Escolar Documentos
Profissional Documentos
Cultura Documentos
1
AV Concept Holdings Limited Interim Report 2003
105,526 98,101
CURRENT ASSETS
Short term investment 1,380 1,379
Inventories 8 247,453 206,411
Accounts receivable 9 273,064 183,784
Prepayment, deposits and
other receivables 14,367 15,595
Cash and cash equivalents 45,208 64,103
581,472 471,272
CURRENT LIABILITIES
Accounts payable and accrued expenses 10 146,526 119,944
Tax payable 6,744 3,805
Interest-bearing bank borrowings 288,856 229,009
Finance lease payables 3,025 2,638
445,151 355,396
NON-CURRENT LIABILITIES
Finance lease payables (1,818 ) (1,728)
Other long term payable (452) (460)
Deferred tax (1,104 ) (1,104)
(3,374 ) (3,292)
238,473 210,685
238,473 210,685
2
Interim Report 2003 AV Concept Holdings Limited
As at 1 April 2002
As previously reported 23,632 121,507 13,872 (7,723) 19,454 170,742
Prior year adjustment –
SSAP 12
“Income Taxes” – – – – (962) (962)
As at 1 April 2003
As previously reported 36,153 139,366 13,872 (6,308) 28,405 211,488
Prior year adjustment –
SSAP 12
“Income Taxes” – – – – (803) (803)
3
AV Concept Holdings Limited Interim Report 2003
4
Interim Report 2003 AV Concept Holdings Limited
The interim financial statements have been prepared in accordance with the principal
accounting policies set out in the Group’s audited financial statements for the year
ended 31 March 2003, except that the Group has adopted the revised SSAP 12 “Income
Taxes” to account for the deferred taxation which became effective on 1 January 2003.
The adoption of the revised SSAP 12 represents a change in accounting policy, which
has been applied retrospectively and the comparative figures have been restated
accordingly. This change in accounting policy has resulted in a decrease of HK$772,000
and an increase of HK$288,000 in the profit attributable to shareholders for the six
months ended 30 September 2003 and 2002, respectively. The opening reserves at 1
April 2003 and 2002 have been reduced by HK$803,000 and HK$962,000, respectively.
2. SEGMENT INFORMATION
The Group principally engages in the marketing and distribution of electronic components
and the design, manufacture and original equipment manufacture of electronic products.
An analysis of the Group’ s turnover and contribution to profit from operating activities
for the Group’s business segments is as follows:
Business segments:
Marketing and distribution 721,822 730,438 23,978 27,435
Design, manufacture and
original equipment
manufacture 113,942 144,822 13,811 (5,892 )
5
AV Concept Holdings Limited Interim Report 2003
An analysis of the Group’s turnover for the Group’s geographical segments is as follows:
Segment turnover
Six months ended
30 September
2003 2002
(unaudited) (unaudited)
HK$’000 HK$’000
Geographical segments:
Hong Kong 663,004 644,315
Singapore 89,104 86,362
USA and Canada 54,143 5,782
Korea 16,531 135,920
EU 7,525 2,476
Japan 5,058 –
Other locations 399 405
835,764 875,260
4. FINANCE COSTS
4,582 5,515
6
Interim Report 2003 AV Concept Holdings Limited
5. TAX
Hong Kong profits tax has been provided at the rate of 17.5% (2002: 16%) on the
estimated assessable profits arising in Hong Kong during the period. Taxes on profits
assessable elsewhere have been calculated at the rates of tax prevailing in the countries
in which the Group operates, based on existing laws, interpretations and practices in
respect thereof.
6. INTERIM DIVIDEND
The Board of Directors has resolved to declare an interim dividend of HK2.5 cents per
ordinary share in issue in respect of the six months ended 30 September 2003 (2002:
HK1.0 cent) payable on or before 16 January 2004 to shareholders whose names appear
on the register of members of the Company on 29 December 2003.
The calculation of basic earnings per share is based on the net profit from ordinary
activities attributable to shareholders of HK$28,120,000 (2002: HK$12,510,000) and the
weighted average of 363,302,749 (2002: 320,531,637) ordinary shares in issue during
the period.
Diluted earnings per share for the six months ended 30 September 2003 is based on the
net profit attributable to shareholders of HK$28,120,000 and the weighted average number
of ordinary shares of 366,551,443, after adjusting for the effects of all dilutive potential
shares.
Diluted earnings per share for the six months ended 30 September 2002 have not been
disclosed, as the share options outstanding during the period had an anti-dilutive effect
on the basic earnings per share for the period.
7
AV Concept Holdings Limited Interim Report 2003
8. INVENTORIES
30 September 31 March
2003 2003
(unaudited) (audited)
HK$’000 HK$’000
247,453 206,411
9. ACCOUNTS RECEIVABLE
The Group seeks to maintain strict control over its outstanding receivables and has a
credit control policy to minimise credit risk. A credit committee consisting of senior
management and the directors of the Group has been established to review and approve
large customer credits.
The aged analysis of the accounts receivable as at 30 September 2003, based on the
invoice due date and stated net of provision for doubtful debts, is as follows:
30 September 31 March
2003 2003
(unaudited) (audited)
HK$’000 HK$’000
Accounts receivable:
Current 187,777 111,215
Less than 30 days 50,429 43,583
31 - 60 days 17,416 15,576
Over 60 days 17,442 13,410
273,064 183,784
8
Interim Report 2003 AV Concept Holdings Limited
The aged analysis of the accounts payable as at 30 September 2003, based on the
invoice due date, is as follows:
30 September 31 March
2003 2003
(unaudited) (audited)
HK$’000 HK$’000
Accounts payable:
Current 61,157 55,671
Less than 30 days 52,628 50,072
31 - 60 days 13,554 2,270
Over 60 days 3,073 1,707
130,412 109,720
146,526 119,944
Number of Share
shares capital
(unaudited) (unaudited)
HK$’000
Authorised:
At 30 September 2003 and 31 March 2003 800,000,000 80,000
9
AV Concept Holdings Limited Interim Report 2003
BUSINESS REVIEW
Turnover of the Group for the six months ended 30 September 2003 decreased
5% to HK$835,764,000 (2002: HK$875,260,000). For the same period, profit
attributable to shareholders rose 125% to HK$28,120,000 (2002: HK$12,510,000).
During the six months under review, turnover from the distribution of
semiconductors dropped by 1% to HK$721,822,000 (2002: HK$730,438,000). The
corresponding operating profit also fell 13% to HK$23,978,000 (2002:
HK$27,435,000).
In the first quarter of the period, the SARS outbreak in Hong Kong and Pearl
River Delta area slowed the Group’s semiconductors distribution business. Margins
on the component sales were kept low to maintain steady flow of goods and to
avoid any accumulation of inventory over the SARS affected period.
Overall turnover for the six months under review remained little changed from the
last corresponding period.
The concentration of sales and backlog orders in the second quarter of the
financial period had increased the Group’s accounts receivable as at the balance
sheet date. The effect is temporarily and the accounts receivable is expected to
return to a normal low level in the third quarter of the financial year.
10
Interim Report 2003 AV Concept Holdings Limited
The six months under review should be recognised as a beginning of a new page
for the Group’s design and manufacture business.
Turnover for the period fell 21% to HK$113,942,000 (2002: HK$144,822,000) and
profit from operations rose to HK$13,811,000 (2002: loss of HK$5,892,000).
The drop in turnover of the design and manufacture business segment was solely
attributable to the adoption of a new business model in our provision of
manufacturing services to Reigncom Limited (“Reigncom”), a company incorporated
in the Republic of Korea and an investee company of the Group.
In April 2003, the Group entered into a new electronic manufacturing services
(“EMS”) agreement with Reigncom. Under the new agreement, the Group’s sales
to Reigncom are based only on the EMS fees chargeable on the products
manufactured. Raw materials used in the manufacture of the products are
consigned by Reigncom.
Prior to the new agreement, the Group is responsible for the purchase of these
raw materials. Accordingly, sales to Reigncom are based on the FOB price of the
completed products which included the costs of the raw materials and the EMS
fees chargeable.
The change in the business model caused an apparent drop in sales to Reigncom
to HK$16,531,000 (2002: HK$135,920,000). If the same basis of the new EMS
agreement were applied, the pro-forma 2002 sales to Reigncom would have been
HK$8,327,000. Thus reflecting a growth in the Reigncom EMS service sales of
99% in 2003.
In March 2003, the Group won its first major Japanese EMS customer to provide
SMT printed circuit board assembly services. Production output rose rapidly from
the initial 30,000 units per month in April 2003 to over 140,000 units per month in
September 2003. Our consistent production quality had won many praises from
our customers and further Japanese EMS orders are expected.
In addition to the Group’s EMS services, sales of the Group’s own ODM products
also played a major role in the period under review. Turnover for the ODM products
during the six months recorded exceptional growth to HK$77,978,000 (2002:
HK$5,632,000). The success of our current range of MP3 players has attracted
many new orders. In addition, much interest has also been generated for our
next year’s product range.
11
AV Concept Holdings Limited Interim Report 2003
Investment in Reigncom
Based on the expected IPO offer price, the market value of the Company’s interest
in Reigncom would be approximately 45,864 million Won (approximately
HK$297,631,000). As a result of the shares to be issued by Reigncom pursuant
to the IPO, the Company’s percentage interest in the share capital of Reigncom
will be reduced from the current level of about 18.8% to about 15.0% immediately
following the share offer.
PROSPECTS
The full year financial performance for the Group’s semiconductor distribution
business is a picture of great optimism. Strong customer demand noted in the
second quarter is expected to continue for the remainder of the financial year
and beyond. Looking into 2004, sales of digital electronic components, including
flash memory IC’s, micro-controller units and TFT-LCD IC’s are set to rise and
prices are expected to remain robust.
The sales growth of the Group’s EMS services is expected to continue at an even
faster rate. Orders from Reigncom and Japanese customers are expected to rise
substantially in the coming year. Thus generating a meaningful return on
investment for the EMS operation.
12
Interim Report 2003 AV Concept Holdings Limited
Based on our current successful range of ODM MP3 products, a new product
lineup has been designed for 2004. Same emphasis has been put in the product’s
industrial design, details and user interface. These are the important attributes
that differentiate our ODM products to those of the mass market. Much interest
has already been generated and the directors are very optimistic of the sales of
our new 2004 range of products.
Total facilities available to the Group from its bankers amounted to HK$477,170,000
(as at 31 March 2003: HK$442,170,000). The management is confident that the
Group has adequate financial resources for its business growth and forecast
requirement for the coming year.
13
AV Concept Holdings Limited Interim Report 2003
Percentage
of the
Number of shares and nature of interests Company’s
Personal Other issued
Company interests interests Total share capital
The interests of the directors in the share options of the Company are
separately disclosed in the section “Share Option Scheme” below.
Apart from as disclosed under the heading “Share Option Scheme” below, at
no time during the period were rights to acquire benefits by means of the
acquisition of shares in or debentures of the Company granted to any directors
or their respective associates, or were any such rights exercised by them or
was the Company or any of its subsidiaries a party to any arrangement to
enable the directors to acquire such rights in any other body corporate.
14
Interim Report 2003 AV Concept Holdings Limited
Director
Lai Yat Hung, 4,125,000@ – – (4,125,000) – 28 December 1999 28 June 2000 – 0.72 1.72
Edmund 27 June 2003
Lai Yat Hung, 2,250,000@ – – (2,250,000) – 20 October 2000 20 April 2001 – 0.31 0.53
Edmund 19 April 2003
Other employees
27,000,000# – (10,800,000) (450,000) 15,750,000 22 May 2002 23 May 2002 – 0.304 0.31
12 May 2012
# The number of outstanding share options under the new share option scheme adopted
by the Company on 13 May 2002 (the “New Scheme”).
@ The number of outstanding share options under the old share option scheme adopted by
the Company on 1 April 1996 (the “Old Scheme”).
15
AV Concept Holdings Limited Interim Report 2003
Notes:
1. The vesting period of the share options is from the date of grant until the commencement
of the exercise period.
2. The exercise price of the share options is subject to adjustment in the case of rights or
bonus issues, or other similar changes in the Company’ s share capital. The exercise
price and the number of outstanding share options under the New Scheme and the Old
Scheme were adjusted to take into account the effect of the rights issue completed on 3
June 2002.
3. The price of the Company’s shares disclosed as at the date of the grant of share
options is the Stock Exchange closing price on the trading day immediately prior to the
date of the grant of options.
4. The weighted average closing price immediately before the dates on which the options
were exercised was HK$0.46 per share.
The financial impact of share options granted is not recorded in the Company’s
or the Group’s balance sheet until such time as the options are exercised, and no
charge is recorded in the profit and loss account or balance sheet for their cost.
Upon the exercise of the share options, the resulting shares issued are recorded
by the Company as additional share capital at the nominal value of the shares,
and the excess of the exercise price per share over the nominal value of the
shares is recorded by the Company in the share premium account. Options which
are cancelled prior to their exercise date are deleted from the register of
outstanding options.
16
Interim Report 2003 AV Concept Holdings Limited
SUBSTANTIAL SHAREHOLDERS
As at 30 September 2003, the persons or corporations, other than the directors
or chief executive of the Company, who had interests or short positions in the
shares and underlying shares of the Company as recorded in the register required
to be kept under Section 336 of the SFO or as otherwise notified to the Company,
were as follows:
Percentage of the
Number of Company’s issued
Name shares held share capital
Note: 123,508,300 shares in the Company were beneficially held by B.K.S. Company Limited
which is a wholly-owned subsidiary of Credit Cash Limited. Credit Cash Limited is a
company wholly-owned by Ansbacher (BVI) Limited which is the trustee of a
discretionary trust the beneficiaries of which include Mr. So Chi On, Madam Yeung Kit
Ling and other family members of Mr. So Yuk Kwan. Therefore, the shares in which
B.K.S. Company Limited was shown as being interested duplicate those of Credit
Cash Limited, Ansbacher (BVI) Limited and Madam Yeung Kit Ling.
Save as disclosed above, as at 30 September 2003, the Company has not been
notified by any other person or corporation, other than the directors of the Company
whose interests are set out above, having interests or short positions in the
shares and underlying shares of the Company which would fall to be disclosed to
the Company under the provisions of the SFO, or as recorded in the register
required to be kept under Section 336 of the SFO.
17
AV Concept Holdings Limited Interim Report 2003
AUDIT COMMITTEE
The Audit Committee had reviewed with management the accounting principles
and practices adopted by the Group and discussed auditing, internal control and
financial reporting matters including a review of the unaudited interim financial
report for the six months ended 30 September 2003 with the directors.
Non-executive directors of the Company are not appointed for a specific term as
all of the directors, excluding the Managing Director, are subject to retirement by
rotation and re-election at the Annual General Meeting in accordance with the
Company’s Articles of Association.
18