923
1,996
2,139
–
(2,569) – (362)
4,615 333 (2,095) – 22,229
(23,280)
14,420 131 (6,516)
(13,095) (561) 8,692 (323) 17,693
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(b)
Analysis of changes in financing during the year Share capital including share premium 2000 1999 HK$’000 HK$’000 At 1st January Purchase of own shares New bank loans Repayment of bank loans Inception of hire purchase contracts Repayment of capital element of hire purchase contracts
35,781 – – –
At 31st December
35,973 (192) – –
Bank loans 2000 1999 HK$’000 HK$’000 – – 21,000 (2,881)
Obligations under hire purchase contracts 2000 1999 HK$’000 HK$’000
– – – –
5,129 – – –
7,769 – – –
860
2,888
–
–
–
–
–
–
–
–
(3,611)
(5,528)
35,781
35,781
18,119
–
2,378
5,129
21 CONTINGENT LIABILITIES At 31st December 2000, 12 (1999: 18) employees have completed the required number of years of service under the Employment Ordinance (“the Ordinance”) to be eligible for long service payment on termination of their employment. The Group is only liable to make such payment where the termination meets the circumstances specified in the Ordinance. If the termination of all these employees meets the circumstances specified in the Ordinance, the Group’s liability at 31st December 2000 would be HK$1,201,000 (1999: HK$1,435,000). Provision of HK$347,000 (1999: HK$347,000) has been made in the accounts as at 31st December 2000. The shortfall of HK$854,000 (1999: HK$1,088,000) has not been provided for in the accounts as at 31st December 2000, as in the opinion of the Directors, the amount will not crystallise in the foreseeable future.
NOTES TO THE ACCOUNTS
20 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (continued)
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NOTES TO THE ACCOUNTS
22 COMMITMENTS (a)
Capital commitments At 31st December 2000, the Group had the following capital commitments: Group
Contracted but not provided for in respect of – investment in a company – leasehold land and buildings
(b)
2000 HK$’000
1999 HK$’000
– –
9,000 36,175
–
45,175
Commitments under operating leases At 31st December 2000, the Group had commitments under operating leases in respect of land and buildings to make payments in the next twelve months under operating leases which expire as follows: Group
Within one year
2000 HK$’000
1999 HK$’000
–
89
23 PLEDGE OF ASSETS At 31st December 2000, the Group’s banking facilities amounting to approximately HK$74 million (1999: HK$42 million) were secured by the following: (a)
legal charges over certain land and buildings of the Group with a total net book value of HK$41,120,000 (1999: HK$2,500,000);
(b)
corporate guarantees given by the Company;
(c)
letters of undertaking from the Company and a subsidiary covenanting that their tangible net worth will be maintained at not less than HK$45 million and HK$10 million respectively; and
(d)
a deed of guarantee executed by the Company amounting to HK$30 million.
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The Directors of the Company regard Spector Holdings Limited, a company incorporated in the British Virgin Islands, as being the ultimate holding company.
25 APPROVAL OF ACCOUNTS The accounts were approved by the Board of Directors on 23rd April 2001.
26 SUBSIDIARIES At 31st December 2000, the Company held shares in the following principal subsidiaries: Place of incorporation/ establishment
Paid up share capital/ registered capital
British Virgin Islands
Ordinary US$1,200
Investment holding and provision of sourcing and management services
100%
100%
Ever Peak Development Limited
Hong Kong
Ordinary HK$2
Property holding
100%
100%
Glitter Wire & Cable Company, Limited
Hong Kong
Ordinary HK$500 Non-voting deferred HK$2,000,000
Property holding
100%
100%
*New Technology Cable Limited
Hong Kong
Ordinary HK$1,000 Non-voting deferred HK$10,000,000
Manufacturing and sale of electric cables and wires
100%
100%
NTC Services Limited
Hong Kong
Ordinary HK$10,000
Provision of staff management services
100%
100%
Perennial Cable (H.K.) Limited
Hong Kong
Ordinary HK$2,000,000
Trading of electric cables, wires and accessories
100%
100%
Name
Principal activities
Interest 2000 1999
Shares held directly Perennial Limited
Shares held indirectly
NOTES TO THE ACCOUNTS
24 ULTIMATE HOLDING COMPANY
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NOTES TO THE ACCOUNTS
26 SUBSIDIARIES (continued)
Name
Place of incorporation/ establishment
Paid up share capital/ registered capital
*Perennial Cable Limited
British Virgin Islands
Ordinary US$1
Investment and property holding, manufacture and sale of electric cables, wires and accessories
100%
100%
#
Perennial Cable (Shenzhen) Co., Limited
Mainland China
HK$21,000,000
Manufacturing of electric cables and wires
100%
100%
*Perennial Plastics (H.K.) Limited
Hong Kong
Ordinary HK$2
Manufacturing and sale of plastic resins and compounds
100%
100%
Perennial Plastics Limited
British Virgin Islands
Ordinary US$50,000
Investment holding
100%
100%
Perennial Investment (H.K.) Limited
Hong Kong
Ordinary HK$10,000
Investment holding
100%
100%
Principal activities
Interest 2000 1999
Save as noted below, the above companies’ place of operation is the same as their place of incorporation/establishment. *
The manufacturing activities of these companies are performed by sub-contractors in the Mainland China.
#
Perennial Cable (Shenzhen) Co., Limited, one of the Company’s subsidiaries, is not audited by PricewaterhouseCoopers, Hong Kong. The net assets of this subsidiary amounted to 10.01% of the Group’s total net assets.
