Website: http://www.texwinca.com
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INTERIM RESULTS
The Board of Directors of Texwinca Holdings Limited (the "Company") has pleasure in presenting the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30th September, 2000 as follows:
Financial Highlights
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CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT
Turnover
Six months ended
30th September,
2000 1999
(Unaudited) (Unaudited)
Notes HK$'000 HK$'000
(Restated)
TURNOVER 2 2,089,975 1,455,402
Cost of sales (1,523,390) (1,042,063)
------------ ------------
Gross profit 566,585 413,339
Other revenue 9,910 15,355
Selling & distribution costs (203,110) (142,979)
Administrative expenses (130,048) (107,631)
Other operating expenses (10,047) (4,553)
------------ ------------
PROFIT FROM OPERATING
ACTIVITIES 233,290 173,531
Share of profit of an associate 25,648 16,885
Finance costs (3,693) (12,634)
------------ ------------
PROFIT BEFORE TAX 255,245 177,782
Tax 3 (22,984) (13,017)
------------ ------------
PROFIT BEFORE MINORITY
INTERESTS 232,261 164,765
Minority interests --- ---
------------ ------------
NET PROFIT FROM
ORDINARY ACTIVITIES
ATTRIBUTABLE TO
SHAREHOLDERS 232,261 164,765
Dividends (76,531) (38,419)
------------ ------------
RETAINED PROFIT FOR THE
PERIOD 155,730 126,346
============ ============
Earnings per share (cents) 4
Basic 18.2 12.9
============ ============
Diluted 17.9 12.7
============ ============
Interim dividend per share (cents) 6.0 3.0
============ ============
CONDENSED CONSOLIDATED BALANCE SHEET
At 30th At
September, 31st March,
2000 2000
(Unaudited) (Audited)
Notes HK$'000 HK$'000
NON-CURRENT ASSETS
Fixed assets 730,066 699,132
Investment properties 29,750 29,750
Construction in progress --- 4,615
Trademarks 44,999 45,810
Interest in an associate 75,742 67,359
Rental deposits 45,688 20,206
------------ ------------
926,245 866,872
------------ ------------
CURRENT ASSETS
Due from an associate 24,416 31,074
Inventories 551,958 445,648
Trade and bills receivables 5 481,655 362,273
Prepayments, deposits and
other receivables 159,589 100,254
Cash and cash equivalents 250,555 228,070
------------ ------------
1,468,173 1,167,319
------------ ------------
CURRENT LIABILITIES
Trade payables and accrued
liabilities 6 659,106 467,112
Tax payable 68,158 52,427
Dividends 153,146 76,615
Interest-bearing bank and other
borrowings 15,386 102,968
------------ ------------
895,796 699,122
------------ ------------
NET CURRENT ASSETS 572,377 468,197
------------ ------------
TOTAL ASSETS LESS
CURRENT LIABILITIES 1,498,622 1,335,069
NON-CURRENT LIABILITIES
Interest-bearing bank loans 17,953 7,393
Deferred tax 18,119 16,769
------------ ------------
36,072 24,162
MINORITY INTERESTS 478 478
------------ ------------
1,462,072 1,310,429
============ ============
CAPITAL AND RESERVES
Issued capital 63,811 64,031
Reserves 7 1,398,261 1,246,398
------------ ------------
1,462,072 1,310,429
============ ============
NOTES TO THE CONDENSED FINANCIAL STATEMENTS:
1. Basis of preparation
This unaudited interim financial report has been prepared in accordance with the requirements of the Listing Rules of The Stock Exchange of Hong Kong Limited ("SEHK") and is in compliance with Statement of Standard Accounting Practice ("SSAP") 25 "Interim Financial Reporting" issued by the Hong Kong Society of Accountants, except that comparative figures of the condensed consolidated cash flow statement have not been shown as the Company has taken advantage of the transitional provision set out in the Listing Rules. In preparation of this interim financial report, the same principal accounting policies and methods of computations adopted in the most recent published annual financial statements have been followed.
2. Segmental information
As the Group's turnover and profits are mainly derived from activities carried out in the People's Republic of China, including Hong Kong, therefore no analysis by territory is provided.
An analysis of the Group's turnover and contribution to profit from operating activities by principal activity during the period is shown as follows:
Contribution to profit
Turnover from operating activities
Six months ended Six months ended
30th September, 30th September,
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$'000 HK$'000 HK$'000 HK$'000
(Restated)
Production, dyeing and
sale of knitted
fabric 991,144 773,167 150,852 145,737
Production, dyeing and
sale of yarn 362,610 230,419 42,360 22,278
Retailing and
distribution of
casual apparel and
accessories 704,170 432,068 29,469 5,764
Repair and maintenance
services for motors
and generators, and
trading of
generators 15,928 14,413 1,062 (1,731)
Franchise income 16,123 5,335 9,547 1,483
---------- ---------- ---------- ----------
2,089,975 1,455,402 233,290 173,531
========== ========== ========== ==========
3. Tax
Hong Kong profits tax is provided at the rate of 16.0% (1999: 16.0%) on the estimated assessable profits arising in Hong Kong for the period.
Taxes on profits in respect of subsidiaries operating overseas have been calculated at the rates of tax prevailing in the respective tax jurisdictions in which they operate based on existing legislation, interpretations and practices in respect thereof.
Six months ended
30th September,
2000 1999
(Unaudited) (Unaudited)
HK$'000 HK$'000
Group:
Hong Kong and PRC
profits tax:
Current period
provision 19,369 10,680
Deferred tax 1,350 786
------------ ------------
20,719 11,466
Associate 2,265 1,551
------------ ------------
22,984 13,017
============ ============
4. Earnings per share
(a) Basic earnings per share
The calculation of the basic earnings per share is based on the net profit from ordinary activities attributable to shareholders of HK$232,261,000 (1999: HK$164,765,000 restated) and the weighted average number of 1,277,676,716 (1999: 1,278,720,104) shares in issue during the period.
(b) Diluted earnings per share
The calculation of the diluted earnings per share is based on the followings:
Six months ended
30th September,
2000 1999
(Unaudited) (Unaudited)
HK$'000 HK$'000
(Restated)
Net profit from ordinary
activities attributable to
shareholders 232,261 164,765
============= =============
Weighted average number of
ordinary shares used in
calculation of basic
earnings per share 1,277,676,716 1,278,720,104
Deemed issue of ordinary
shares for no
consideration arising
from share options 17,770,423 14,393,465
------------- -------------
Weighted average number of
ordinary shares used in
calculation of diluted
earnings per share 1,295,447,139 1,293,113,569
============= =============
Therefore, the diluted earnings per share for the six months ended 30th September, 2000 was 17.9 cents (1999: 12.7 cents restated).
5. Trade and bills receivables
The Group has a clear and tight monitoring system on credit control and it normally trades with its customers under the following credit terms:
(a) cash before or upon delivery;
(b) letter of credit at sight or usance; and
(c) open credit of 30 - 90 days.
Generally, it is only those with good reputation and well-established financial background will be granted with open account credit terms.
The ageing of trade and bills receivables as at 30th September, 2000 is as follows:
At 30th September, At 31st March,
2000 2000
(Unaudited) (Unaudited)
HK$'000 HK$'000
0 - 90 days 465,396 350,816
91 - 180 days 7,129 6,606
Over 180 days 9,130 4,851
------------- -------------
481,655 362,273
============= =============
6. Trade payables and accrued liabilities
The ageing of trade payables and accrued liabilities as at 30th September, 2000 is as follows:
At 30th September, At 31st March,
2000 2000
(Unaudited) (Unaudited)
HK$'000 HK$'000
0-90 days 625,558 448,964
91-180 days 33,548 18,040
Over 180 days --- 108
------------- -------------
659,106 467,112
============= =============
7. Reserves
Transfer on
At repurchase Foreign Retained At 30th
31st March, of own exchange profit for September,
2000 shares adjustment period 2000
(Audited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Share premium
account 316,772 (3,815) --- --- 312,957
Capital redemption
reserve 722 220 --- --- 942
Contributed
surplus 3,986 --- --- --- 3,986
Goodwill on
acquisition (110,603) --- --- --- (110,603)
Exchange
fluctuation
reserve (9,904) --- (52) --- (9,956)
Investment
property
revaluation
reserve 7,238 --- --- --- 7,238
Asset revaluation
reserve 7,840 --- --- --- 7,840
Retained profit 1,030,347 (220) --- 155,730 1,185,857
--------- --------- --------- --------- ---------
Total 1,246,398 (3,815) (52) 155,730 1,398,261
========= ========= ========= ========= =========
8. Contingent liabilities
Contingent liabilities not provided for in the financial statements were:
At 30th September, At 31st March,
2000 2000
(Unaudited) (Audited)
HK$'000 HK$'000
Guarantees of banking
facilities granted to
an associate 12,500 12,500
Export bills discounted
with recourse 13,930 49,441
------------- -------------
26,430 61,941
============= =============
At 30th September, 2000, irrevocable and unconditional guarantees aggregating HK$874 million (31st March, 2000: HK$750 million) have been given by the Company in respect of an associate's and certain subsidiaries' banking facilities and borrowings aggregating HK$46,978,000 (31st March, 2000: HK$43,847,000).
9. Capital commitments
The aggregate commitments for capital expenditure not being provided in the financial statements were:
At 30th September, At 31st March,
2000 2000
(Unaudited) (Audited)
HK$'000 HK$'000
In respect of fixed assets,
contracted for 10,550 ---
In respect of investment in
subsidiaries in the
PRC, contracted for 81,089 9,915
------------- -------------
91,639 9,915
============= =============
10. Operating lease commitments
At 30th September, At 31st March,
2000 2000
(Unaudited) (Audited)
HK$'000 HK$'000
Annual commitments
under non-
cancellable operating
leases for land and
buildings expiring:
Within one year 19,862 48,508
In the second to fifth
years, inclusive 135,259 87,918
After five years 4,099 1,314
------------- -------------
159,220 137,740
============= =============
Annual commitment
under a non-
cancellable operating
lease for plant and
machinery expiring
after five years 9,406 9,406
============= =============
11. Prior period adjustment
The Group's deferred pre-operating expenses represented expenses incurred by certain subsidiaries of the Company prior to the commencement of these subsidiaries' operations. Before the adoption of the SSAP Interpretation 9 "Accounting for Pre-operating Costs" issued by the Hong Kong Society of Accountants, these expenses were capitalised up to the date of commencement of operations of these subsidiaries and were amortised on a straight-line basis over a period of five years.
The policy of accounting for deferred pre-operating expenses was changed during the period as a result of the adoption of the revised SSAP 1, which was subsequently clarified by Interpretation No. 9 "Accounting for Pre-operating Costs". Under the new accounting policy, the Group's deferred pre-operating expenses are charged to the profit and loss account in the period in which they arise.
In restating the consolidated profit and loss account for the period ended 30 September 1999 on the basis of the new policy, the Group's net profit from ordinary activities attributable to shareholders for the period ended 30th September 1999 have been increased by HK$3,030,000 and the retained profit as at 1 April 1999 have been decreased by HK$12,085,000. There is no tax attributable to this prior period adjustment. Accordingly, the comparative amounts including earnings per share and opening retained profits have been restated.
12. Comparative figures
Certain comparative figures have been reclassified to conform to the current period's presentation. In particular, the comparative figures have been reclassified or expanded to conform with Statement of Standard Accounting Practice 1 "Presentation of Financial Statements" issued by the Hong Kong Society of Accountants which became effective during the year ended 31st March, 2000.
INTERIM DIVIDEND
The Board has declared an interim dividend of 6.0 cents per share (1999: 3.0 cents) for the six months ended 30th September, 2000. The interim dividend will be payable on Monday, 12th February, 2001 to shareholders registered on the Register of Members at the close of business on Tuesday, 23rd January, 2001.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members will be closed from Wednesday, 17th January, 2001 to Tuesday, 23th January, 2001 (both days inclusive), during which period no transfer of shares can be registered. In order to qualify for the interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Registrar in Hong Kong, Tengis Limited at 4/F., Hutchison House, 10 Harcourt Road, Central, Hong Kong for registration not later than 4:00 p.m. on Tuesday, 16th January, 2001.
BUSINESS REVIEW
For this interim period, the Group's turnover and net profit from ordinary activities attributable to shareholders rose remarkably by 44% and 41% respectively. The Board has recommended an interim dividend of 6.0 cents per share, an increase of 100% over last year's 3.0 cents.
Turnover of the textile business amounted to HK$1,354 million, up 35% compared with 1999 interim period. The robust growth was mainly due to an increase in productivity and strong orders from Asian buyers. As rise in prices was still not feasible during the period, the management had exercised stringent cost control measures to improve profit margins.
Retail sales recorded an amazing surge of 63%, at HK$704 million. Sales growth of our three major markets, China, Hong Kong and Taiwan was at 58%, 85% and 67% respectively. As at 30th September, 2000, there were 545 outlets in China, 28 in Hong Kong and 62 in Taiwan. Licensed outlets were also operated in Macau, South Korea, Malaysia, Kuwait, Jordan and Iran.
FINANCIAL POSITION
During the period, the Group had been in healthy financial status. At the end of this interim period, cash and cash equivalents amounted to HK$251 million and total bank borrowings was HK$33 million. Total bank borrowings to equity ratio was further reduced to 0.02. Inventory turnover on sales was 48 days while receivables turnover on sales was 42 days.
OUTLOOK
As market conditions have been favourable, the Group will continue its expansions as planned. For the textile business, productivity would be further expanded in our China factories. As to the retail business, more shops will be opened in our three major markets and the total number of shops will be over 700 in the second half year. The interim results have met our expectation, and the management is confident about the results for the whole financial year.
ARRANGEMENTS TO PURCHASE, REDEEM AND SELL SHARES
During the six months ended 30th September, 2000, the Company repurchased a total of 4,398,000 of its listed shares on The Stock Exchange of Hong Kong Limited as follows:
Number of
shares Price per share Aggregate
Month/Year repurchased Highest Lowest consideration
HK$ HK$ HK$'000
April 2000 1,574,000 0.88 0.78 1,290
May 2000 1,420,000 0.88 0.82 1,218
June 2000 702,000 1.19 0.84 715
August 2000 140,000 1.28 1.25 177
September 2000 562,000 1.11 1.05 610
----------- -----------
4,398,000 4,010
===========
Add: Brokerage & commission charges 25
-----------
Total cash paid 4,035
===========
The above repurchased shares have been duly cancelled and the issued share capital of the Company has been reduced according to the par value of the cancelled shares.
Save as disclosed above, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's securities during the six months ended 30th September, 2000.
AUDIT COMMITTEE
Members of the Audit Committee (the "Committee") comprise the two independent non-executive directors of the Group, namely Mr. Au Son Yiu and Mr. Cheng Shu Wing. The principal duties of the Committee include the review and supervision of the financial reporting process and internal controls of the Group.
For the interim period, the Committee has reviewed and discussed with management the interim report and the internal controls of the Group.
CODE OF BEST PRACTICE
In the opinion of the directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Listing Rules of SEHK throughout the accounting period covered by the interim report except that the independent non-executive directors of the Company are not appointed for specific terms. Independent non-executive directors are subject to retirement and re-election at the Annual General Meeting of the Company in accordance with the provisions of the Company's Bye-laws.
By order of the Board
Poon Bun Chak
Chairman
Hong Kong, 18th December, 2000
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