INTERIM RESULTS
The board of directors of Bossini International Holdings Limited (the "Company") announces the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 September 1998. The results. together with the comparative figures for the corresponding period in 1997, are summarised below:
Six months ended
30 September
1998 1997
HK$'000 HK$'000
TURNOVER 551,235 675,914
============ ===========
OPERATING PROFIT/(LOSS)
BEFORE EXCEPTIONAL ITEM (21,063) 10,988
Exceptional item (Note 1) - (11,621)
------------ -----------
OPERATING LOSS (21,063) (633)
Share of profit of an
associated company 529 -
------------ -----------
LOSS BEFORE TAXATION (20,534) (633)
Taxation (Note 2) (927) (2,380)
------------ -----------
LOSS BEFORE MINORITY
INTERESTS (21,461) (3,013)
Minority interests (40) 166
------------ -----------
NET LOSS ATTRIBUTABLE
TO SHAREHOLDERS (21,501) (2,847)
============ ===========
LOSS PER SHARE (Note 3) (7.84 cents) (1.04 cents)
============ ===========
Notes:
1. Exceptional item
The exceptional item for the previous period represented foreign exchange losses caused by the devaluation of the Malaysia and Singapore currencies.
2. Taxation
Hong Kong profits tax has been calculated at the rate of 16% (1997: 16.5%) on the estimated assessable profits arising in Hong Kong during the period. Taxes on profits assessable elsewhere have been calculated at the rates of taxation prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.
Six months ended
30 September
1998 1997
HK$'000 HK$'000
Group:
Hong Kong 388 146
Elsewhere 459 2,234
------- -------
847 2,380
Share of taxation of an overseas
associated company 80 -
------- -------
Taxation charge for the period 927 2,380
======= =======
3. Loss per share
Loss per share is calculated based on the net loss attributable to shareholders for the period of HK$21,501,000 (1997: HK$2,847,000) and 274,297,493 shares (1997: 274,297,493 shares) in issue during the period.
INTERIM DIVIDEND
The board of directors does not recommend the payment of an interim dividend for the six months ended 30 September 1998 (1997:' Nil).
BUSINESS REVIEW AND OUTLOOK
The Group's consolidated turnover for the six months ended 30 September 1998 was HK$551,235,000, representing a decrease of 18.4 % as compared to the corresponding period in 1997. The net loss attributable to shareholders was HK$21,501,000.
With the outbreak of the Asian financial turmoil in mid-1997, Hong Kong's economy deteriorated, which severely dampened consumer sentiment and badly hit the local retail market. To combat the unfavourable market conditions, the Group has streamlined its business operations, cut excess manpower and implemented various measures to reduce its operating costs. Besides, negotiations have been made with store landlords for rental reduction. The management has imposed tighter controls on inventory flow to increase stock turnover and keep the inventory at a minimal level. In addition, the Group has fought for more competitive prices from its suppliers to lessen the adverse effects of the selling price reduction on the Group's gross margin.
Although the economy of China and Singapore were less affected by the financial turmoil than Hong Kong, the Group's retail business was inevitably affected by the slowdown of economic growth and the weakening of consumers' spending power in these two countries. The profit margin suffered a downturn under the intensified competition within the industry. In view of the unfavourable market conditions, the Group has suspended its business expansion in both countries, reduced operating expenses and improved cost efficiency to maintain its strength for future business growth.
Looking ahead, it is expected that the economic setback of Hong Kong and Asian countries will last for a longer period and hence the business operation of the Group will continue to be difficult in the foreseeable future. However, the Group believes that its competitiveness in the market can be maintained by imposing effective cost controls and improving the marketability of its products. In order to achieve higher sales turnover and increase profit contribution under the subdued market conditions, the Group will keep on improving its product quality, setting attractive prices for its products and rearranging its product combinations to be more suited to customers' demand. The consolidation of operations and reduction of rentals are expected to result in a sharp decrease in store rental costs in the second half of the year. Furthermore, the benefits derived from those cost control measures introduced during the period under review will be fully reflected in the second half of the year. The Group predicts that the total operating expenses for the financial year ending
To combat the adverse market conditions, the Group will continue to adopt a prudent strategy for its business development in Hong Kong, China and Singapore.
DIRECTORS' INTERESTS IN SHARES
As at 30 September 1998. the interests of the Company's directors in the share capital of the Company and its associated corporations within the meaning of the Securities (Disclosure of Interests) Ordinance (the "SDI Ordinance") as recorded in the register maintained by the Company pursuant to Section 29 of the SDI Ordinance were as follows:
(1) The Company
Nature of Number of
Name of director Notes interest shares
Mr. Shuk Hoi LAW (a)and(b) Corporate 186,859,000
Mr. Ka Sing LAW (a)and(b) Corporate 186,859,000
Mr. Kar Po LAW (a)and(b) Corporate 186,859,000
Notes:
(a) Kandos Investments Limited ("Kandos"). a company incorporated in the British Virgin Islands with limited liability which has an issued share capital of US$10,000 divided into 1.000 ordinary shares of US$10 each, beneficially owned 177,148,750 shares of HK$0.10 each in the Company as at
(b) Venus Company Limited ("Venus") and its subsidiary beneficially owned 9,710,250 shares of HK$0.10 each in the Company as at 30 September 1998. Venus is a company incorporated in the British Virgin Islands with limited liability. It has an issued share capital of HK$1,400 divided into 1.400 shares of HK$1 each. Mr. Shuk Hoi LAW, Mr. Ka Sing LAW and Mr. Kar Po LAW beneficially owned 600 shares. 200 shares and 200 shares, respectively, in Venus as at
(2) Associated corporation
Nature of Number of
Name of director interest shares
Kandos Investments Mr. Shuk Hoi LAW Personal 432
Limited Mr. Ka Sing LAW Personal 142
Mr. Kar Po LAW Personal 142
Save as disclosed above. none of the directors or their associates had any personal, family, corporate or other interests in the share capital of the Company or any of its associated corporations as defined in the SDI Ordinance.
At no time during the period was the Company, its holding company, its subsidiaries, or any of its fellow subsidiaries a party to any arrangements to enable the Company's directors, their respective spouses or children under 18 years of age to acquire benefits by means of the acquisition of shares in the Company or any other body corporate.
SUBSTANTIAL SHAREHOLDERS
As at 30 September 1998, the following parties had registered an interest in the share capital of the Company that was required to be recorded in the register of interests kept by the Company pursuant to Section 16(1) of the SDI Ordinance:
Name Number of shares
(a) Kandos Investments Limited 177,148,750
(b) Mr. Shuk Hoi LAW 177,148,750
The interests disclosed by parties (a) and (b) above were in respect of the same shareholding. Pursuant to the SDI Ordinance, as Mr. Shuk Hoi LAW owned more than one-third interest in the issued share capital of Kandos as at 30 September 1998, he was deemed to be interested in the shares of the Company held by Kandos.
Save as disclosed above, no person had registered an interest in the share capital of the Company that was required to be recorded under Section 16(1) of the SDI Ordinance during the period.
CODE OF BEST PRACTICE
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 1998, 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 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 Bye-laws of the Company.
YEAR 2000 COMPLIANCE
The Year 2000 problem arises due to the calendar year data stored in computer systems in a two-digit format rather than using a four-digit year form. As a result, the systems may not be able to distinguish "2000" from "1900" in the year 2000 and hence may lead to system failure or miscalculations.
The Group reviewed its computer systems in mid-1998 and has identified areas which could be affected by the Year 2000 problem. System rectification works are being carried out to ensure compliance. The enhancement and upgrading of certain major systems have been completed and are pending for testing. The rest of the compliance works will be completed shortly. It is expected that the systems conversion work can be started in early 1999 and will be completed by the end of June 1999.
As the Year 2000 compliance works are handled by our Information Technology Department, it is anticipated that the costs incurred therefrom will not be material. Such costs will be recognised as operating expenses according to the Group's accounting policies.
The Group believes that the Year 2000 problem will not cause a major disruption to the operations of the Group.
PURCHASE, REDEMPTION OR SALE OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities during the period.
By Order of the Board
Ka Sing LAW
Director
Hong Kong, 18 December 1998
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