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unaudited financial results
for the NINE months ended 31st december, 2001
In view of the fact that Hang Fung Gold Technology Limited (the "Company") is an
associate of S.W. Lam, Inc. which is quoted on the National Association of
Securities Dealers, Inc. Electronic Bulletin Board, the quarterly and annual
results of the Company and S.W. Lam, Inc. are accordingly required to be
simultaneously disseminated in Hong Kong and the United States.
The Directors of Hang Fung Gold Technology Limited (the "Company") announce the
unaudited consolidated income statements of the Company, its subsidiaries and
associates (collectively the "Group") for the three months and nine months ended
31st December, 2001 together with comparative figures for the corresponding
periods in 2000 as follows:
CONSOLIDATED INCOME STATEMENTS
Nine months ended Three months ended
31st December 31st December
2001 2000 2001 2000
Note HK$'000 HK$'000 HK$'000 HK$'000
(Unaudited) (Unaudited)
Turnover (2) 968,475 802,849 350,322 372,172
Cost of sales (825,641) (668,785) (298,651) (321,748)
------------- ------------- ------------- -------------
Gross profit 142,834 134,064 51,671 50,424
Selling and distribution expenses (22,438) (11,831) (10,789) (4,264)
General and administrative expenses (59,195) (46,655) (22,768) (14,751)
Impairment loss on goodwill arising
on acquisition of associates (1) -- (188,142) -- --
------------- ------------- ------------- -------------
Profit from operations 61,201 (112,564) 18,114 31,409
Interest income 6,027 5,475 1,402 1,532
Interest expense (25,079) (18,496) (7,803) (6,953)
Share of loss of associates and provision for
doubtful receivables from an associate (8,500) (4,623) (2,869) (3,884)
------------- ------------- ------------- -------------
Profit before taxation 33,649 (130,208) 8,844 22,104
Taxation (3) (3,372) (5,000) (972) (2,000)
Profit attributable to shareholders 30,277 (135,208) 7,872 20,104
============= ============= ============= =============
Dividend - interim -- -- -- --
============= ============= ============= =============
Earnings/(Loss) per share (4)
- Basic 0.568 cents (3.235) cents
============= =============
- Diluted 0.565 cents (3.199) cents
============= =============
Notes:
1. Principal accounting policies
The unaudited consolidated income statements have been prepared in
accordance with the principal accounting policies set out in the Company's
annual accounts for the year ended 31st March, 2001, except for goodwill
set out below.
Effective from 1st April, 2001, the Company has adopted SSAP 30 "Business
Combination", goodwill arising on acquisitions is capitalised in the
balance sheet and amortised to the income statement in accordance with the
pattern of the related economic benefits flowing to the Company. This
change in accounting policy has been applied retrospectively. As a result
of this change in accounting policy, the goodwill of approximately
HK$188,142,000, which was previously eliminated against reserves, has been
reinstated and an impairment loss of approximately HK$188,142,000 has been
recognised in corresponding period in 2000.
2. Turnover
Analysis of the Group's turnover by geographical locations is as follows:
Nine months ended
31st December
2001 2000
Turnover Turnover
HK$'000 HK$'000
By geographical locations
Mainland China and Hong Kong 658,560 487,329
South East Asia 125,925 112,399
Europe 58,068 77,073
The United States of America 78,466 76,271
Others 47,456 49,777
-------- --------
968,475 802,849
======== ========
Turnover by geographical locations is determined on the basis of the
destination of delivery of products.
3. Taxation
Taxation in the consolidated income statements represents:
Nine months ended
31st December
2001 2000
HK$'000 HK$'000
Hong Kong taxation 3,372 5,000
======== ========
The Company is exempted from taxation in Bermuda until 2016. Hong Kong
profits tax was provided at the rate of 16% (2000: 16%) on the estimated
assessable profit arising in or derived from Hong Kong.
There was no significant unprovided deferred taxation as at 31st December,
2001.
4. Earnings/(Loss) per share
(a) Basic earnings/(loss) per share
The calculation of basic earnings/(loss) per share is based on the
profit attributable to shareholders of HK$30,277,000 (2000: loss of
HK$135,208,000) and 5,332,000,000 shares (2000: 4,179,425,000 shares)
in issue during the period.
(b) Diluted earnings/(loss) per share
The calculation of diluted earnings/(loss) per share is based on the
profit attributable to shareholders of HK$30,277,000 (2000: loss of
HK$135,208,000) and on the weighted average number of 5,362,577,396
shares (2000: 4,226,132,000 shares) in issue during the period after
adjusting for the effects of all dilutive potential shares. The effect
of the dilutive potential shares resulting from the exercise of the
outstanding employee share options on the weighted average number of
shares in issue during the period was 30,577,396 shares (2000:
46,707,000 shares), which were deemed to have issued at no
consideration if all outstanding employee share options had been
exercised on the date when the employee share options were granted.
5. Comparative figures
Certain comparative figures have been reclassified to conform to the
current period presentation.
RESULTS
Turnover for the nine months ended 31st December, 2001 amounted to approximately
HK$968,475,000 representing an increase of 20.6% over the corresponding period
in 2000. Profit from operation before impairment loss on goodwill arising on
acquisition of associates was HK$61,201,000 (2000: HK$75,578,000). The decrease
in profit was due to (1) change of product mix of increase in proportion of
sales of gold products of relatively lower gross profit margin; (2) increase in
selling and administrative expenses which was mainly due to increase in size of
operation and business in general, expansion of distribution network and the
establishment of the "3D-Gold Tourism Exhibition Hall"; and (3) adoption of more
competitive pricing strategy to cope with increasing competition and to increase
market share.
Profit attributable to shareholders before impairment loss on goodwill arising
on acquisition of associates amounted to approximately HK$30,277,000 (2000:
HK$52,934,000). The decrease in profit was mainly due to (1) the increase in
share of loss of associates and provision for doubtful receivable from an
associate and (2) the increase in interest expense due to increase of bank
borrowings for expanding distribution network and the establishment of the
"3D-Gold Tourism Exhibition Hall".
REDUCTION OF SHARE PREMIUM ACCOUNT
On 1st March, 2002, the Company has passed a resolution to reduce the entire
share premium accounts to zero by canceling the entire amount HK$328,220,000
standing to the credit of the share premium accounts as at 1st March, 2002. The
cancelled amount will be transferred to the contributed surplus account of the
Company. The amount of HK$200,693,000 in the contributed surplus account will
then be set off against the accumulated deficit of the Company as at 31st March,
2001 of HK$200,693,000. As a result, the Company will enable to declare
dividends to shareholders of the Company at an earlier opportunity and make a
distribution to shareholders out of the contributed surplus account as and when
they consider it appropriate to do so.
THIRD INTERIM DIVIDEND
The Directors do not recommend any third interim dividend in respect of the nine
months ended 31st December, 2001 (2000: Nil).
PURCHASE, SALE AND REDEMPTION OF SECURITIES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any
of the Company's listed securities during the nine months ended 31st December,
2001.
On behalf of the Board
Lam Sai Wing
Chairman
Hong Kong, 21st March, 2002