Page 1
567
89
10
INTERIM REPORT 2009/2010 中期報告
Page 2
Pages
頁次
CORPORATE INFORMATION 1
公司資料
CONDENSED CONSOLIDATED INCOME STATEMENT 2
簡明合併收益表
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME 3
簡明合併綜合收益報表
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION 4
簡明合併財務狀況表
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS 5
簡明合併現金流量表
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY 6
簡明合併權益變動表
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS 7
簡明合併財務報表附註
MANAGEMENT DISCUSSION AND ANALYSIS 15
管理層論述及分析
OTHER INFORMATION 19
其他資料
Page 3
1
CEC International Holdings Limited
CORPORATE INFORMATION
INTERIM REPORT
2009/2010
DIRECTORS
Executive Directors
Mr. Lam Wai Chun
(Chairman and Managing Director)
Ms. Tang Fung Kwan
Ms. Li Hong
Mr. Chung Wai Kin
(appointed on 29 September 2009)
Independent Non-executive Directors
Mr. Au Son Yiu
Mr. Lee Wing Kwan, Denis
Dr. Tang Tin Sek
Mr. Goh Gen Cheung
Professor Zhu Yuhe
AUDIT COMMITTEE
Dr. Tang Tin Sek (Chairman)
Mr. Au Son Yiu
Mr. Lee Wing Kwan, Denis
Mr. Goh Gen Cheung
REMUNERATION COMMITTEE
Mr. Au Son Yiu (Chairman)
Dr. Tang Tin Sek
Mr. Lee Wing Kwan, Denis
Mr. Goh Gen Cheung
Professor Zhu Yuhe
Ms. Tang Fung Kwan
REGISTERED OFFICE
Canon’s Court
22 Victoria Street
Hamilton HM 12
Bermuda
HEAD OFFICE AND PRINCIPAL PLACE
OF BUSINESS
2nd Floor, Hing Win Factory Building
110 How Ming Street
Kwun Tong, Kowloon
Hong Kong
HEADQUARTERS IN MAINLAND CHINA
Li Xin Jie, Yong An Lu
Dong Feng Zhen
Zhongshan
Guangdong
Mainland China
SHARE REGISTRARS AND TRANSFER
OFFICES
Bermuda Principal Share Registrar
Butterfield Fulcrum Group (Bermuda) Limited
Rosebank Centre
11 Bermudiana Road
Pembroke HM08
Bermuda
COMPANY SECRETARY
Ms. Ho Wing Yi
AUDITOR
PricewaterhouseCoopers
Certified Public Accountants
LEGAL ADVISERS
F. Zimmern & Co.
Appleby
PRINCIPAL BANKERS
China Construction Bank
Standard Chartered Bank (Hong Kong) Limited
The Hongkong and Shanghai Banking
Corporation Limited
Hong Kong Branch Share Registrar
Computershare Hong Kong Investor
Services Limited
Shops 1712-1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
Hong Kong
Websites: http://www.0759.com
http://www.ceccoils.com
http://www.irasia.com/listco/hk/cecint
E-mail: [email protected]
Listed on The Stock Exchange of
Hong Kong Limited
Stock Code:759
Page 4
INTERIM REPORT
2009/2010
CEC International Holdings Limited
2009/2010 INTERIM RESULTS
The Board of Directors (the “Board”) of CEC International Holdings Limited (the “Company”) is pleased
to present the unaudited condensed consolidated income statement, condensed consolidated statement
of comprehensive income, condensed consolidated statement of cash flows, condensed consolidated
statement of changes in equity of the Company and its subsidiaries (collectively referred to as the
“Group”) for the six months ended 31 October 2009 and the unaudited condensed consolidated
statement of financial position as at 31 October 2009 of the Group.
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended
31 October
2009 2008
Note HK$’000 HK$’000
(Unaudited) (Unaudited)
2
Revenue 2 261,067 394,959
Cost of sales (208,373) (327,564)
Gross profit 52,694 67,395
Other income – interest income 33 316
Other loss 3 (506) (98)
Selling and distribution expenses (4,717) (7,739)
General and administrative expenses (37,313) (43,854)
Operating profit 4 10,191 16,020
Finance costs 5 (4,389) (7,694)
Profit before taxation 5,802 8,326
Taxation 6 (3,712) (1,190)
Profit for the period 2,090 7,136
Attributable to:
– equity holders of the Company 2,090 7,129
– minority interest – 7
2,090 7,136
Earnings per share, basic and diluted 8 0.29 cent 0.99 cent
Page 5
3
CEC International Holdings Limited
INTERIM REPORT
2009/2010
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended
31 October
2009 2008
HK$’000 HK$’000
(Unaudited) (Unaudited)
Profit for the period 2,090 7,136
Other comprehensive income
Change in fair value on available-for-sale financial assets 271 (877)
Currency translation differences (713) 6,612
Total comprehensive income for the period 1,648 12,871
Total comprehensive income attributable to:
– equity holders of the Company 1,648 12,864
– minority interest – 7
1,648 12,871
Page 6
INTERIM REPORT
2009/2010
CEC International Holdings Limited
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
31 October 30 April
2009 2009
Note HK$’000 HK$’000
(Unaudited) (Audited)
ASSETS
Non-current assets
Leasehold land and land use rights 9 39,606 40,043
Property, plant and equipment 9 316,146 351,132
Investment properties 9 26,804 26,804
Available-for-sale financial assets 8,448 8,177
391,004 426,156
Current assets
Inventories 77,715 92,084
Accounts receivable 10 135,890 124,307
Prepayments, deposits and other receivables 6,816 5,757
Tax recoverable – 652
Pledged bank deposits 25,672 27,690
Cash and cash equivalents 38,069 30,212
4
284,162 280,702
Total assets 675,166 706,858
EQUITY
Share capital 11 71,661 71,661
Reserves 336,561 334,913
Total equity 408,222 406,574
LIABILITIES
Non-current liabilities
Borrowings 20,660 54,012
Deferred income tax 5,304 5,871
25,964 59,883
Current liabilities
Borrowings 199,800 201,544
Accounts payable 12 20,355 18,145
Accruals and other payables 19,318 20,236
Taxation payable 1,507 476
240,980 240,401
Total liabilities 266,944 300,284
Total equity and liabilities 675,166 706,858
Net current assets 43,182 40,301
Total assets less current liabilities 434,186 466,457
Page 7
5
CEC International Holdings Limited
INTERIM REPORT
2009/2010
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended
31 October
2009 2008
HK$’000 HK$’000
(Unaudited) (Unaudited)
Net cash generated from operating activities 46,322 7,796
Net cash used in investing activities (391) (30,260)
Net cash used in financing activities (39,354) (17,030)
Increase/(decrease) in cash and cash equivalents 6,577 (39,494)
Translation adjustments (575) 130
Cash and cash equivalents at beginning of period 30,212 70,316
Cash and cash equivalents at end of period 36,214 30,952
Analysis of the balance of cash and cash equivalents:
Cash and bank balances 38,069 41,409
Bank overdrafts (1,855) (10,457)
36,214 30,952
Page 8
INTERIM REPORT
2009/2010
CEC International Holdings Limited
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Attributable to equity
holders of the Company
Share Other Retained Minority Total
Capital reserves profits Total interest equity
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Balance at 1 May 2008 71,661 126,948 229,006 427,615 248 427,863
Profit for the period – – 7,129 7,129 7 7,136
Other comprehensive income:
Change in fair value of
available-for-sale
financial assets – (877) – (877) – (877)
Currency translation
differences – 6,612 – 6,612 – 6,612
6
Total comprehensive income
for the period ended
31 October 2008 – 5,735 7,129 12,864 7 12,871
2007/2008 final dividend – – (3,583) (3,583) – (3,583)
Balance at 31 October 2008 71,661 132,683 232,552 436,896 255 437,151
Balance at 1 May 2009 71,661 135,606 199,307 406,574 – 406,574
Profit for the period – – 2,090 2,090 – 2,090
Other comprehensive income:
Change in fair value of
available-for-sale
financial assets – 271 – 271 – 271
Currency translation
differences – (713) – (713) – (713)
Total comprehensive income
for the period ended
31 October 2009 – (442) 2,090 1,648 – 1,648
Balance at 31 October 2009 71,661 135,164 201,397 408,222 – 408,222
Page 9
7
CEC International Holdings Limited
INTERIM REPORT
2009/2010
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and accounting policies
These unaudited condensed consolidated interim financial statements (the “ Interim Financial Statements”)
have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim financial
reporting”, issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The Interim
Financial Statements should be read in conjunction with the annual financial statements for the year ended
30 April 2009.
Except as described below, the accounting policies applied are consistent with those of the annual financial
statements for the year ended 30 April 2009, as described in those annual financial statements.
The following new standards and amendments to standards are mandatory for the first time for the Group’s
financial year beginning 1 May 2009.
• HKAS 1 (revised), “Presentation of financial statements”. The revised standard prohibits the
presentation of items of income and expenses (that is “non-owner changes in equity”) in the
statement of changes in equity, requiring “non-owner changes in equity” to be presented separately
from owner changes in equity. All ‘non-owner changes in equity’ are required to be shown in a
performance statement.
Entities can choose whether to present one performance statement (the statement of comprehensive
income) or two statements (the income statement and statement of comprehensive income).
The Group has elected to present two statements: an income statement and a statement of
comprehensive income. The Interim Financial Statements have been prepared under the revised
disclosure requirements.
It has also introduced a number of terminology changes, including revised titles for the condensed
consolidated financial statements.
• HKFRS 8, “Operating segments”. HKFRS 8 replaces HKAS 14, “Segment reporting”. It requires a
‘management approach’ under which segment information is presented on the same basis as that
used for internal reporting purposes.
Operating segments are reported in a manner consistent with the internal reporting provided to
management.
• Amendment to HKFRS 7, “Financial instruments: disclosures”. The amendment increases the
disclosure requirements about fair value measurement and amends the disclosure about liquidity
risk. The amendment introduces a three-level hierarchy for fair value measurement disclosures
about financial instruments and requires some specific quantitative disclosures for those
instruments classified in the lowest level in the hierarchy. These disclosures will help to improve
comparability between entities about the effects of fair value measurements. In addition, the
amendment clarifies and enhances the existing requirements for the disclosure of liquidity risk
primarily requiring a separate liquidity risk analysis for derivative and non-derivative financial
liabilities. It also requires a maturity analysis for financial assets where the information is needed
to understand the nature and context of liquidity risk. The Group will make additional relevant
disclosures in its financial statements ending 30 April 2010.
Page 10
INTERIM REPORT
2009/2010
CEC International Holdings Limited
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and accounting policies (continued)
The following new standards, amendments to standards and interpretations are mandatory for the first time
for the Group’s financial year beginning 1 May 2009, but are not currently relevant for the Group.
• HKAS 23 (amendment), “Borrowing costs”.
• HKFRS 2 (amendment), “Share-based payment”.
• HKAS 32 (amendment), “Financial instruments: presentation”.
• HK(IFRIC) 9 (amendment), “Reassessment of embedded derivatives” and HKAS 39 (amendment),
“Financial instruments: Recognition and measurement”.
• HK(IFRIC) 13, “Customer loyalty programmes”.
• HK(IFRIC) 15, “Agreements for the construction of real estate”.
• HK(IFRIC) 16, “Hedges of a net investment in a foreign operation”.
• HKAS 39 (amendment), “Financial instruments: Recognition and measurement”.
The Group has not early adopted any new standards, amendments or interpretations which have been
issued on or before 31 October 2009 but are not effective for the financial year ending 30 April 2010. The
Group is in the process of assessing their impact on the Group’s results and operations.
8
2. Segment information
The chief operating decision-maker (“management”) reviews the Group’s internal reports periodically in
order to assess performance and allocate resources. Management has determined the operating segments
based on these reports.
Management considers the business from product perspective. The Group has two reportable segments,
namely (i) Electronic components manufacturing and (ii) Others (comprise rental income and service
income from provision of information technology services). Segment information provided to management
for decision-making is measured in a manner consistent with that in the financial statements.
Page 11
9
CEC International Holdings Limited
INTERIM REPORT
2009/2010
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Segment information (continued)
Six months ended 31 October 2009 Six months ended 31 October 2008
Electronic Electronic
components components
manufacturing Others Total manufacturing Others Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Segment revenue
Total sales 260,208 1,612 261,820 394,234 2,130 396,364
Intersegment sales – (753) (753) – (1,405) (1,405)
External sales 260,208 859 261,067 394,234 725 394,959
Segment results
Operating profit 9,871 320 10,191 15,666 354 16,020
Finance costs (4,389) (7,694)
Profit before taxation 5,802 8,326
Taxation (3,712) (1,190)
Profit for the period 2,090 7,136
Additions to non-current assets 327 80 407 48,319 – 48,319
Depreciation and amortisation 35,073 27 35,100 36,389 26 36,415
Distribution cost and
administrative expenses 41,821 209 42,030 51,273 320 51,593
Electronic components
manufacturing Others Total
As at As at As at As at As at As at
31/10/2009 30/4/2009 31/10/2009 30/4/2009 31/10/2009 30/4/2009
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Segment assets 646,716 678,064 28,450 28,142 675,166 706,206
Unallocated assets – 652
Total assets 675,166 706,858
Page 12
INTERIM REPORT
2009/2010
CEC International Holdings Limited
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Segment information (continued)
Geographical information
Revenue Non-current assets
Six months ended
31 October
As at As at
2009 2008 31/10/2009 30/4/2009
HK$’000 HK$’000 HK$’000 HK$’000
The PRC (including the Hong Kong
Special Administrative Region) 208,350 312,023 390,512 425,532
Other regions 52,717 82,936 492 624
261,067 394,959 391,004 426,156
10
Revenue by geographical location is determined on the basis of the destination of shipment.
Non-current assets by geographical location are determined based on the location of the relevant assets.
For the six months ended 31 October 2009, revenues of approximately HK$75,721,000 (2008:
HK$126,138,000) are derived from a single external customer. These revenues are attributable to the
electronic components manufacturing segment.
3. Other loss
Six months ended
31 October
2009 2008
HK$’000 HK$’000
Net loss on disposals and written off of property,
plant and equipment 506 98
Page 13
11
CEC International Holdings Limited
INTERIM REPORT
2009/2010
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. Operating profit
Operating profit is stated after charging/(crediting) the following:
Six months ended
31 October
2009 2008
HK$’000 HK$’000
Amortisation of leasehold land and land use rights 490 484
Cost of inventories sold 107,056 181,144
Depreciation of property, plant and equipment 34,610 35,931
Employee benefit expenses (including directors’ emoluments) 70,632 105,712
Provision for impairment of accounts receivable 3,417 139
Inventory write-down/(reversal of inventory write-down) 1,347 (299)
5. Finance costs
Six months ended
31 October
2009 2008
HK$’000 HK$’000
Interest expense 3,891 6,807
Amortisation of loan arrangement costs 498 887
4,389 7,694
Page 14
INTERIM REPORT
2009/2010
CEC International Holdings Limited
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. Taxation
The Company is incorporated in Bermuda and is exempted from taxation in Bermuda until 2016. Hong
Kong profits tax has been provided at the rate of 16.5% (2008: 16.5%) on the estimated assessable profit
for the period. Subsidiaries of the Group in Mainland China are subject to Mainland China enterprise
income tax ranging from 12.5% to 25% (2008: 12.5% to 25%) on their taxable income determined
according to Mainland China tax laws. Other overseas taxation has been calculated on the estimated
assessable profits for the period at the rates prevailing in the respective jurisdictions.
The amount of taxation charged to the condensed consolidated income statement represents:
Six months ended
31 October
2009 2008
HK$’000 HK$’000
12
Hong Kong profits tax
– current tax 3,012 917
– over-provision in prior year – (137)
Overseas taxation including Mainland China- current tax 1,267 1,884
Deferred taxation (567) (1,474)
3,712 1,190
7. Dividend
The Board resolved not to declare any dividend in respect of the six months ended 31 October 2009 (2008:
Nil).
8. Earnings per share
The calculation of basic earnings per share for the six months ended 31 October 2009 is based on the profit
attributable to equity holders of the Company of approximately HK$2,090,000 (2008: HK$7,129,000) and
the weighted average number of 716,610,798 (2008: 716,610,798) shares in issue during the period.
For the six months ended 31 October 2009 and 3l October 2008, diluted earnings per share equals basic
earnings per share as there was no dilutive potential share.
Page 15
13
CEC International Holdings Limited
INTERIM REPORT
2009/2010
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9. Movements in capital expenditures
During the six months ended 31 October 2009, the additions to capital expenditures were approximately
HK$407,000 (2008: HK$48,319,000); the total net book value of disposals and write-offs of property, plant
and equipment was approximately HK$522,000 (2008: HK$103,000).
10. Accounts receivable
The aging analysis of accounts receivable is as follows:
As at 31 As at 30
October 2009 April 2009
HK$’000 HK$’000
Current 112,281 112,380
Overdue by 0 – 1 month 14,915 8,701
Overdue by 1 – 2 months 6,321 1,192
Overdue by 2 – 3 months 2,373 2,034
Overdue by more than 3 months 5,650 3,093
141,540 127,400
Less: provision for impairment of accounts receivable (5,650) (3,093)
135,890 124,307
Top management of the Group and an Accounts Receivable Supervisory Committee set up by the Company
perform on-going credit and collectability evaluation of each customer. The Group offers an average credit
period ranging from one to four months to its customers who have good payment records and wellestablished relationships with the Group.
11. Share capital
As at 31 As at 30
October 2009 April 2009
HK$’000 HK$’000
Authorised:
1,000,000,000 (As at 30 April 2009: 1,000,000,000) shares
of HK$0.10 each 100,000 100,000
Issued and fully paid:
716,610,798 (As at 30 April 2009: 716,610,798) shares
of HK$0.10 each 71,661 71,661
Page 16
INTERIM REPORT
2009/2010
CEC International Holdings Limited
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12. Accounts payable
The aging analysis of accounts payable is as follows:
As at 31 As at 30
October 2009 April 2009
HK$’000 HK$’000
Current 19,329 17,635
Overdue by 0 – 1 month 856 111
Overdue by 1 – 2 months 9 33
Overdue by 2 – 3 months – 71
Overdue by more than 3 months 161 295
20,355 18,145
13. Share options scheme
On 26 September 2002, a new share option scheme (the “Scheme”) was adopted by the Company. The
purpose of the Scheme is to provide any full-time employees (including executive directors) of the
Company or any of its subsidiaries and non-executive directors of the Company or any of its subsidiaries
(including independent non-executive directors of the Company) with the opportunity to acquire
proprietary interests in the Company and to encourage participants to work towards enhancing the value of
the Company and its shares for the benefit of the Company and its shareholders as a whole.
14
During the six months ended 31 October 2009, no option was granted under the Scheme (2008: Nil).
14. Capital commitments
As at 31 As at 30
October 2009 April 2009
HK$’000 HK$’000
Capital commitments in respect of property,
plant and equipment:
Contracted but not provided for 1,998 108
15. Related party transactions
Six months ended
31 October
2009 2008
HK$’000 HK$’000
(a) Rental expenses paid to a related company
which is owned by a director of the Company 242 –
(b) Key management compensation is as below:
Wages and salaries 2,885 2,951
Pension costs – defined contribution plans 207 251
3,092 3,202
Page 17
15
CEC International Holdings Limited
INTERIM REPORT
2009/2010
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
For the six months ended 31 October 2009, revenue of the Group amounted to HK$261,067,000
(2008: HK$394,959,000), slipping 34% as compared with that of the corresponding period last year.
Gross profit was HK$52,694,000 (2008: HK$67,395,000), falling 22% as compared with that of
the corresponding period last year. Profit attributable to equity holders of the Company reduced to
HK$2,090,000 (2008: HK$7,129,000), representing a drop of 71%. However, comparing with the
business in the second half of last financial year, revenue and gross profit marked an increase of 19%
and 94% respectively, which indicates that the order has been recovering steadily from the previous low
level and that the business of the Group has been moving towards a stable development phase under
the Group’s cautious and strong sales strategy. During the period under review, gross profit margin was
20.2% (2008: 17.1%), increasing by a percentage of 3.1 as compared with that of the corresponding
period last year. In respect of operating expenses, selling and distribution expenses and general and
administrative expenses were HK$4,717,000 (2008: HK$7,739,000) and HK$37,313,000 (2008:
HK$43,854,000) respectively, lowering 39% and 15% respectively as compared with those of the
corresponding period last year.
In respect of working capital, the accounts receivable of the Group was HK$135,890,000 (30 April
2009: HK$124,307,000) as at 31 October 2009, reporting an increase of about 9% as compared with
that of the financial year-end date of last year. Since the revenue during the period under review
recorded an uplift of about 19% as compared with the revenue of HK$219,573,000 in the second half
of last financial year, the Group will continue to closely monitor the quality of the accounts receivable
and adopt stringent credit policy. As at 31 October 2009, inventory of the Group was HK$77,715,000
(30 April 2009: HK$92,084,000), decreasing approximately 16% as compared with that of the financial
year-end date of last year. The continuous reduction in inventory was mainly attributed to the Group’s
tremendous effort in enhancing the material utilization of the production workflow. Besides, the closure
of some under-performing factories during last year also caused the fall of overall inventory level. The
Group’s accounts payable was HK$20,355,000 (30 April 2009: HK$18,145,000).
Page 18
INTERIM REPORT
2009/2010
CEC International Holdings Limited
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL REVIEW
Fund Surplus and Liabilities
As at 31 October 2009, the Group’s bank balances and cash (denominated mainly in Hong Kong
dollar, United States dollar and Renminbi) was HK$63,741,000 (30 April 2009: HK$57,902,000). As
at 31 October 2009, the Group had aggregate banking facilities (excluding that of foreign exchange
derivative financial instrument) of approximately HK$346,887,000 (30 April 2009: HK$396,613,000)
for overdrafts, loans, trade financing, factoring of accounts receivable, etc. Unused facilities as at the
same date amounted to approximately HK$126,018,000 (30 April 2009: HK$138,239,000). As at 31
October 2009, approximately HK$114,869,000 of the total used facilities were secured by charges
on the Group’s certain accounts receivables, pledges of the Group’s bank deposits and available-forsale financial assets. In addition, the Group is required to comply with certain restrictive financial
covenants imposed by the major financing banks. As at 31 October 2009, the Group could comply
with such financial covenants.
16
As at 31 October 2009, the Group’s total borrowings granted from banks amounted to
HK$220,460,000 (30 April 2009: HK$255,556,000), of which HK$199,800,000 (30 April 2009:
HK$201,544,000) was current and will be repayable within one year, and HK$20,660,000 (30 April
2009: HK$54,012,000) was non-current and will be repayable within a period of more than one year
but not exceeding five years. As at 31 October 2009, the Group’s gearing ratio* was 0.31 (30 April
2009: 0.36), reporting a decrease of 0.05 as compared with that of the financial year-end date of last
year. Moreover, the Group did not have any contingent liabilities (30 April 2009: Nil) as at the same
date.
(* The ratio of (total borrowings less cash and cash equivalents) over (total borrowings less cash and cash equivalents
plus total equity))
Financial Resources and Capital Structure
For the six months ended 31 October 2009, the Group’s net cash inflow (increase in cash and cash
equivalents) was HK$6,577,000 (2008: net cash outflow of HK$39,494,000). The net cash inflow
from operating activities was HK$46,322,000 (2008: HK$7,796,000). The net cash outflow from
financing activities was HK$39,354,000 (2008: HK$17,030,000). Currently, financial leverage of the
Group has been lowered gradually, significantly enhancing the company’s safety in sustaining business
under the severely unpleasant market conditions. In addition, the Group’s interest expenses amounted
to HK$3,891,000 (2008: HK$6,807,000), reducing 43% as compared with that of the corresponding
period last year.
Page 19
17
CEC International Holdings Limited
INTERIM REPORT
2009/2010
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL REVIEW (continued)
Financial Resources and Capital Structure (continued)
The Group did not have any material fixed asset investment project during the period under review.
For the six months ended 31 October 2009, net cash outflow from investing activities was HK$391,000
(2008: HK$30,260,000).
Cash Flow Summary
For the six months
ended 31 October
2009 2008
HK$’000 HK$’000
Net cash inflow from operating activities 46,322 7,796
Net cash outflow from investing activities (391) (30,260)
Net cash outflow from financing activities (39,354) (17,030)
Increase/(decrease) in cash and cash equivalents 6,577 (39,494)
As at 31 October 2009, the Group’s net current assets was HK$43,182,000 (30 April 2009:
HK$40,301,000) and the current ratio was 1.18 (30 April 2009: 1.17).
Charges on Assets
As at 31 October 2009, certain assets of the Group with an aggregate carrying value of approximately
HK$47,228,000 (30 April 2009: HK$50,871,000) were pledged to secure banking facilities of the
Group.
Exchange Risk
The Group’s business is mainly conducted in Hong Kong, Mainland China and South-east Asia. The
major revenue currencies are primarily denominated in Hong Kong dollar, Renminbi and United
States dollar whilst the major currencies in purchase commitments are primarily denominated in Hong
Kong dollar, Renminbi and United States dollar. Recently, the United States dollar has persistently
weakening against world’s major currencies, and there have been news frequently from the market
revealing the expectation on the rise of exchange rate of Renminbi to United States dollar. In the event
of a remarkable appreciation of Renminbi against United States dollar, the Group might experience
additional cost pressure. In this connection, the management will closely monitor the fluctuation trend
of Renminbi.
Page 20
INTERIM REPORT
2009/2010
CEC International Holdings Limited
MANAGEMENT DISCUSSION AND ANALYSIS
FUTURE PROSPECTS
The financial tsunami arose last year induced the devastating fluctuation of order of the Group.
During the period under review, the demand from the electronic consumer market stabilized to some
extent. However, as the market environment is still uncertain, it is difficult to predict the future
market movement at this stage. To safeguard against any uncertain market condition in the future, the
Group will undertake a progressive sales approach and will concentrate resources mainly in servicing
the existing customers and complying with their business development plans. The Group will also
continue to adopt “budgeting expenditure by income” as its operating principle; further tightening the
operating expenses, making full use of its resources and further optimizing its break-even-point so as to
strengthen its ability to sustain business when encountering market fluctuations.
The Group will dedicate its effort in improving its financial structure and lowering financial risk, and
hence shall maintain a prudent financial management policy. Apart from reducing expenditure, the
Group will endeavor its best effort in controlling the accounts receivable and inventory level, so as to
increase the flexibility of utilizing working capital and improve the cash flow level.
18
EMPLOYEES
After the large-scaled staff cut-off during last year, the present total number of staff reduced 40% as
compared with that of the corresponding period last year. As at 31 October 2009, the Group employed
approximately 4,590 staff (2008: 7,600), including approximately 4,130 production staff and 460
management staff at all levels. In response to the present operation arrangement, the Group will
cut off the positions in the Hong Kong headquarter by approximately twenty percent, based on the
actual job requirements, in the second half of the financial year. On the other hand, the Group will
hire approximately twenty percent additional production staff in each production plant in Mainland
China to accommodate the future order demand. The remuneration of the employees is determined
by reference to market benchmark, individual performance and work experience, subject to periodic
review. Other agreed employee benefits include pension scheme, medical insurance, on-job training,
education subsidy and other social security fund and paid leaves stipulated under the relevant
jurisdiction of places of operation. Pursuant to the Company’s share option scheme, options may be
granted to eligible employees to subscribe for shares in the Company. During the period under review,
no option was granted under the scheme (2008: Nil).
Page 21
19
CEC International Holdings Limited
INTERIM REPORT
2009/2010
OTHER INFORMATION
INTERESTS OF DIRECTORS AND CHIEF EXECUTIVE IN SECURITIES
As at 31 October 2009, the interests of the directors and chief executive of the Company in the shares,
underlying shares and debentures of the Company or any of its associated corporations (within the
meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) as recorded in the register
required to be kept by the Company pursuant to section 352 of the SFO or otherwise notified to the
Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out
in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing
Rules”) were as follows:
(a) Shares of the Company
Number of shares of HK$0.10 each held
Personal Percentage
interests Corporate Trust Total of issued
Name of director (Note 2) interests interests interests share capital
Mr. Lam Wai Chun 29,955,188 442,295,660 442,295,660 472,250,848 65.90%
(Note 3) (Note 3) (Note 3)
Ms. Tang Fung Kwan 4,194,611 – – 4,194,611 0.59%
Ms. Li Hong 548,000 – – 548,000 0.08%
Mr. Au Son Yiu 6,257,440 – – 6,257,440 0.87%
Dr. Tang Tin Sek 3,714,000 – – 3,714,000 0.52%
Notes:
1. All the above interests in the shares of the Company were long positions.
2. Personal interests were interests held by the relevant directors as beneficial owners.
3. The 442,295,660 shares were held by Ka Yan China Development (Holding) Company Limited, a
wholly-owned subsidiary of Ka Yan China Investments Limited. The entire issued share capital of
Ka Yan China Development (Holding) Company Limited was ultimately held by HSBC International
Trustee Limited as trustee of a discretionary trust (the “Trust”). Being a founder of the Trust, Mr.
Lam Wai Chun was deemed to be interested in all the shares held by Ka Yan China Development
(Holding) Company Limited for the purpose of the SFO. The corporate interests and trusts interests
in 442,295,660 shares refer to the same shares in the Company and duplicated with each other.
Accordingly, Mr. Lam Wai Chun’s total interests in 472,250,848 shares in the Company was arrived
at after eliminating the duplications.
Page 22
INTERIM REPORT
2009/2010
CEC International Holdings Limited
OTHER INFORMATION
INTERESTS OF DIRECTORS AND CHIEF EXECUTIVE IN SECURITIES (continued)
(b) Shares of associated corporation(s) of the Company
Coils Electronic Co., Limited
Percentage
of issued
Number of non-voting deferred shares of HK$1.00 each held non-voting
Personal Corporate Family Total deferred
Name of director interests interests interests interests shares
Mr. Lam Wai Chun (Notes 4, 5 and 6) 7,500,000 6,000,000 500,000 14,000,000 100%
Notes:
4. Mr. Lam Wai Chun held 7,500,000 non-voting deferred shares of HK$1.00 each, representing
approximately 53.57% of the 14,000,000 non-voting deferred shares of HK$1.00 each issued by
Coils Electronic Co., Limited, in which Coils International Holdings Limited, a direct wholly-owned
subsidiary of the Company, held the entire issued ordinary share capital.
20
5. 6,000,000 non-voting deferred shares of HK$1.00 each were held by Ka Yan China Development
(Holding) Company Limited and 500,000 non-voting deferred shares of HK$1.00 each were held
by Ms. Law Ching Yee, the spouse of Mr. Lam Wai Chun, representing approximately 42.86% and
approximately 3.57% of the 14,000,000 non-voting deferred shares of HK$1.00 each in the share
capital of Coils Electronic Co., Limited respectively. Mr. Lam Wai Chun was deemed to be interested
in all these shares under the SFO by virtue of, (i) for the shares held by Ka Yan China Development
(Holding) Company Limited, the reason set out in Note 3 to sub-paragraph (a) above and, (ii) for
the shares held by Ms. Law Ching Yee, being the spouse of Ms. Law Ching Yee.
6. All the above interests in the non-voting deferred shares of Coils Electronic Co., Limited held or
deemed to be held by Mr. Lam Wai Chun were long positions.
7. Mr. Lam Wai Chun held shares in certain subsidiaries as trustee for their holding companies.
Save as disclosed above, as at 31 October 2009, none of the directors or chief executive of the
Company had any interests or short positions in the shares, underlying shares or debentures of the
Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were
required to be entered into the register kept by the Company pursuant to section 352 of the SFO, or
which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7
and 8 of Part XV of the SFO or the Model Code.
Save as disclosed above, as at 31 October 2009, neither the directors or chief executive of the Company
nor their spouses or children under the age of 18 had been granted any rights to subscribe for any
equity or debt securities of the Company or any of its associated corporations (within the meaning of
Part XV of the SFO), or had exercised such rights.
Page 23
21
CEC International Holdings Limited
INTERIM REPORT
2009/2010
OTHER INFORMATION
INTERESTS OF SHAREHOLDERS DISCLOSEABLE UNDER THE SFO
As at 31 October 2009, according to the register kept by the Company under section 336 of the SFO,
the following persons, other than the directors or chief executive of the Company, had an interest or
short position in the shares or underlying shares of the Company which would fall to be disclosed to
the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:
Shares of the Company
Substantial shareholders (as defined in the Listing Rules)
Number of shares of HK$0.10 each held Percentage
Beneficial Family Corporate Trusts of issued
Name owner interests interests interests share capital
Ms. Law Ching Yee – 472,250,848 – – 65.90%
(Note 2)
Ka Yan China Development 442,295,660 – – – 61.72%
(Holding) Company Limited (Notes 2 and 3)
Ka Yan China Investments Limited – – 442,295,660 – 61.72%
(Notes 2 and 3)
HSBC International Trustee Limited – – – 442,295,660 61.72%
(Notes 2 and 3)
Other person as recorded in the register kept by the Company pursuant to section 336 of the SFO
Number of shares of HK$0.10 each held Percentage
Beneficial Family Corporate Trusts of issued
Name owner interests interests interests share capital
Toko, Inc. 36,785,402 – – – 5.13%
(Note 4)
Page 24
INTERIM REPORT
2009/2010
CEC International Holdings Limited
OTHER INFORMATION
INTERESTS OF SHAREHOLDERS DISCLOSEABLE UNDER THE SFO (continued)
Shares of the Company (continued)
Notes:
1. All the above interests in the shares of the Company were long positions.
2. The 442,295,660 shares were held by Ka Yan China Development (Holding) Company Limited, a whollyowned subsidiary of Ka Yan China Investments Limited. The entire issued share capital of Ka Yan China
Development (Holding) Company Limited was ultimately held by the Trust founded by Mr. Lam Wai Chun.
Ms. Law Ching Yee, being the spouse of Mr. Lam Wai Chun, was deemed to be interested in all the shares
held by her spouse, for the purpose of the SFO.
3. The interests in 442,295,660 shares held by Ka Yan China Investments Limited, the ultimate holding
company of the Company, and HSBC International Trustee Limited refer to the same shares and duplicated
with each other. Such shares formed the shares in which Ka Yan China Development (Holding) Company
Limited was interested. As at 31 October 2009, the actual number of shares held by Ka Yan China
Investments Limited, Ka Yan China Development (Holding) Company Limited and HSBC International
Trustee Limited in the Company which duplicated with one another was 442,295,660 shares.
22
4. The percentage has been adjusted based on the total number of shares of the Company in issue as at 31
October 2009 (i.e. 716,610,798 shares).
Save as disclosed above, the Company had not been notified of any other person (other than a director
or a chief executive of the Company) who had an interest (whether direct or indirect) in 5% or more
of the shares comprised in the relevant share capital or a short position which were required to be
recorded in the register kept by the Company pursuant to section 336 of the SFO as at 31 October
2009.
DISCLOSURE PURSUANT TO RULE 13.21 OF THE LISTING RULES
In accordance with the disclosure requirements of rule 13.21 of the Listing Rules, the Company makes
the following disclosure in relation to the details of the 2007 Agreement (as defined below), which
includes a condition relating to specific performance of the controlling shareholder of the Company:
On 17 September 2007, the Company (as borrower), Coils Electronic Co., Limited (as original
guarantor), an indirect wholly-owned subsidiary of the Company, and a group of banks entered into
a 3-year transferable term loan facility agreement (the “2007 Agreement”) for an aggregate amount of
HK$300,000,000 (the “2007 Facility”).
Page 25
23
CEC International Holdings Limited
INTERIM REPORT
2009/2010
OTHER INFORMATION
DISCLOSURE PURSUANT TO RULE 13.21 OF THE LISTING RULES (continued)
Pursuant to the provisions of the 2007 Agreement, it would be an event of default if Mr. Lam Wai
Chun, the Chairman and a controlling shareholder of the Company, ceases to be the Chairman of the
Company or ceases to be involved actively in the management and business of the Group.
If the aforesaid event of default occurs, upon a notice served to the Company, (i) the 2007 Facility
shall immediately be cancelled; (ii) all or part of the loans under the 2007 Facility, together with the
accrued interest, and all other amounts accrued or outstanding under all finance documents (including
the 2007 Agreement) shall immediately become due and payable; and/or (iii) all or part of the loans
outstanding under the 2007 Facility shall immediately become payable on demand. As at 31 October
2009, the aggregate outstanding loan under the 2007 Agreement was approximately HK$100,000,000.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SHARES
The Company had not redeemed any of its listed shares during the six months ended 31 October 2009.
Neither the Company nor any of its subsidiaries had purchased or sold any of the Company’s listed
shares during the six months ended 31 October 2009.
CODE ON CORPORATE GOVERNANCE PRACTICES
The Company has adopted the principles and complied with the applicable code provisions of the
Code on Corporate Governance Practices (the “Code”) as set out in Appendix 14 to the Listing Rules
for the six months ended 31 October 2009, except for the following deviations:
1. Under Code Provision A.4.1, non-executive directors should be appointed for a specific term,
subject to re-election.
Three independent non-executive directors of the Company have not been appointed for a
specific term, but are subject to retirement by rotation at the annual general meetings of the
Company at least once every three years in accordance with the Bye-laws of the Company.
The Company intended to comply with Code Provision A.4.1 by entering into a letter of
appointment with specific term with each of the non-executive directors of the Company upon
their respective re-election. The other two independent non-executive directors have entered
into their respective letters of appointment with specific term upon their re-election at the
annual general meeting held on 29 September 2009.
Page 26
INTERIM REPORT
2009/2010
CEC International Holdings Limited
OTHER INFORMATION
CODE ON CORPORATE GOVERNANCE PRACTICES (continued)
2. Under Code Provision A.2.1, the roles of chairman and chief executive officer should be separate
and should not be performed by the same individual.
Before 29 September 2009, the roles of the Chairman of the Board and the chief executive
officer of the Company (the “CEO”) were performed by two different executive directors of
the Company. Due to the re-allocation of the respective duties of the executive directors of
the Company, Mr. Lam Wai Chun, the Chairman of the Board, has been appointed as the
Managing Director of the Company with effect from 29 September 2009 and has carried out
the responsibilities of the CEO since then. This constitutes a deviation from Code Provision
A.2.1 which stipulates that the roles of chairman and chief executive officer should be separate
and should not be performed by the same individual. However, as Mr. Lam Wai Chun is the
founder of the Group and possesses substantial and valuable experience in the industry that is
relevant to the Group’s operation, the Board believes that vesting the roles of the Chairman of
the Board and the CEO in the same person will provide the Company with strong and consistent
leadership and promote effective and efficient formulation and implementation of business
decisions and strategies and considers that such structure is currently in the best interests of the
Company and its shareholders.
24
DISCLOSURE OF INFORMATION OF DIRECTORS
Pursuant to the disclosure requirements under rule 13.51B(1) of the Listing Rules, the changes of
information of directors are as follows:
Dr. Tang Tin Sek, the independent non-executive director of the Company, retired as an independent
non-executive director of Wai Chun Group Holdings Limited, a company listed on the Stock Exchange,
on 28 September 2009.
Mr. Goh Gen Cheung, the independent non-executive director of the Company, is an independent nonexecutive director of Beijing Properties (Holdings) Limited (formerly known as Peaktop International
Holdings Limited), a company listed on the Stock Exchange. The change of name of such listed
company became effective during the period under review.
AUDIT COMMITTEE
The Audit Committee of the Company currently comprises four independent non-executive directors,
with Dr. Tang Tin Sek, who is a Certified Public Accountant practising in Hong Kong with substantial
experience in corporate finance, auditing and financial management, acting as chairman of the Audit
Committee. Regular meetings have been held by the Audit Committee since its establishment and it
meets at least twice each financial year.
The Audit Committee has reviewed the accounting principles and practices adopted by the Group, the
internal control of the Group and the Interim Report for the six months ended 31 October 2009.
Page 27
25
CEC International Holdings Limited
INTERIM REPORT
2009/2010
OTHER INFORMATION
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its own
code of conduct regarding directors’ securities transactions for the six months ended 31 October 2009.
Following specific enquiry by the Company, all of the directors of the Company confirmed compliance
with the required standard set out in the Model Code throughout the six months ended 31 October
2009.
By Order of the Board
Lam Wai Chun
Chairman
Hong Kong, 14 December 2009
Page 28
As at 31 October 2009
於2009年10月31日
50,000
Short-term bank loans
短期銀行貸款
31/10/2009
30/4/2009
Bank overdrafts
銀行透支
Trust receipts bank loans
信託收據銀行貸款
Long-term bank loans
長期銀行貸款
Page 29
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