(incorporated in Bermuda with limited liability)
INTERIM RESULTS ANNOUNCEMENT
FOR THE SIX MONTHS ENDED 30TH JUNE 2001
GROUP FINANCIAL HIGHLIGHTS
Six months ended 30th June
2001
2000
(unaudited)
(unaudited)
HK$'000
HK$'000
*
*
*
*
*
Turnover
455,711
(Loss) profit before taxation
(10,803)
(Loss) profit attributable to shareholders
(7,667)
(Loss) earnings per share
(1.60) Cents
Interim dividend per share
1.0 Cent
576,535
19,120
11,383
2.48 Cents
1.0 Cent
Change
(%)
-21%
-157%
-167%
-165%
-
The board of directors (the "Directors") of Frankie Dominion International Limited (the
"Company") are pleased to announce the unaudited consolidated results of the Company and its
subsidiaries (collectively referred to as the "Group"), for the six months ended 30th June, 2001
together with comparative figures for the corresponding period of 2000 are as follows:
1
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
CONDENSED CONSOLIDATED INCOME STATEMENT
Notes
Turnover
3
Cost of sales
Gross profit
Other revenue
Distribution costs
Administrative expenses
Impairment loss of investments in securities
For the six months
ended 30th June
(unaudited)
(unaudited)
2001
2000
HK$
HK$
455,711,715
576,535,532
(377,742,320)
(461,891,867)
77,969,395
1,528,792
(32,177,558)
(46,690,214)
(2,500,000)
114,643,665
7,838,783
(39,967,100)
(58,461,493)
24,053,855
(4,862,475)
(Loss) profit from operations
Finance costs
4
5
(1,869,585)
(4,025,109)
Expenses for cessation of a general
merchandise store
Goodwill of associates written off
6
(3,146,714)
(103,200)
Share of loss of associates
(Loss) profit before taxation
Taxation
7
(Loss) profit after taxation
Minority interests
Net (loss) profit attributable to shareholders
Dividends
(Loss) earnings per share
8
-
(9,144,608)
(1,658,807)
19,191,380
(71,244)
(10,803,415)
(48,490)
19,120,136
(3,787,556)
(10,851,905)
3,184,705
15,332,580
(3,949,262)
(7,667,200)
11,383,318
4,779,263
4,779,092
(1.60) Cents
2.48 Cents
2
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
Notes:
1.
Basis of preparation
The condensed financial statements have been prepared in accordance with Statement of
Standard Accounting Practice No. 25 "Interim financial reporting" issued by the Hong
Kong Society of Accountants, except that comparatives figures are not presented for the
condensed consolidated cash flow statement, being the first cash flow statement to be
included in the interim financial report relating to accounting periods ended on or after
1st July, 2000. Such departures from SSAP 25 are permitted under the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited.
2.
Accounting policies
The condensed financial statements have been prepared under the historical cost
convention, as modified for the revaluation of certain properties and investments in
securities.
2.1
In the current period, the Company has adopted SSAP (Revised 9) "Events after
the balance sheet date" ("SSAP 9 (Revised)") for the first time. SSAP 9 (Revised)
specifies that dividends declared after the balance sheet date should not be
recognised as a liability at the balance sheet date. SSAP 9 (Revised) has been
applied retrospectively resulting in a prior adjustment.
2.2
Adoption of SSAP 30, "Business Combinations" and SSAP 31, "Impairment of
Assets" and Interpretation 13
3
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
SSAP 31 prescribes procedures to be applied to ensure that assets are carried at
not more than their recoverable amounts. The recoverable amount of an asset is
defined to be the higher of its net selling price and its value in use. The Group
determines the value in use of its assets, (including fixed assets, goodwill arising
on business combinations accounted for using the purchase method and intangible
assets) as the present value of estimated future cash flows together with estimated
disposal proceeds at the end of its useful life. The Group is required to assess at
each balance sheet date whether there are any indications that assets may be
impaired, and if there are such indications, the recoverable amount of the assets is
to be determined. Any resulting impairment losses identified are charged to the
income statement.
In accordance with the provisions of Interpretation 13, assessments of impairment
of goodwill also apply to goodwill previously eliminated against reserves which
will not be reinstated at the time of adoption of SSAP 30. Any impairment loss
identified in respect of goodwill previously eliminated against reserves is to be
recognized as an expense in the income statement. The amendments to SSAP 30
and the provisions of Interpretation 13 are required to be reflected in accordance
with the requirements of SSAP 2 and the transitional provision in SSAP 30.
The Group has performed an assessment of the fair value of its assets, including
the related goodwill that had previously been charged to reserves. The Group has
retrospectively restated its previously reported net loss for the periods ended 31st
December, 2000 and 31st December, 1999 by HK$31,779,964 and
HK$31,415,575, respectively for the impairment of goodwill arising from the
acquisition of associates.
Except as stated above, the condensed financial statements have been prepared in
accordance with the accounting policies consistent with those adopted by the Group in its
financial statements for the year ended 31st December, 2000.
4
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
3.
Turnover
An analysis of the Group's turnover and contribution to operating profit by activity for
the six months ended 30th June, 2001 is as follows:
For the six months ended 30th June
2001
2000
Contribution
Contribution
to operating
to operating
Turnover
(unaudited)
HK$
profit
(unaudited)
HK$
Turnover
(unaudited)
HK$
profit
(unaudited)
HK$
453,820,373
-
4,923,732
-
560,318,918
7,149,096
33,016,016
(214,958)
453,820,373
4,923,732
567,468,014
32,801,058
Activity
Continuing operations
Manufacture and sale of
consumer home products
Investment in securities
Discontinued operations
Operating of a general
merchandise store
1,891,343
455,711,716
Impairment loss of
investment in securities
(4,293,317)
630,415
9,067,519
576,535,533
(8,747,204)
24,053,854
(2,500,000)
-
(1,869,585)
24,053,854
5
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
An analysis of the Group's turnover by geographical market is as follows:
For the six months
ended 30th June
2001
2000
(unaudited)
(unaudited)
HK$
HK$
Geographical market
North America
Holland
Germany
United Kingdom
France
Other European countries
Hong Kong
Australia
China
Others
174,800,546
192,148,098
93,735,545
37,023,065
39,176,113
36,140,462
25,285,029
18,120,096
12,248,494
6,655,833
12,526,533
106,409,944
59,691,579
50,128,091
56,807,426
33,891,789
33,376,590
14,779,039
9,143,183
20,159,794
455,711,716
576,535,533
Contribution to operating profit by geographical market has not been presented as the
contribution to operating profit from each market is closely proportional to the turnover
attributable to that market.
6
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
4.
(Loss) profit from operations
(Loss) profit from operation has been arrived at after charging and crediting:
For the six months
ended 30th June
2001
2000
(unaudited)
(unaudited)
HK$
HK$
Depreciation and amortisation
(Gain) loss on disposal of property,
plant and equipment
Operating lease payments in respects of
rented Properties
Provision for bad and doubtful debts
5.
16,008,921
(439,035)
12,354,384
2,000,464
16,663,835
184,662
16,285,376
-
Finance costs
For the six months
ended 30th June
2001
2000
(unaudited)
(unaudited)
HK$
HK$
Interest on:
Bank borrowings wholly repayable
within five years
Obligations under finance leases
3,355,355
669,754
4,322,111
540,364
4,025,109
4,862,475
7
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
6.
Discontinued operations
On 1st March, 2001, the Group discontinued its business of operating of a general
merchandise store. The cost incurred for such discontinuance was approximately
HK$3,146,000.
The results of the discontinued operations for the period from 1st January, 2001 up to the
date of discontinuance and for the six months ended 30th June, 2001 are set out in note (3)
to the condensed financial statements.
7.
Taxation
For the six months
ended 30th June
2001
2000
(unaudited)
(unaudited)
HK$
HK$
Hong Kong profits tax
Share of taxation of an associate-Overseas
taxation
-
3,787,556
48,490
-
48,490
3,787,556
Hong Kong Profits Tax is calculated at the rate of 16% (2000: 16%) on the estimated
assessable profit for the period.
8.
(Loss) earnings per share
The calculation of basic (loss) earnings per share is based on the loss attributable to
shareholders of HK$7,667,200 (2000: profit of HK$11,383,000) and the weighted
average of 477,926,292 (2000: 459,792,678) shares in issue during the period. The
exercises of the Company's options do not result in any dilutive effect for the six months
ended 30th June, 2001 and 30th June, 2000.
8
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
INTERIM DIVIDEND
The Directors have resolved that an interim dividend of HK$0.01 per share (2000: HK$0.01)
will be paid in cash on 7th November, 2001 to shareholders whose names shall appear on the
register of members of the Company on 26th October, 2001. The total dividend of
HK$4,779,263 is calculated based on 477,926,292 shares in issue (2000: HK$4,779,092 based
on 477,909,272 shares in issue).
CLOSURE OF REGISTERS OF MEMBERS
The registers of members will be closed from 22nd October, 2001 to 26th October, 2001 both
days inclusive, during which period no transfer of shares will be effected. In order to qualify for
the 2001 interim dividend, all share certificates with completed transfer form either overleaf or
separately, must be lodged with the Company's branch registrars in Hong Kong, Secretaries
Limited, 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not later than
4:00 p.m. on 19th October, 2001.
MANAGEMENT DISCUSSION AND ANALYSIS
Business Review
For the six months ended 30th June, 2001, the Group recorded an unaudited turnover of
HK$455,711,000, representing a decrease of 20.96% against the corresponding period in 2000 of
HK$576,535,000. The Group's unaudited loss attributable to shareholders under review was
HK$7,667,200 whereas in the corresponding period in 2000 a profit of HK$11,383,000 was
recorded. Loss per share in the first half of this year was HK$0.016 (2000 comparative figures
for the same period : earnings per share HK$0.0248).
In view of the slowing down of the world's major economies, the Group has undergone a
difficult period in the first half of the year. Overseas buyers mostly from America and Europe
remained cautious in placing orders with the result of a decline in sales to the Group's dominant
markets, a reduction in the profit margins and a loss in operation from non wholly-owned
subsidiaries. The loss attributable to shareholders for the period include impairment loss of
investments in securities of Perception Digital Technology (BVI) Limited amounting to
9
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
HK$2,500,000.
Bigfield Goldenford Holdings Limited
Bigfield Goldenford Holdings Limited, a 62.50% subsidiary of the Group, recorded a decrease in
turnover of 15.25% from that of the previous year. Net loss for the period amounted to
approximately HK$8.5 million, compared with net profit of HK$10.45 million in the
corresponding period of 2000. The net loss for the period was mainly attributed to the drop in
profit margin and increase in factory overheads and depreciation provision for the additional
machinery and equipment together with the provision for bad and doubtful debt.
Frankie Dominion (Holdings) Limited
Frankie Dominion (Holdings) Limited has also recorded a decline in business operation.
Turnover and profit slightly decreased by 23.17% amounting to HK$164,192,000 and 15.94%
amounting to HK$14,661,000 respectively in the first half of the year as compared with the same
period in 2000.
Home Mart Store Limited ("Home Mart")
As mentioned in the Group's 2000 Annual Report, Home Mart ceased operation of its general
merchandise store business in March 2001, due to the expiration of the tenancy for its premises
at Metro Plaza. All inventories of the general merchandise have been disposed and no further
write off is to be taken into the account in the second half of the year.
Net margin
Net margin fell to 1.08% in the first half of 2001 compared with 5.89% as at 30th June, 2000.
Operating Expenses
Operating expenses in the first half of 2001 slightly increased to 17.31% over that of 30th June,
2000 at 17.07%.
Interest Expenses
As a result of increasing finance leases, interest expenses slightly rose to 0.88% in the first half
of 2001 compared with 0.84% as at 30th June, 2000.
10
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
Provisions for bad and doubtful debt
Provisions rose in the first half of the year due to an additional provision of HK$2,000,000 being
made against a doubtful account. In comparison, no provision was made in the same period last
year.
LIQUIDITY AND FINANCIAL RESOURCES
Net current assets and current ratio were HK$43,668,000 and 1.23 : 1 as at 31st December, 2000
and HK$30,302,000 and 1.13 : 1 as at 30th June, 2001. The reduction in net current assets was
largely due to an increase in bank borrowings.
The Group's gearing ratio was slightly increased from 20% as at 31st December, 2000 to 26.5%
as at 30th June, 2001, which was calculated based on the net borrowings of HK$56,509,000
(31st December, 2000: HK$45,961,000) and the shareholders' funds of HK$213,090,000 (31st
December, 2000: HK$230,315,000).
The Group generally finances its business with internally generated cash flows and revolving
credit facilities provided by the Group's principal bankers. With net current assets of
HK$30,302,000, the management believes that the Group has sufficient financial resources to
discharge its debts and to finance its daily operations and capital expenditure.
EMPLOYEE
As at 30th June, 2001, the Group had approximately 9,600 (31st December, 2000: 9,800)
employees. Employees are remunerated according to nature of the job and market trend, with
built-in merit component incorporated in the annual increment and year end performance bonus
to reward and motivate individual performance.
11
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
SHARE OPTION SCHEME
On 1st June, 2001, the Company approved and adopted a share option scheme (the "Scheme")
under which the directors may, at their discretion, grant to employees and executive directors of
the Group options to subscribe for shares of the Company at any time during the ten years from
its date of approval. Under the terms of the Scheme, the subscription price may not be less than
80% of the average of the closing prices of the Company's shares quoted on the Hong Kong
Stock Exchange on the five trading days immediately preceding the date of offer of the option, or
the nominal value of the Company's shares, whichever is the higher. The maximum number of
shares over which options may be granted may not exceed 10% of the share capital in issue from
time to time. No option under the Scheme has been granted or exercised during the period and no
options were outstanding as at 30th June, 2001.
PROSPECTS
The uncertain outlook for the US economy affects prospects for the second half of the year. The
business environment remains difficult and challenging. The Group will strengthen its main
business of manufacture and sale of consumer home products and continue its effective ongoing
strategy and implement stringent control over expenses. The Group does not expect the adverse
conditions to deteriorate significantly.
AUDIT COMMITTEE
The Audit Committee has reviewed with management the accounting policies and practice
adopted by the Group and discussed auditing, internal controls and financial reporting matters
including a review of the interim financial statements for the period ended 30th June, 2001.
CODE OF BEST PRACTICE
The Company has complied throughout the six months ended 30th June, 2001 with the Code of
Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited (the "Stock Exchange").
12
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)
PURCHASE, SALE OR REDEMPTION OF OWN LISTED
SECURITIES
During the period, neither the Company nor any of its subsidiaries purchased, sold or redeemed
any of the Company's listed securities.
PUBLICATION OF DETAILED INTERIM RESULTS
A detailed interim results containing all the information required by paragraphs 46(1) to 46(6) of
Appendix 16 of the Listing Rules of Securities on The Stock Exchange of Hong Kong Limited
(the "Stock Exchange") will be published on the Stock Exchange's website in due course.
By Order of the Board
Lam Po Kwai, Frankie
Chairman
Hong Kong, 14th September, 2001
"Please also refer to the published version of this announcement in the Hong Kong i-mail"
13
Frankie Dominion International Limited – Interim Results Announcement
For the Six Months Ended 30th June 2001
(14th September, 2001)