SINOCAN HOLD<01095> - Results Announcement (Summary)
Sinocan Holdings Limited announced on 26/4/2002:
(stock code: 1095)
Year end date: 31/12/2001
Currency: HK$
Auditors' Report: Qualified
Review of Interim Report by: N/A
(Audited)
(Audited) Last
Current Corresponding
Period Period
from 1/1/2001 from 1/1/2000
to 31/12/2001 to 31/12/2000
('000) ('000)
Turnover : 168,128 208,455
Profit/(Loss) from Operations : (57,183) 1,594
Finance cost : (55,094) (53,847)
Share of Profit/(Loss) of Associates : NIL NIL
Share of Profit/(Loss) of
Jointly Controlled Entities : NIL NIL
Profit/(Loss) after Tax & MI : (108,293) (57,663)
% Change over Last Period : N/A
EPS/(LPS)-Basic : (13 cents) (7 cents)
-Diluted : N/A N/A
Extraordinary (ETD) Gain/(Loss) : NIL NIL
Profit/(Loss) after ETD Items : (108,293) (57,663)
Final Dividend per Share : NIL NIL
(Specify if with other options) : N/A N/A
B/C Dates for Final Dividend : N/A
Payable Date : N/A
B/C Dates for Annual General Meeting : To be notified
Other Distribution for Current Period : N/A
B/C Dates for Other Distribution : N/A
Remarks:
1. Adoption of Statements of Standard Accounting Practice
In the current year, the Company has adopted Statement of Standard
Accounting Practice No. 30 - Business Combinations (SSAP 30) for the first
time. Adoption of SSAP 30 has led to changes in the Group's accounting
policy as set out in note 4 to the financial statements.
In the current year, the Group has adopted SSAP 30 and has elected not to
restate goodwill (negative goodwill) previously eliminated against
(credited to) reserves. Accordingly, goodwill arising on acquisitions
prior to 1 January 2001 is held in reserves and will be charged to the
income statement at the time of disposal of the relevant subsidiary or
associate, or at such time as the goodwill is determined to be impaired.
Negative goodwill arising on acquisitions prior to 1 January 2001 will be
credited to income at the time of disposal of the relevant subsidiary or
associate.
Goodwill arising on acquisition on or after 1 January 2001 is capitalised
and amortised over its estimated useful life. Negative goodwill arising on
acquisition on or after 1 January 2001 is presented as a deduction from
assets and will be released to income based on an analysis of the
circumstances from which the balance resulted.
2. Basis of preparation of financial statements
The financial statements have been prepared under the historical cost
convention.
In preparing the financial statements, the directors have given careful
consideration to the going concern status of the Group in light of the
poor financial position of the Group during the year ended 31 December
2001.
After completion of an assignment agreement signed between JHY
International Inc. ("JHY"), the Company and certain subsidiaries and a
group of Hong Kong bank creditors dated 13 October 1999, JHY became the
Company's largest creditor. Throughout the past years, the Company had
been engaged in negotiations with JHY on reorganising the Group's affairs;
no agreement could be reached so far.
On 1 February 2002, the Company received a statutory demand from JHY for
immediate repayment of loans to the Company in the total of $563,300,500
(the "Debt"), inclusive of interest accrued up to 31 January 2002 (note
21).
On 1 March 2002, the Company received a winding up petition (the
"Petition") filed by JHY with the High Court of the Hong Kong Special
Administrative Region (the "High Court") against the Company and claiming
for the Debt and accrued interest in total of approximately $567,084,000.
The Petition is scheduled to be heard at the High Court on 19 June 2002.
The directors are seeking legal advice in relation to the Petition.
On 28 January 2002, the Company received a court summons issued based on
an application by Dao Heng Bank ("DHB") demanding the Company to settle an
outstanding loan of approximately $3,669,000 as at 31 December 2001. The
loan was secured by a mortgage over certain properties owned by a
subsidiary with a carrying value of approximately $4,948,000 (note 14). As
of the date of this report, the High Court has granted a judgment against
the Company and it is expected that DHB will apply for a possession order
of the mortgaged property and to realize it for the satisfaction of the
outstanding loan.
As stated in the published announcements dated 7 February 2002, Shanghai
Sinocan Lianxing Metal Containers Printing Company Limited ("Lianxing")
received a judgement from the Shanghai Municipal First Intermediate
People's Court in the PRC (the "People's Court") under an application by
Bank of China (Shanghai Nanhui sub-branch) ("BOC"), for the freezing and
confiscation of certain plant and machinery of Lianxing and demand for the
settlement of an outstanding loan of approximately RMB39,860,000 (the "BOC
Debt") at that date. The BOC Debt was advanced to Lianxing pursuant to a
short term loan agreement entered into between Lianxing and BOC for the
period from 27 June 2001 to 18 June 2002. The directors are of the opinion
that as the BOC Debt has not expired, it is not due for repayment and do
not understand the reason why judgement was made by the People's Court.
The directors are seeking legal advice in relation to the judgement.
On 22 March 2002, the Agricultural Bank of China (Shanghai Kangqiao
Development Area sub-branch) ("ABC") applied to the People's Court to
demand for immediate repayment of the outstanding balance of a default
loan of approximately RMB18,930,000 and accrued interest from Lianxing.
The directors are seeking legal advice in relation to the demand.
As the Group continues to face severe liquidity problem and operate in an
unsatisfactory business environment, the ability of the Group to continue
to trade as a going concern in these circumstances depends, inter alia, on
the following:
(i) the successful outcome of any further restructuring measures to be
implemented to secure new funding for the Group;
(ii) the successful turnaround of its business to profit;
(iii) the successful outcome of any negotiations with JHY to withdraw
the winding up petition before 19 June 2002; and
(iv) the successful negotiation and continuous financial support from
the banker of Lianxing and bankers of the Company.
On the basis that the directors anticipate the reorganization of the
Group's affairs will be successful, they have adopted the going concern
basis for the preparation and presentation of these financial statements.
Should the Group be unable to continue to operate as a going concern,
adjustments would have to be made to restate the values of assets to their
recoverable amounts, to provide for any further liabilities which might
arise, and to reclassify non-current assets and liabilities as current
assets and liabilities, respectively.
3. Finance costs
2001 2000
HK$'000 HK$'000
Interest on bank loans repayable within
five years 6,128 7,600
Interest on other loans 48,966 46,247
________ ________
55,094 53,847
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4. Taxation
(a) Taxation in the consolidated income statement represents:
2001 2000
$'000 $'000
Hong Kong
- overprovision in previous year - (55)
Other jurisdictions
- PRC income tax 142 -
________________
Taxation charge/(credit) 142 (55)
======= =======
(i) Hong Kong profits tax is provided at 16% based on the assessable
profit for the year. No profits tax for the Group is provided since they
have no profit assessable to Hong Kong profits tax during the year.
(ii) In accordance with the applicable Enterprises Income Tax Law of
the PRC, certain of the Group's subsidiaries, including Desheng Lianfeng
Tin Manufacture Company Limited, Fujian ("Lianfeng"), Putian Lianfa Tin
Manufacture Company Limited ("Lianfa"), Shanghai Sinocan Lianxing Metal
Containers & Printing Company Limited ("Lianxing") and Shanghai Sinocan
Huaxing Plastic Containers Company Limited ("Huaxing"), are exempt from
income tax for the first two profitable years of operations after their
commencement of operations and are entitled to a 50% exemption on income
tax that would otherwise be charged for the succeeding three years. In
addition, Lianfeng and Lianfa are exempt from the 3% state income tax for
five years from 1 January 1995.
Apart from Huaxing, none of these subsidiaries had assessable profit
during the year. Huaxing was entitled to 50% exemption on income tax, i.e.
at the effective rate of 7.5% for the first year.
5. Loss per share
The calculation of basic loss per share is based on the loss attributable
to shareholders for the year of $108,293,000 (2000 : $57,663,000) and the
849,600,000 (2000 : 849,600,000) ordinary shares in issue throughout the
year.
There was no diluted loss per share shown for both years because the
effects arising from the exercise of potential ordinary shares would have
been anti-dilutive.
For more details, please refer to the press announcement today.
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