FINANCIAL 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 1999. The results, together with the comparative figures for the corresponding period in 1998, are summarised below:
Six months ended
30 September
1999 1998
HK$'000 HK$'000
TURNOVER 558,634 551,235
=========== ==========
OPERATING PROFIT/(LOSS) 34,471 (21,063)
Share of profit/(loss) of
an associated company (141) 529
----------- ----------
PROFIT/(LOSS) BEFORE
TAXATION 34,330 (20,534)
Taxation (Note 1) (5,706) (927)
----------- ----------
PROFIT/(LOSS) BEFORE
MINORITY INTERESTS 28,624 (21,461)
Minority interests (4) (40)
----------- ----------
NET PROFIT/(LOSS)
ATTRIBUTABLE
TO SHAREHOLDERS 28,620 (21,501)
=========== ==========
DIVIDENDS (Note 2) 12,343 -
=========== ==========
EARNINGS/(LOSS) PER SHARE
(Note 3) 10.43 cents (7.84 cents)
=========== ==========
Notes:
1. Taxation
Hong Kong profits tax has been provided at the rate of 16% (1998: 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 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
1999 1998
HK$'000 HK$'000
Group:
Hong Kong 4,180 388
Elsewhere 1,526 459
------- -------
5,706 847
Share of taxation of an overseas
associated company - 80
------- -------
Taxation charge for the period 5,706 927
======= =======
2. Dividends
Six months ended
30 September
1999 1998
HK$'000 HK$'000
Interim dividend of 4.5 cents
(1998: Nil) per share 12,343 -
======== =======
3. Earnings/(loss) per share
Basic earnings/(loss) per share is calculated based on the net profit attributable to shareholders for the period of HK$28,620,000 (1998: net loss of HK$21,501,000) and on 274,297,493 shares (1998: 274,297,493 shares) in issue during the period.
Diluted earnings/(loss) per share has not been calculated for the six months ended 30 September 1999 and 1998 as no diluting events existed during these periods.
INTERIM DIVIDEND
The Board of Directors has resolved to declare an interim dividend of 4.5 cents per share (1998: Nil) for the six months ended 30 September 1999. The interim dividend will be paid on 20 January 2000 to shareholders whose names appear on the Register of Members of the Company on 14 January 2000.
BUSINESS REVIEW AND OUTLOOK
The Group's consolidated turnover for the six months ended 30 September 1999 was HK$558,634,000, representing an increase of 1.3% as compared to the corresponding period in 1998. The net profit attributable to shareholders was HK$28,620,000, whereas in the same period last year a loss of HK$21,501,000 was recorded.
Business Review
Since the revision of business strategy and the implementation of cost control measures, the effects have been reflected throughout the six months ended 30 September 1999, and the figures, compared with the corresponding period of last year, are as follows:
(a) Gross margin increased by 3% despite downward pressure on retail prices.
(b) Rental expenses to turnover ratio decreased by 5% to 15.1%.
(c) Other operating expenses to turnover ratio decreased by 3.3% to 19.8%.
During the period, the Group has strategically allocated more resources to carry out a series of advertising, sponsorship and promotional activities to raise the popularity of the "Bossini" brand in the market, strengthen the saleability of the existing product lines and enhance development of new product lines. The Group operated 33 retail stores in Hong Kong and Macau during the period. In order to improve the visual effectiveness of product display and to provide customers with a more comfortable shopping environment, the Group has carried out renovation work on 19 stores. At the end of the period, renovation work on 10 retail stores had been completed and this project will continue over the next six months.
In view of the slowdown in economic growth in China and sluggishness of the consumer market, the Group has reduced the number of authorised dealer stores in an attempt to improve the operating efficiency of the business, and has focused on operating directly managed stores and well-performing authorised dealer stores. The number of authorised dealer stores has decreased from 78 at the end of March 1999 to 57 at the end of the current period.
Business in Singapore has grown rapidly and achieved satisfactory results. During the period, the children's wear line, newly introduced by the Group, was well received by the market.
Outlook
With the recovery of the Asian economy, the improving business environment in Hong Kong and the expected entry of China into the WTO, the Group will accelerate its development of current business in all major markets, establish an extensive retail network and increase its local market share of garments. At the same time, the Group will actively undertake diversification of its products. Following the introduction of a girlswear product line in Hong Kong last year, a new line of kids" casual footwear is going to be launched at the end of November this year and other new product lines with growth potential are being considered. To complement the development in product diversification, the Group will enlarge some existing retail stores and, in future, select retail stores with larger sizes. After the adjustment of operation strategy, the business in China will be in a better position to cope with the future changes in operating environment, especially when facing open market and fierce competition. This will form the solid foundation of a long-term development plan. The Group is planning expansion into the local market in Singapore with more retail stores to be opened.
YEAR 2000 COMPLIANCE
As disclosed in the Group's 1998/99 Annual Report, the Group has taken appropriate measures to ensure the computer systems and equipment are Year 2000 compliant.
As scheduled, all the computer system modification and conversion works have been fully completed before 30 September 1999. The Group has also enquired of its major business partners whether their computer systems and their products/services provided to the Group are Year 2000 compliant.
The Group expects that the Year 2000 issue will not cause significant disruption to its operations. However, as there is no assurance that the measures implemented by the Group and its business partners can fully eliminate the risks of Year 2000 problems, the Group has drawn up contingency plans to ensure business continuity in case of the occurrence of any unforeseeable events.
As the Year 2000 compliance project is handled by our Information Technology Department and no replacement of major systems and equipment are required, there is no significant financial impact arising from Year 2000 compliance works. Such costs are expensed according to the Group's accounting policies.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members will be closed from 10 January 2000 (Monday) to 14 January 2000 (Friday), both days inclusive, during which period no transfer of shares will be effected.
To qualify for the interim dividend, all transfer forms accompanied by the relevant share certificates must be lodged with the Company's Hong Kong branch share registrar, Central Registration Hong Kong Limited of Shops 1712-6, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong no later than 4:00 p.m. on 7 January 2000 (Friday).
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, 26 November 1999
The full text of the Company's interim results announcement will be available on the internet at http://www.irasia.com/listco/hk/bossini.
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