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News

Half Year Financial Statement Announcement

BackJul 24, 2002
The Board of Directors of Qian Hu Corporation Limited is pleased to announce the results of the Group and of the Company for the six months ended 30 June 2002.
These figures have not been audited.


- -
Group
Company
- -
$'000
%
$'000
%
- -
- -
30/06/02
30/6/01
Increase/ (Decrease)
30/6/02
30/6/01
Increase/ (Decrease)
1.(a) Turnover
27,817
19,866
40.0
18,851
14,808
27.3
1.(b) Cost of sales
(17,605)
(12,845)
37.1
(11,687)
(9,616)
21.5
1.(c) Gross profit
10,212
7,021
45.5
7,164
5,192
38.0
1.(d) Investment income
0
0
0
0
0
0
1.(e) Other income including interest income
0
6
(100.0)
0
3
(100.0)
2.(a) Operating profit before income tax, minority interests, extraordinary items, interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items
4,393
2,466
78.1
3,237
2,261
43.2
2.(b)(i) Interest on borrowings
(56)
(37)
51.4
(45)
(29)
55.2
2.(b)(ii) Depreciation and amortisation
(702)
(566)
24.0
(423)
(396)
6.8
2.(b)(iii) Foreign exchange gain/(loss)
9
89
(89.9)
22
40
(45.0)
2.(c) Exceptional items (provide separate disclosure of items)
0
0
0
0
0
0
- -
- -
$'000
%
$'000
%
- -
- -
30/06/02
30/6/01
Increase/ (Decrease)
30/6/02
30/6/01
Increase/ (Decrease)
2.(d) Operating profit before income tax, minority interests and extraordinary items but after interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items
3,644
1,952
86.7
2,791
1,876
48.8
2.(e) Income derived from associated companies (With separate disclosure of any items included therein which are exceptional because of size & incidence)
24
15
60.0
0
0
0
2.(f) Operating profit before income tax
3,668
1,967
86.5
2,791
1,876
48.8
2.(g) Less income tax (Indicate basis of computation)
(775)
(440)
76.1
(560)
(370)
51.4
2.(g)(i) Operating profit after tax before deducting minority interests
2,893
1,527
89.5
2,231
1,506
48.1
2.(g)(ii) Less minority interests
24
65
(63.1)
0
0
0
2.(h) Operating profit after tax attributable to members of the company
2,917
1,592
83.2
2,231
1,506
48.1
2.(i)(i) Extraordinary items (provide separate disclosure of items)
0
0
0
0
0
0
2.(i)(ii) Less minority interests
0
0
0
0
0
0
2.(i)(iii) Extraordinary items attributable to members of the company
0
0
0
0
0
0




- -
Group
Company
- -
$'000
%
$'000
%
- -
- -
30/06/02
30/6/01
Increase/ (Decrease)
30/6/02
30/6/01
Increase/ (Decrease)
2.(i)(iv) Transfer to/from Exchange Reserve
0
0
0
0
0
0
2.(i)(v) Transfer to Capital Reserve
0
0
0
0
0
0
2.(i)(vi) Transfer to Reserve Fund
0
0
0
0
0
0
2.(j) Operating profit after tax and extraordinary items attributable to members of the company
2,917
1,592
83.2
2,231
1,506
48.1





Group Figures
- -
Latest period
Previous corresponding period
3.(a) Operating profit [2(g)(i) above] as a percentage of turnover [1(a) above]
10.40%
7.69%
3.(b) Operating profit [2(h) above] as a percentage of issued capital and reserves at end of the period
12.14%
10.43%
3.(c) Earnings per ordinary share for the period based on 2(h) above :-
(i) Based on weighted average number of ordinary shares in issue (*)
3.19 cents
1.75 cents
(ii) On a fully diluted basis

(To disclose the basis used in arriving at the weighted average number of shares for the purposes of (c)(i) above and to provide details of any adjustments made for the purpose of (c)(ii) above) (#)
3.15 cents
1.74 cents
3.(d) Net tangible asset backing per ordinary share based on existing issued share capital as at the end of the period reported on
23.33 cents
17.91 cents


3.(e) To provide an analysis of expenses based on their nature within the group for

THE GROUP
1st Half 2002
$'000
1st Half 2001
$'000
Increased
$'000
%
Selling and distribution
705
671
34
5.1
General and administration
5,807
4,367
1,440
33.0
Financial
56
37
19
51.4
6,568
5,075
1,493
29.4


Included in general and administration expenses is personnel expenses amounted to $3.3 million (30/6/2001 : $2.6 million).


* Note to 3(c)(i)
Earnings per ordinary share on existing issued share capital is computed based on the weighted average number of shares in issue during the period of 91,455,774 (30/6/2001: 91,033,800).

# Note 3(c)(ii)
Earnings per ordinary share on a fully diluted basis is computed based on the weighted average number of shares during the period adjusted to assume conversion of all potential dilutive ordinary shares of 92,482,207 (30/6/2001: 91,662,390).



- -
Group
Company
Item 4 is not applicable to interim results
$'000
%
$'000
%
- -
- -
30/06/02
30/6/01
Increase/ (Decrease)
30/6/02
30/6/01
Increase/ (Decrease)
4.(a) Sales reported for first half year
4.(b) Operating profit [2(g)(i) above] reported for first half year
4.(c) Sales reported for second half year
4.(d) Operating profit [2(g)(i) above] reported for second half year






5.(a) Amount of any adjustment for under or overprovision of tax in respect of prior years



5.(b) Amount of any pre-acquisition profits



5.(c) Amount of profits on any sale of investments and/or properties

+Item 5c Table


5.(d) Any other comments relating to Paragraph 5




6. Segmental Results

(i) BUSINESS SEGMENTS (The Group)

30/6/2002
Fish
$'000
Accessories
$'000
Plastic & Others
$'000
Eliminations
$'000
Total
$'000
TURNOVER
External sales
11,990
12,560
3,267
-
27,817
Inter-segment sales
585
3,767
636
(4,988)
-
Total sales
12,575
16,327
3,903
(4,988)
27,817
RESULTS
Segment results
1,645
2,539
163
(82)
4,265
Unallocated expenses
(565)
3,700
Financial expenses - net
(56)
Share of profit of associated companies
24
Taxation
(775)
Minority interests
24
Net profit for the period
2,917
ASSETS & LIABILITIES
Assets
12,348
15,480
5,418
-
33,246
Investment in associated companies
368
Unallocated assets
2,440
Total assets
36,054
Liabilities
3,466
5,151
1,470
-
10,087
Unallocated liabilities
1,895
Total liabilities
11,982
OTHER INFORMATION
Capital expenditure
751
525
162
-
1,438
Depreciation and amortisation
298
249
155
-
702
Other non-cash expenses (income)
140
-
(30)
-
110


30/6/2001
Fish
$'000
Accessories
$'000
Plastic & Others
$'000
Eliminations
$'000
Total
$'000
TURNOVER
External sales
9,344
7,707
2,815
-
19,866
Inter-segment sales
276
1,544
78
(1,898)
-
Total sales
9,620
9,251
2,893
(1,898)
19,866
RESULTS
Segment results
1,093
1,079
200
(72)
2,300
Unallocated expenses
(311)
1,989
Financial expenses - net
(37)
Share of profit of associated companies
15
Taxation
(440)
Minority interest
65
Net profit for the period
1,592
ASSETS & LIABILITIES
Assets
10,691
7,884
5,452
-
24,027
Investment in associated companies
338
Unallocated assets
292
Total assets
24,657
Liabilities
3,102
2,645
1,961
-
7,708
Unallocated liabilities
1,692
Total liabilities
9,400
OTHER INFORMATION
Capital expenditure
220
93
877
-
1,190
Depreciation and amortisation
238
204
124
-
566
Other non-cash expenses (income)
20
(319)
(49)
-
(348)



(ii) GEOGRAPHICAL SEGMENTS (The Group)

Turnover
Turnover
Assets
Assets
Capital expenditure
Capital expenditure
30/6/2002
$'000
30/6/2001
$'000
30/6/2002
$'000
30/6/2001
$'000
30/6/2002
$'000
30/6/2001
$'000
Singapore
15,549
11,567
27,352
19,042
737
939
Asia
8,429
6,001
8,702
5,615
701
251
Europe
2,973
1,754
-
-
-
-
Others
866
544
-
-
-
-
Total
27,817
19,866
36,054
24,657
1,438
1,190





7.(a) Review of the performance of the company and its principal subsidiaries


Turnover

2nd Quarter 2002 vs
2nd Quarter 2001
2nd Qtr 2002
$'000
2nd Qtr 2001
$'000
Increased
$'000
%
Fish
6,512
4,989
1,523
30.5
Accessories
7,015
4,048
2,967
73.3
Plastic & others
1,762
1,448
314
21.7
15,289
10,485
4,804

First half 2002 vs
First half 2001
1st Half 2002
$'000
1st Half 2001
$'000
Increased
$'000
%
Fish
11,990
9,344
2,646
28.3
Accessories
12,560
7,707
4,853
63.0
Plastic & others
3,267
2,815
452
16.1
27,817
19,866
7,951

For the 6 months ended 30 June 2002, our ornamental fish activities and distribution of accessories continued to be our core activities, which together accounted for 88% of our total turnover. Geographically, our Singapore market continued to be our main market accounting for 56% of our total turnover for the 6 months ended 30 June 2002.

Our turnover increased by $8 million or 40.0% from $19.8 million for the 6 months ended 30 June 2002 to $27.8 million for the 6 months ended 30 June 2002. All activities registered growth in turnover. Turnover for ornamental fish, accessories, and plastics and other business increased by $2.6 million or 28.3%, $4.9 million or 63.0% and $0.5 million or 16.1%, respectively for the 6 months ended 30 June 2002 as compared to its corresponding period in FY 2001. Comparing to the 2nd quarter of FY 2001, turnover for ornamental fish, accessories, and plastics and other business increased by $1.5 million or 30.5%, $3.0 million or 73.3% and $0.3 million or 21.7%, respectively in the 2nd quarter of FY 2002.

The turnover of ornamental fish recorded in the 2nd quarter of FY 2002 was $6.5 million, which was $1.0 million or 18.9% higher than the 1st quarter of FY 2002. The increase in the turnover of ornamental fish is mainly due to improved sales from the China market, as well as sales of ornamental fish to the increasing numbers of local fish retail outlets in the first half of FY 2002 and to visitors patronizing our in-house retail outlet. One of our subsidiaries in Thailand and our newly set-up fish division in Malaysia, which commenced their operations in January 2002, have contributed to the turnover ornamental fish in FY 2002.

As announced previously, with effect from FY 2002, the Taiwanese government has allowed the import of licensed Dragon Fish. Since January 2002, we have started export Dragon Fish to Taiwan to take advantage of the change in regulation. The sales of Dragon Fish to Taiwan accounted for approximately 26% of the increase in sales of ornamental fish during the first half of FY 2002.

Following the healthy growth in the 1st quarter of FY 2002, our accessories' turnover in the 2nd quarter of FY 2002 has improved by $1.5 million or 26.5% over its 1st quarter's performance. Our Malaysia & Thailand subsidiaries' sales, which have surged by 66% as compared to the corresponding period in FY 2001, continued to contribute significantly to the increase in turnover of accessories as a result of market share gained from these countries towards the end of FY 2001.

In the domestic market, we continue to expand and penetrate our distribution network to more local retailers and supermarkets, which has also resulted in the increase in sales of our accessories products.

Our turnover for plastic and others experienced slower growth due to local market competitiveness. We managed to generate higher sales during the period under review by focusing on more high-value items and expanding our distribution channel to outside Singapore.

On a geographical basis, turnover from Singapore grew 34.4% mainly as a result of improved sales to local fish retailers and sales generated from the opening of our in-house retail outlets. Turnover from overseas grew by 47.8% for the first half of FY2002 compared to the corresponding period in FY2001. Our constant effort in expanding into overseas' untapped markets contributed to the increased in overseas turnover.


Operating profit before taxation

2nd Quarter 2002 vs
2nd Quarter 2001
2nd Qtr 2002
$'000
2nd Qtr 2001
$'000
Increased
(Decreased)
$'000
%
Fish
939
619
320
51.7
Accessories
1,551
722
829
114.8
Plastic & others
102
103
(1)
(1.0)
Unallocated corporate expenses
(335)
(243)
(92)
37.9
2,257
1,201
1,056

First half 2002 vs
First half 2001
1st Half 2002
$'000
1st Half 2001
$'000
Increased
(Decreased)
$'000
%
Fish
1,638
1,090
548
50.3
Accessories
2,552
1,070
1,482
138.5
Plastic & others
158
212
(54)
(25.5)
Unallocated corporate expenses
(680)
(405)
(275)
67.9
3,668
1,967
1,701

Our operating profit increased by $1.7 million or 86.7% to $3.6 million for the 6 months ended 30 June 2002 as compared to $1.9 million for the 6 months ended 30 June 2001. Profit after taxation increased by 83.2% from $1.6 million for the 6 months ended 30 June 2001 to approximately $2.9 million for the 6 months ended 30 June 2002.

Although the sales of ornamental fish yielded consistent gross profit margin during the first half of FY 2002 as compared to its corresponding period in FY 2001, our operating profit from ornamental fish registered growth in FY 2002 as a result of the improved sales volume. As our operating expenses remained relatively stable, the increase in sales has resulted in improve in profitability.

During the first half of FY 2001, our accessories activities experienced low profit as a result of high purchase costs and operating losses due mainly to set-up and restructuring costs incurred by our Thailand subsidiary (dealing with accessories) which could only resumed operations in May 2001 due to regulatory compliances.

In the first half of FY 2002, with a higher sales volume and better gross profit margin achieved, we managed to grow our operating profit from the accessories business as compared to the corresponding period in FY 2001. In addition, our Thailand subsidiary has managed to be operationally profitable by the end of FY 2001.

Despite the increase in turnover, our plastics and other business recorded a dip in profitability. This was as a result of higher operating costs experienced following the shift to our new factory location, coupled with losses incurred by one of our subsidiaries in PRC.

Unallocated corporate expenses relate to staff costs and administrative expenses incurred in relation to the overseeing of the Group's operations both locally and overseas. The increase was in line with additional headcount and corporate expenses.




7.(b) Where a forecast, or a prospect statement, has been previously disclosed to shareholders,




7.(c) A statement by the Directors of the Company whether any item or event of a material or


In the opinion of the Directors, no item, transaction or event of a material or unusual nature has arisen in the interval between the end of the financial period under review to the date of this report which will substantially affect the results of the Group and of the Company for the 6 months ended 30 June 2002.




8. A commentary at the date of this announcement of the competitive conditions of the


While the Group will continue to grow healthily at our home base in Singapore due to the growing domestic market, as well as our increasing export of Dragon Fish to the new Taiwan market, we, however, expect the bulk of our growth to be from our overseas operations such as our newly incorporated entity in Thailand, our new fish division in Malaysia and our growing operations in China.

Our subsidiary in Malaysia, Guan Guan, which managed to increase its turnover and profitability significantly in the first half of FY 2002, is expected to sustain its growth rate into the second half of FY 2002, especially with its increasing market share and contributions from the newly set up fish division.

One of our subsidiaries in Thailand, Qian Hu Marketing, suffered losses in first half of FY 2001 mainly due to restructuring costs incurred, managed to be operationally profitable at the end of FY 2001. With the newly incorporated Thai Qian Hu, we believe the turnover from our Thailand entities should increase and remain profitable in FY 2002.

We also expect better performance from our China entity, Beijing QianYang, in view of its extensive marketing effort to penetrate the PRC market in FY 2002. Coupled with contributions from our manufacturing base in Guangzhou, Wan Jiang, which we are in the process of raising our stake from 50% to 60%, we will be able to recognize an improved turnover and increase our profit share from these entities.

As announced in April 2002, we have entered into a joint venture agreement to set up a joint venture company in Taiwan, under the name Jin Jien Hsing, dealing with the distribution of pet food and accessories, which we have subscribed to 50% of its registered capital. Through this newly set up entity, our Group is able to directly tap on new markets in Taiwan.

As we do not expect to carry further restructuring and start-up costs of our existing overseas subsidiaries in FY 2002, we expect positive contributions from our Group's overseas operations in Malaysia, Thailand and China. Accordingly, we envisage our Group's turnover and profit will continue to increase in FY 2002.


Risk factors

Normal business risk

Like in all other businesses, setting up new entities suffers losses initially due to depreciation, low turnover, and competition. However, we do not foresee any new business entity being set up in FY 2002 and we are going to concentrate in expanding our overseas market shares and distribution network in our overseas subsidiaries.

Although collectibilty and high inventory is part of the normal business risk, our Group's has adopted prudent policies to make 10% general provision for all trade debts overdue for more than 120 days and a full provision for all non-moving stocks for duration of more than 6 months.

Suppliers and customers risk

None of our suppliers or customers contributes more than 5% of our total turnover.

Outbreak of diseases and infection

Ornamental fish, like other livestock, is susceptible to disease and infection. However, different breeds of fish are vulnerable to different types of diseases. While as it is possible that a rare or virulent strain of bacteria or virus may inflect a particular breed of fish in the farm, fatal infection across breeds is uncommon. With good health management, we have to-date not encountered any outbreak of diseases or inflection in our farm.

Reliant on Asian market for the sales of Dragon Fish

The sales for Dragon Fish contributed around 9% and 10% of our total Group's turnover and PBT respectively during the first half of FY 2002. With the import deregulation moves in Taiwan, we now export our Dragon Fish mainly to Japan and Taiwan, as well as distributing them to local retailers. We expect to export more Dragon Fish to China and Thailand in the second half of FY 2002.

Currently, we export over 500 species and varieties of ornamental fish directly to more than 57 countries and different countries require different types and varieties of fish.

Fluctuation in foreign exchange currencies against the S$

During the first half of FY 2002, approximately 90% of our sales are dominated in S$. Around 50% of our purchases are dominated in S$, the rest are in Euro, US$, and Yen. Although we do not entered into any hedging contracts, we do have an unstructured internal policy to hedge the fluctuation in certain currency when the management deems necessary.




9. Dividend

(a) Any dividend declared for the present financial period?
-
None -
(b) Any dividend declared for the previous corresponding period? None
(c) Total Annual Dividend
-
-
Latest Year (S$'000)
Previous Year (S$'000)
 
Ordinary
0
0
 
Preference
0
0
 
Total:
0
0
 


(d) Date payable



(e) Books closure date



(f) Any other comments relating to Paragraph 9




10.(a) Balance sheet



10.(b) Cash flow statement


THE GROUP
1/1/2002 to 30/6/2002
$
1/1/2001 to 30/6/2001
$
Cash flows from operating activities
Profit before taxation and minority interest
3,668,166
1,967,530
Adjustments for:
Depreciation of fixed assets
614,264
455,984
Profit on disposal of land use rights
-
(48,703)
Profit on disposal of fixed assets
(30,000)
(19,418)
Amortisation of land use rights
4,361
11,156
Amortisation of trademarks/customer acquisition costs, product listing fees
83,623
89,227
Amortisation of pre-operating expenses
-
10,034
Provision for doubtful trade debts
139,589
20,000
Provision for stock obsolescence written back
-
(300,000)
Share of profit of associated companies
(24,096)
(15,338)
Interest expense
55,794
37,089
Interest income
-
(6,121)
Net effect of exchange differences
29,345
42,157
Operating profit before working capital changes
4,541,046
2,243,597
(Increase) decrease in:
Stocks
(1,195,475)
(683,899)
Trade debtors
(1,798,106)
(1,403,014)
Other debtors, deposits and prepayments
(29,500)
216,320
Due from
- associates (trade)
(499,815)
-
- associates (non-trade)
(145,185)
(104,992)
Increase (decrease) in:
Trade creditors
933,931
183,641
Bills payable to bank, secured
238,453
78,831
Other creditors and accruals
491,480
559,079
Due to directors (non-trade)
(656)
(262,413)
Cash generated from operations
2,536,173
827,150
Income tax paid
(442,122)
(502,105)
Interest paid
(55,794)
(37,089)
Interest received
-
6,121
Net cash generated from operating activities
2,038,257
294,077
Cash flows from investing activities
Purchase of fixed assets
(961,872)
(1,045,750)
Proceeds from disposal of fixed assets
30,000
244,991
Advance for investment
-
(28,482)
Payment for land use rights
-
(31,937)
Payment for trademarks/customer acquisition cost, product listing fees
(9,620)
(51,705)
Net cash used in investing activities
(941,492)
(912,883)
Cash flows from financing activities
Repayment of hire purchase creditors
(160,682)
(119,683)
Repayment of term loan
(99,996)
(94,119)
Payment of dividend
(376,860)
(312,426)
Proceeds from issue of new shares (net)
4,457,168
2,880
Net cash generated from (used in) financing activities
3,819,630
(523,348)
Net increase (decrease) in cash and cash equivalents
4,916,395
(1,142,154)
Cash and cash equivalents at beginning of period
1,335,126
3,230,972
Cash and cash equivalents at end of period
6,251,521
2,088,818
Cash and cash equivalents comprises :
Fixed deposits
597,839
127,745
Cash and bank balances
5,653,682
1,961,073
Cash and cash equivalents at end of period
6,251,521
2,088,818




10.(c) Statement of changes in equity


THE GROUP
Share
Capital
$
Share premium
$
Revenue reserve
$
Translation reserve
$
Total
$
Balance 1 Jan 2001
8,275,000
2,081,887
3,361,160
25,546
13,743,593
Currency translation differences
-
-
-
87,275
87,275
Net profit for the period
-
-
601,299
-
601,299
Issue of new shares
1,200
1,680
-
-
2,880
Balance at 31 Mar 2001
8,276,200
2,083,567
3,962,459
112,821
14,435,047
Currency translation differences
-
-
-
9,008
9,008
Net profit for the period
-
-
1,124,896
-
1,124,896
Payment of final dividend
-
-
(312,426)
-
(312,426)
Balance at 30 June 2001
8,276,200
2,083,567
4,774,929
121,829
15,256,525
Currency translation differences
-
-
-
(41,603)
(41,603)
Net profit for the period
-
-
497,302
-
497,302
Balance at 30 Sept 2001
8,276,200
2,083,567
5,272,231
80,226
15,712,224
Currency translation differences
-
-
-
124,944
124,944
Net profit for the period
-
-
1,334,872
-
1,334,872
Balance at 31 Dec 2001
8,276,200
2,083,567
6,607,103
205,170
17,172,040
Currency translation differences
-
-
-
(65,870)
(65,870)
Net profit for the period
-
-
1,043,587
-
1,043,587
Issue of new shares
36,500
51,100
-
-
87,600
Capitalisation of share premium for bonus issue
831,270
(831,270)
-
-
-
Balance at 31 Mar 2002
9,143,970
1,303,397
7,650,690
139,300
18,237,357
Currency translation differences
-
-
-
(70,985)
(70,985)
Net profit for the period
-
-
1,873,464
-
1,873,464
Payment of final dividend
-
-
(376,860)
-
(376,860)
Issue of new shares
1,071,800
3,600,520
-
-
4,672,320
Share issue expenses
-
(302,752)
-
-
(302,752)
Balance at 30 June 2002
10,215,770
4,601,165
9,147,294
68,315
24,032,544




10.(d) Explanatory notes that are material to an understanding of the information provided in


Accounting policies

Statement of Accounting Standards ("SAS") 39, Agriculture

SAS 39 which took effect for financial years beginning on or after 1 October 2001, establishes accounting and reporting standards for recognizing, measuring and disclosing information relating to agricultural activity, including biological assets. It requires biological asset, which meet recognition criteria, to be measured on initial recognition and at each balance sheet date at its fair value less estimated point-of-sales costs. Gain and loss arising from these measurements should be included in the net profit or loss for the period in which it arises. However, where fair value of the biological asset cannot be measured reliably, the biological asset should be stated at cost less accumulated depreciation and any accumulated impairment losses.

Included in fixed assets of the Group and of the Company as at 30 June 2002 were brooder stocks, which are parent stocks of Dragon Fish, held for the use in the breeding of Dragon Fish, amounting to $1.38 million. Due to the uniqueness of each Dragon Fish, we believe that its fair value cannot be determined reliably. In compliance with SAS 39, these brooder stocks were carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis so as to write off the cost of these brooder stocks over their estimated lives of 50 years.

SAS 12, Income Taxes

SAS 12, which took effect for financial years beginning on or after 1 April 2001, requires deferred tax to be calculated using the balance sheet liability method. Deferred tax assets should be recognized when it is probable that sufficient taxable profit will be available against which the deferred tax assets can be utilized.

With effect from 1 January 2002, the Group changed its accounting policy with respect to the treatment of deferred taxation in order to conform to the new requirements of SAS 12. The change in accounting policy has no material impact to the retained earnings of the Group and of the Company as at 31 December 2001.



11. Details of any changes in the company's issued share capital

During the 2nd quarter of FY 2002, 718,000 share options were exercised pursuant to the terms of the Qian Hu Pre-IPO Share Option Scheme. There were no share options granted during the period to subscribe for unissued ordinary shares.

As at 30 June 2002, there were 1,429,000 unexercised share options issued pursuant to the terms of the Qian Hu Pre-IPO Share Option Scheme at the exercise price of $0.24 per share.

In addition, in May 2002, the Company issued 10,000,000 ordinary shares of $0.10 each fully paid at $0.45 per share pursuant to a Private Placement. The new shares rank pari passu in all respects with the existing shares of the Company.

Use of Placement proceeds

The net proceeds from Private Placement, after deducting expenses, was approximately $4.2 million. As at 30 June 2002, the amount has been partially deployed by our Group's local and overseas operations as working capital. Details are set out as follows :




12. The group's borrowings and debt securities as at the end of the financial period reported



(c) Any other comments relating to Paragraph 12




13. A statement that the same accounting polices and methods of computation are followed



14. Contingent Liabilities

As at 30 June 2002, the Group and the Company have no contingent liabilities.


BY ORDER OF THE BOARD

Kenny Yap Kim Lee
Executive Chairman and Managing Director
24/07/2002



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