401 HOLDINGS<00401> - Results Announcement
401 Holdings Limited announced on 15/02/2005:
(stock code: 00401 )
Year end date: 31/03/2004
Currency: HKD
Auditors' Report: Qualified
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 01/04/2003 from 01/04/2002
to 31/03/2004 to 31/03/2003
Note ('000 ) ('000 )
Turnover : 23,136 6,933
Profit/(Loss) from Operations : (23,898) (43,264)
Finance cost : (9,088) (14,214)
Share of Profit/(Loss) of
Associates : (279) 63
Share of Profit/(Loss) of
Jointly Controlled Entities : N/A N/A
Profit/(Loss) after Tax & MI : (33,265) (57,448)
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) : (0.0802) (0.1677)
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : (33,265) (57,448)
Final Dividend : NIL NIL
per Share
(Specify if with other : N/A N/A
options)
B/C Dates for
Final Dividend : N/A
Payable Date : N/A
B/C Dates for (-)
General Meeting : N/A
Other Distribution for : N/A
Current Period
B/C Dates for Other
Distribution : N/A
Remarks:
1. BASIS OF PREPARATION
The Provisional Liquidators were appointed on 3 August 2004 and do not
have the same detailed knowledge of the financial affairs of the Company
and the Group, as would have the directors of the Company. The accounting
staff responsible for maintaining the books and records of the Company and
preparing its accounts left the Company prior to the appointment of the
Provisional Liquidators. The Provisional Liquidators have made enquiries
of the directors of the Company and have reviewed the available books and
records of the Group.
The Provisional Liquidators found that the Group's accounting records and
supporting vouchers for the year ended 31 March 2004 were incomplete.
Accordingly, the accounts of the Company and the Group for the year ended
31 March 2004 have been prepared on the following bases:
(A) The accounts have been prepared on the basis of the management
accounts prepared by the Provisional Liquidators. The Provisional
Liquidators prepared the management accounts on the basis of the
information available to them, including unaudited management accounts of
the Group as at 31 March 2004, vouchers prepared by the Group's former
employees, the Provisional Liquidators' enquiries, as well as the Group's
books and records that are available to the Provisional Liquidators.
(B) The disclosure in respect of contingent liabilities and litigation
has been based on the annual report of the Company for the year ended 31
March 2003 which was published in January 2004, press announcements made
and circulars issued by the Company prior to the appointment of the
Provisional Liquidators, those books and records made available to them
following their appointment and on the basis of requests made of and
information provided by the Group's former legal advisers.
(C) The disclosure of related party transactions is based on the
information available to the Provisional Liquidators following their
appointment.
(D) The Company is currently proposing to restructure its affairs
through a self-restructuring proposal ("Resumption Proposal"). As the
Resumption Proposal remains subject to, amongst other things, the approval
of The Stock Exchange of Hong Kong Limited ("Stock Exchange"), the
accounts for the year ended 31 March 2004 were not prepared on a full
going concern basis, and in particular:
a. Fixed assets are stated at the Provisional Liquidators' best
estimate of their net realisable value. For presentation purposes they are
shown as non-current assets.
b. Current assets are stated at the Provisional Liquidators' best
estimate of their respective net realisable values.
c. Current liabilities are based on the records of the Company and
the Provisional Liquidators' investigations to date. The Provisional
Liquidators have not yet adjudicated any notices of claim from the
creditors of the Company. This will need to be completed to establish the
creditors of the Company with certainty. In any event, if the proposed
restructuring can be implemented successfully, all the debts of the
Company will be compromised and discharged in full through the schemes of
arrangement being proposed between the Company and its creditors.
d. Should the listing of the Company's shares finally be cancelled
and the Company be wound up, further adjustments may be required to reduce
the value of properties for sale to their forced sale value.
2. AUDITORS' REPORT FOR THE YEAR ENDED 31 MARCH 2004
Basis of Opinion
The evidence available to the auditors was limited as set out in detail in
the following paragraphs.
1. The accounts for the year ended 31 March 2004 have been prepared
based on the management accounts prepared by the Provisional Liquidators
and the management accounts have been prepared on the basis of the
information available to them which may not be complete. In light of the
fact that evidence available to the auditors was possibly limited and that
there are no practicable audit procedures to ensure the completeness of
evidence, they are unable to satisfy themselves as to whether the accounts
are free from material misstatement.
2. Due to missing supporting documentation and relevant accounting
records, the auditors are unable to perform audit work necessary to
ascertain the validity and completeness on the following amounts included
in the consolidated profit and loss account for the year ended 31 March
2004:
- Site management fee to a related company of approximately HK$248,000;
- Revenue in respect of the provision of freight forwarding services in
the PRC of approximately HK$425,000;
- Revenue in respect of the sales and leasing of properties of
approximately HK$537,000.
3. Included in the staff costs, there is HK$994,000 in respect of
which there was insufficient evidence available for the auditors to
ascertain its validity.
4. Regarding the disclosure of directors' and senior management's
emoluments, the auditors are unable to obtain direct confirmations from
some of the former directors in respect of the emoluments paid and payable
to them for the year ended 31 March 2004. The auditors are also unable to
obtain sufficient evidence regarding the amounts disclosed for the five
highest paid individuals. They are, therefore, unable to satisfy
themselves as to whether the disclosure of directors' and senior
management's emoluments is accurate and/or adequate.
5. Regarding the disclosure of unrecognised deferred tax assets which
is made in accordance with Statement of Standard Accounting Practice No.
12 (revised) issued by the Hong Kong Institute of Certified Public
Accountants, the auditors were not provided with sufficient information to
enable them to ascertain whether the disclosure is accurate.
There were no other satisfactory audit procedures that the auditors could
adopt to satisfy themselves as to the matters set out above. Any
adjustment found to be necessary would affect the results and/or cash
flows of the Group for the year ended 31 March 2004 and/or the assets and
liabilities of the Company and/or the Group as at that date.
In forming their opinion the auditors also evaluated the overall adequacy
of the presentation of information in the accounts. The auditors believe
that their audit provides a reasonable basis for their opinion.
Fundamental uncertainty
Trading of the Company's shares has been suspended since 28 March 2003. On
19 May 2004, the Stock Exchange announced that the Company had been placed
into the third stage of the de-listing procedure. The Stock Exchange
imposed a six-month period to 18 November 2004 for the Company to submit a
viable resumption proposal.
On 25 October 2004, the Company submitted the Resumption Proposal to the
Listing Division of Stock Exchange ("Listing Division"). The Resumption
Proposal set out a proposed self-restructuring proposal of the Company,
under which, amongst other things, the full amount of the liabilities of
the Company will be discharged and compromised through the schemes of
arrangement with the creditors and the entire interests of the Company in
its dormant or insolvent subsidiaries will be transferred to a nominee of
the scheme administrators. However, the Listing Division did not consider
the Resumption Proposal represents a viable proposal and has advised that
it will apply to the Listing Committee of the Stock Exchange ("Listing
Committee") for the cancellation of listing of the Company's shares. The
Company has requested a review of the Listing Division's decision by the
Listing Committee. This notwithstanding, in light of, inter alia, the
petitioning creditor's support for the proposed self-restructuring, the
High Court of Hong Kong Special Administrative Region on 10 January 2005
further adjourned the hearing of the petition to wind up the Company to 14
March 2005.
Should the listing of the Company's shares be cancelled, the petitioning
creditor may proceed with the winding-up petition and the Company may be
wound up. In these circumstances, adjustments might have to be made
further to reduce the value of properties for sales to their forced sales
value.
The auditors consider that the fundamental uncertainty has been adequately
disclosed in the accounts and their opinion is not qualified in this
respect.
Qualified opinion: Disclaimer on view given by the accounts
Because of the significance of the possible effects of the limitation in
evidence available to the auditors referred to in the "Basis of opinion"
section, the auditors are unable to form an opinion as to whether the
accounts give a true and fair view of the state of affairs of the Company
and of the Group as at 31 March 2004 and of the Group's loss and cash
flows for the year then ended and as to whether the accounts have been
properly prepared in accordance with the disclosure requirements of the
Hong Kong Companies Ordinance.
As set out in the section "Basis of Opinion" :
(i) the auditors have not obtained all the information and
explanations that they considered necessary for their audit; and
(ii) the auditors were unable to determine whether proper books of
account had been kept.
3. SEGMENT TURNOVER AND RESULTS
Analysis of the Group's turnover and results for the year by principal
activities and markets is as follows:
Turnover Segment result
2004 2003 2004 2003
HK$'000 HK$'000 HK$'000 HK$'000
Sales and
leasing of
properties 21,925 2,705 (13,952) (4,524)
Logistics,
freight
forwarding,
and shipping
services 651 1,264 (224) (9,353)
Sales of goods 357 1,520 (69) 384
Consultancy,
marketing and
other
services 199 1,342 (383) 676
Property and
household
services 4 102 (659) (2,220)
Others - - (13) (266)
--------- ---------- ----------- ---------
23,136 6,933 (15,300) (15,303)
========= ==========
Unallocated
corporate
expenses (17,970) (27,961)
Gain on
disposal of
subsidiaries 9,372 -
------------ ----------
Loss from operations (23,898) (43,264)
============ ==========
4. OTHER CHARGES
2004 2003
HK$'000 HK$'000
Compensation paid - 180
Loss on disposal and write off of fixed assets 424 1,672
Provision for diminution in the value of
investment securities - 250
Provision for amounts due from associates - 489
Provision for bad and doubtful debts 717 1,515
Provision for diminution in value of
properties for sale 11,877 2,939
Unrealised losses for other investment - 13,200
Write off of prepayment, deposits and other
receivables 6,080 -
Write off of properties for sale - 630
---------- ----------
19,098 20,875
========== ==========
5. OPERATING LOSS
The operating loss is stated after crediting and charging the following
and other charges :-
2004 2003
HK$'000 HK$'000
Crediting
Gross rental income from properties 1,195 2,705
Less : Outgoings 767 810
Net rental income from properties 428 1,895
Net exchange gain 25 -
Charging
Auditors' remuneration
- current year 318 276
- overprovision in prior year - (5)
Net exchange loss - 29
Operating lease rentals in respect of land
and buildings 773 1,422
Operating lease rentals in respect of plant
and machinery - 35
Staff costs including directors' emoluments
- salaries, bonus, allowances and benefits
in kind 6,782 10,416
- payment in lieu of notice and severance
payment - 848
- compensation for loss of office as
directors of the Company's subsidiaries
- contractual payment - 1,757
- provision for annual leave - 37
- provision for long service payment 861 813
- retirement benefits scheme contributions 132 194
========== ==========
6. FINANCE COSTS
2004 2003
HK$'000 HK$'000
Interest on bank loans and overdrafts 595 582
Interest on other loans 5,632 598
Interest on convertible debts 2,861 1,692
Premium on redemption of preference shares - 11,342
------- --------
9,088 14,214
======= ========
7. LOSS PER SHARE
The calculation of basic loss per share is based on the net loss
attributable to shareholders for the year ended 31 March 2004 of HK$33,
265,000 (2003: HK$57,448,000), and the weighted average number of
414,536,489 ordinary shares (2003: 342,598,798) in issue during the year.
Diluted loss per share for the year ended 31 March 2003 and 2004 has not
been presented as the effect of any dilution is anti-dilutive.
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