(10) INVESTMENT PROPERTIES
Investment properties represent residential flats located in Hong Kong which were owned by the Group as at year end for investment purposes. No depreciation has been provided on the investment properties as the unexpired lease term is more than 20 years. This treatment is in accordance with the Statement of Standard Accounting Practice Number 13 "Accounting for Investment Properties" issued by the Hong Kong Society of Accountants.
During the year, the Group disposed of an investment property at a consideration of approximately $7,295,000, which resulted in a loss on disposal of approximately $3,880,000. The remaining investment properties in Hong Kong which are held under medium-term lease were revalued on an open market value basis by Chesterton Petty Limited, an independent company of professional valuers, as at 31st March, 1999 at an amount of approximately $21,600,000 (1998 - $30,025,000). The deficit on revaluation of investment properties of $8,425,000 has been charged to the consolidated profit and loss account as an exceptional item (see Note 5).
(11) DEFERRED EXPENDITURES
Development costs of the Group represent expenditures incurred to develop and improve construction methods for a particular type of construction project and construction related computer software.
Pre-operating expenditures represent costs incurred during the start-up period to set up the semi-precast factory in Shenzhen, mainland China.
(12) LOANS TO EMPLOYEES
The Group has provided housing loans to certain employees. The repayment period ranges from 2 to 12 years with interest at prime rate minus 1 per cent, depending on the terms of the individual loan agreements. Amounts due within one year of approximately $70,000 (1998 - $400,000) are included in prepayments, deposits and other receivables.
(13) INTERESTS IN SUBSIDIARIES
(a) Interests in subsidiaries in the accounts of the Company as at 31st March, 1999 comprise:
The Directors are of the opinion that there is no permanent diminution in the value of interests in subsidiaries as at 31st March, 1999.
(b) Particulars of principal subsidiaries as at 31st March, 1999 are:
(14) INTERESTS IN ASSOCIATED COMPANIES
(a) Interests in associated companies comprise:
The market value of the Group's interest in an associated company listed in Hong Kong as at 31st March, 1999 was approximately $9.5 million (1998 - $13.2million).
(b) Particulars of principal associated companies as at 31st March, 1999 are:
(c) The Company has an indirect interest of 25% in Fuli Building, a residential and commercial property project in Shunde in mainland China, which was jointly developed by YLDC and a Chinese party.
(d) One of the subsidiaries of the Group had a 52.7% interest in Shunde Yau Lee. Despite the controlling interest, the subsidiary has appointed the same number of members in the Board of Directors of Shunde Yau Lee as the other shareholder. Consequently, the Group does not have control over the operational and financial matters of Shunde Yau Lee. The Directors have indicated that the Group exercises significant influence over Shunde Yau Lee and as a result, this investment is accounted for using the equity basis of accounting.
(e) The Group has a 15% interest in Shun Cheong. The Directors are of the opinion that the Group exercises significant influence over the financial and operational matters of Shun Cheong and as a result, this investment is accounted for using the equity basis of accounting.
(f) The amounts with associated companies are unsecured, interest-free and have no fixed repayment terms.
(g) The Directors are of the opinion that there is no permanent diminution in the value of interests in associated companies as at 31st March, 1999.
(15) LONG-TERM INVESTMENTS
(a) Long-term investments comprise:
The market value of the Group's investment in listed shares in Hong Kong as at 31st March, 1999 was approximately $464,000 (1998 - $720,000).
(b) In January 1995, one of the subsidiaries of the Group entered into an agreement with Nanjing FEAT Advanced Sciences and Technology Industry Corp. ("Nanjing FEAT") in mainland China to engage in the development and trading of environmental products. The Group has a 60% interest in Nanjing FEAT and has injected the agreed capital contribution of RMB1,000,000 as at year end.
The Directors are of the opinion that the Group has no control and does not exercise any influence over the operations of Nanjing FEAT and therefore, the investment is being accounted for using the cost method.
(c) The Directors are of the opinion that there is no permanent diminution in the value of these long-term investments as at 31st March, 1999.
(16) NET CURRENT ASSETS
(17) LONG-TERM LIABILITIES
(18) SHARE CAPITAL
(a) Authorised:
On 30th July, 1998, following an ordinary resolution of the members, the authorised share capital of the Company was increased from $100,000,000 to $200,000,000 through the creation of an additional 1,000,000,000 new shares of $0.10 each.
On 29th October, 1998, by a special resolution of the members, the Company announced a sub-division of each authorised but unissued share of par value $0.10 each into two shares of par value $0.05 each. As a result, the authorised share capital became 4,000,000,000 shares of $0.05 each.
(b) Issued and fully paid:
On 26th September, 1998, the Company announced a proposed rights issue (the "Rights Issue") of a minimum of 393,552,089 new shares (the "Rights Shares"), at $0.076 per Rights Share on the basis of one Rights Share for every two existing shares held by shareholders of the Company on 29th October, 1998.
On 3rd October, 1998, the Company announced a proposed capital reorganisation to reduce the par value of the existing issued shares from $0.10 each to $0.05 each by the cancellation of $0.05 against each fully paid up share. The effect of this transaction was to decrease the share capital by approximately $39,355,000 and increase the share premium by the same amount.
On 13th November, 1998, pursuant to the Rights Issue, 393,552,089 Rights Shares of $0.05 each were allotted. Together with the effect of the reduction in par value (see Note a), the share capital was reduced to $59,032,813. These shares rank pari passu with the existing shares.
(c) Share Option Scheme
Under the terms of the Share Option Scheme which became effective on 5th August, 1991, the Board of Directors of the Company may, at their absolute discretion, offer to any Director or employee of the Company or any of its subsidiaries options to subscribe for shares in the Company in accordance with the terms of the Share Option Scheme. The maximum number of shares in respect of which options may be granted under the Share Option Scheme is such number of shares, which, when aggregated with shares subject to any other similar scheme, represents 10% of the issued share capital of the Company from time to time. The Share Option Scheme remains in force for a period of 10 years.
On 25th August, 1997, pursuant to the Share Option Scheme, the employees and the Directors were granted options to subscribe for a total of 49,562,000 shares of $0.05 each in the Company. Subject to the adjustment as a result of any alteration in the capital structure of the Company, the subscription price will be the higher of 80% of the average closing price of the shares of the Company on The Stock Exchange of Hong Kong Limited on the five trading days immediately preceding the date of granting of the option and the nominal value of the shares. During the year, options for subscribe for 2,324,000 shares of $0.05 each granted to certain employees were forfeited by the Company pursuant to the terms of the Share Option Scheme. None of the granted options were exercised during the year.
(19) SHARE PREMIUM
The share premium represents the premium received on shares issued. Movements during the year were as follows:
1999 1998
----------------------------------- ------
Development Pre-operating
costs expenditures Total Total
$'000 $'000 $'000 $'000
Cost
Balance, beginning of year 4,837 - 4,837 4,500
Additions 141 5,016 5,157 337
------ ------ ------ ------
Balance, end of year 4,978 5,016 9,994 4,837
------ ------ ------ ------
Accumulated amortisation
Balance, beginning of year 3,750 - 3,750 3,000
Amortisation for the year 750 418 1,168 750
------ ------ ------ ------
Balance, end of year 4,500 418 4,918 3,750
------ ------ ------ ------
Net book value
Balance, end of year 478 4,598 5,076 1,087
====== ====== ====== ======
Balance, beginning of year 1,087 - 1,087 1,500
====== ====== ====== ======
1999 1998
$'000 $'000
Unlisted shares, at cost 51,575 51,575
Capital contributed to a subsidiary 224,500 224,500
------- -------
276,075 276,075
======= =======
Issued and % of issued ordinary Group
Name of Place of Place of fully paid Principal share capital held by equity
company incorporation operation share capital activities Company Subsidiaries interest
Australian Development Australia Australia A$2 Investment holding - 100% 100%
Holdings Pty. Limited
Bellaglade Company Hong Kong Hong Kong $2 Property holding - 100% 100%
Limited
Century Score Hong Kong Hong Kong $2 Investment in real - 100% 100%
Investment Limited estate properties
Chapman Engineering Hong Kong Hong Kong $100 Building services - 60% 60%
Consultant Company engineering
Limited consultant
City Fine Pty. Limited Australia Australia A$2 Property development - 100% 100%
First Smart Investment Hong Kong Hong Kong $2 Investment in real - 100% 100%
Limited estate properties
Global Winner Hong Kong Hong Kong $2 Investment in real - 100% 100%
Investment Limited estate properties
Hero Leader Investment Hong Kong Hong Kong $2 Investment in real - 100% 100%
Limited estate properties
Koshen Engineering Hong Kong Hong Kong $10,000 Provision of design, - 100% 60%
Limited consulting and
project management
services
Lucky Fame Investment Hong Kong Hong Kong $2 Investment in real - 100% 100%
Limited estate properties
Ming Hop Company Hong Kong Hong Kong $500,000 Sourcing of - 100% 100%
Limited construction materials
and execution
of plumbing work
Nanjing Autocon Mainland Mainland US$500,000 Development and - 100% 100%
Technology Company China China sales of construction
Limited equipment and
computer control
software
Nanjing Nanda VH Mainland Mainland Rmb1,500,000 Development and - 70% 70%
Software Intelligence China China sales of computer
Company Limited control software
Right Motive Limited Hong Kong Hong Kong $6,000 Property holding - 100% 100%
and letting
Solid Star Company Hong Kong Hong Kong $2 Property holding - 100% 100%
Limited
Trendplot Investments Hong Kong Hong Kong $2 Provision of - 100% 100%
Limited management services
Yau Lee Building Hong Kong Hong Kong $100,000 Building construction, - 100% 100%
Construction and maintenance and
Decoration Company decoration
Limited
Yau Lee Construction Hong Kong Hong Kong $39,300,000 Building construction - 100% 100%
Company Limited ("YLC")
Yau Lee Construction Hong Kong Hong Kong $2 Sales of building - 100% 100%
Materials & materials and
Technology Limited precast products
Yau Lee Environmental Hong Kong Hong Kong $2 Investment holding - 100% 100%
Development Limited
Yau Lee (Environmental The British Hong Kong US$10,000 Investment holding - 100% 100%
Industries) Company Virgin Islands
Limited
Yau Lee Investment The Cook Hong Kong US$100 Investment holding 100% - 100%
Limited Islands
Yau Lee Technology The British Hong Kong US$1 Investment holding - 100% 100%
Limited Virgin Islands and trading of
construction
equipment and
computer control
software
Yau Lee Wah Concrete Hong Kong Hong Kong $10,000,000 Sales of precast - 100% 100%
Precast Products products
Company Limited
Yau Lee Wah Concrete Mainland Mainland Rmb39,076,066 Manufacture of - 100% 100%
Precast Products China China precast products
(Shenzhen) Company
Limited
Yau Sing Building Hong Kong Hong Kong $500,000 Investment holding - 63% 63%
Materials Company
Limited
1999 1998
Group Company Group Company
$'000 $'000 $'000 $'000
(Note 28)
Listed investment 15,960 - 11,022 -
Unlisted investment 6,040 - 6,959 -
------- ------- ------- -------
Group's share of attributable
net assets of associated companies 22,000 - 17,981 -
Amounts due from associated
companies 52,985 20,698 53,091 20,610
Amounts due to associated
companies (10,975) (808) (11,015) (856)
------- ------- ------- -------
64,010 19,890 60,057 19,754
======= ======= ======= =======
% of issued ordinary
Issued and share capital held by Group
Place of Place of fully paid Principal Associated equity
Name of Company incorporation operation share capital activities Subsidiaries company interest
Bestlink Shipping Hong Kong Hong Kong $100 Provision of shipping - 100% 30%
Limited transportation services
Bonland Investment Hong Kong Hong Kong $100 Investment holding 30% - 30%
Limited
Bonjoy Company Limited Hong Kong Hong Kong $100 Provision of shipping - 100% 30%
transportation services
and investment holding
China Project Australia Australia A$100 Business consulting & 50% - 50%
Connections Pty. Limited international business
Rich Fame Shipping Hong Kong Hong Kong $100 Provision of shipping - 100% 30%
Limited transportation services
Shun Cheong Holdings Bermuda Hong Kong $32,504,160 Investment holding 15% - 15%
Limited ("Shun Cheong")
Shunde Yau Lee Mainland Mainland US$1,707,714 Manufacture of building 52.7% - 33.2%
Building Components China China materials
Company Limited
("Shunde Yau Lee")
Top Channel Holdings Hong Kong Hong Kong $2,000,000 Sub-contracting of joinery 40% - 40%
Limited work and trading of
building materials
Yau Lee Development Hong Kong Hong Kong $100 Property development 50% - 50%
Company Limited
("YLDC")
Yau Lee Property Hong Kong Hong Kong $200 Investment holding 46% - 46%
Development (China)
Company Limited
1999 1998
Group Company Group Company
$'000 $'000 $'000 $'000
Unlisted shares, at cost 976 - 976 -
------ ------ ------ ------
Listed shares in Hong Kong, at cost 1,455 - 1,455 -
------ ------ ------ ------
2,431 - 2,431 -
====== ====== ====== ======
1999 1998
Group Company Group Company
$'000 $'000 $'000 $'000
(Note 28)
CURRENT ASSETS
Inventories (Note 22) 8,586 - 2,712 -
Trade debtors (Note 23) 273,377 - 472,362 -
Gross amount due from customers
for contract work (Note 23) 340,471 - 362,570 -
Due from subsidiaries (Note 27(b)) - 213,053 - 157,741
Due from related parties (Note 27(b)) 3 3 3 3
Prepayments, deposits and
other receivables 44,063 569 29,754 618
Prepaid tax 3,743 - - -
Time deposits (Note 25) 182,215 1,617 180,147 10,878
Cash and bank balances 15,545 532 37,982 467
--------- --------- --------- ---------
Total current assets 868,003 215,774 1,085,530 169,707
--------- --------- --------- ---------
CURRENT LIABILITIES
Payable to suppliers and
subcontractors 106,162 - 122,011 -
Bank overdrafts (Note 25) 72,720 - 133,803 -
Due to subsidiaries (Note 27(b)) - 23,664 - -
Due to related parties (Note 27(b)) 1,246 - 1,850 -
Provision for taxation 272 47 8,310 297
Gross amount due to customers
for contract work (Note 23) 51,915 - 24,923 -
Current portion of hire purchase
obligations (Note 17) 15,690 - 15,548 -
Accruals and other liabilities 77,766 98 87,422 287
Short-term bank loans (Note 25) 304,630 - 390,600 -
--------- --------- --------- ---------
Total current liabilities 630,401 23,809 784,467 584
--------- --------- --------- ---------
NET CURRENT ASSETS 237,602 191,965 301,063 169,123
========= ========= ========= =========
1999 1998
Group Company Group Company
$'000 $'000 $'000 $'000
Due to minority shareholders, net 3,491 - 2,514 -
Obligations under hire purchase
contracts
- Repayable within one year 15,690 - 15,548 -
- Repayable in the second to
fifth years 5,852 - 9,659 -
------- ------- ------- -------
21,542 - 25,207 -
Amounts due within one year
included under current liabilities (15,690) - (15,548) -
------- ------- ------- -------
5,852 - 9,659 -
Deferred taxation (Note 6(b)) 8,559 - 15,382 -
------- ------- ------- -------
17,902 - 27,555 -
======= ======= ======= =======
1999 1998
$'000 $'000
4,000,000,000 shares of $0.05 each
(1998 - 1,000,000,000 shares of $0.10 each) 200,000 100,000
======== ========
1999 1998
Number of Number of
shares of Nominal shares of Nominal
$0.05 each value $0.1 each value
$'000 $'000
1,180,656,268 59,033 787,104,179 78,710
============= ============= =========== =============
1999 1998
Group Company Group Company
$'000 $'000 $'000 $'000
Balance, beginning of year 339,443 339,443 339,443 339,443
Premium arising from Rights Issue
(see Note 18(b)) 10,232 10,232 - -
Direct expenses for Rights Issue (4,054) (4,054) - -
Effect of reduction in par value of
share capital (see Note 18(b)) 39,355 39,355 - -
-------- -------- -------- --------
Balance, end of year 384,976 384,976 339,443 339,443
======== ======== ======== ========
Source: Yau Lee Holdings Limited
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