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1. | 1. | 18.161,01 | +1,36 | 217 | |||
2. | 3. | 0,1885 | -0,26 | 90 | |||
3. | 2. | 1,1800 | -14,49 | 77 | |||
4. | 5. | 9,3500 | +1,14 | 60 | |||
5. | 4. | 168,29 | -1,11 | 50 | |||
6. | Neu! | 0,4400 | +3,53 | 36 | |||
7. | Neu! | 4,7950 | +6,91 | 34 | |||
8. | Neu! | 11,905 | +14,97 | 31 |
Gibt es irgendwelche News? Habe auf allen mir bekannten Seiten gesucht aber nichts gefunden. Eine Mail die ich zu COL geschickt habe ist ebenfalls noch nicht beantwortet. Wenn es was Neues gibt dann stellt es doch bitte hier ins Board.
MfG
MfG
es folgt der 52!!! seitige Geschäftsbericht im dem alles steht was auf der HV besprochen wurde
China Online (Bermuda)Limited
2
Board of Directors
Law Wing Kit, Stephen (Chairman)
Chang Wang (Executive Director)
Chen Chi Lin, Peter (Executive Director)
Cheng Mo Chi, Moses (Independent Non-executive Director)
Tan Shao Hua (Independent Non-executive Director)
Secretary
Fung Ching Man, Ada
Auditors
Deloitte Touche Tohmatsu
Certified Public Accountants
Registered Office
Cedar House, 41 Cedar Avenue
Hamilton HM12, Bermuda
Head Office and Principal Place of Business in Hong Kong
47/F, China Online Centre
333 Lockhart Road
Wan Chai
Hong Kong
Principal Bankers
American Express Bank Ltd.
Banque Cantonale Vaudoise
Commerzbank (South East Asia) Limited
Deutsche Bank AG, Hong Kong
Sin Hua Bank Ltd.
Société Générale
The Hongkong Chinese Bank, Ltd.
Solicitors
P.C. Woo & Co.
Fred Kan & Co.
Richards Butler
Preston Gates & Ellis
Hong Kong Branch Share Registrars
Tengis Limited
4/F Hutchison House
10 Harcourt Road
Central
Hong Kong
Corporate Information
Annual Report 2000
3
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at Board Room, 7th
Floor, The Dynasty Club Limited, South West Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on
Friday, 1 June 2001 at 10:00 a.m. for the following purposes:-1.
To receive and consider the Audited Financial Statements and the Reports of the Directors and Auditors for
the year ended 31 December 2000.
2. To declare final dividends.
3. To re-elect Directors and authorise the Directors to fix their remuneration.
4. To re-appoint Auditors and authorise the Directors to fix their remuneration.
5. To transact any other business.
By Order of the Board
Fung Ching Man, Ada
Company Secretary
Hong Kong, 24 April 2001
Notes:
(i) Any member of the Company entitled to attend and vote at a meeting of the Company or a meeting of the holder of any class of shares in
the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of
the Company. A member may appoint more than one proxy to attend on the same occasion.
(ii) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the
appointor is a corporation, either under seal, or under the hand of an officer or attorney duly authorised.
(iii) The Register of Members will be closed from Tuesday, 29 May 2001 to Friday, 1 June 2001, both days inclusive, during which period no
transfer of shares will be effected. In order to qualify for the proposed final dividends, all share certificates with completed transfer forms
either overleaf or separately, must be lodged with the branch share registrars of the Company in Hong Kong, Tengis Limited at 4th Floor,
Hutchison House, 10 Harcourt Road, Central, Hong Kong for registration not later than 4:00 p.m. on Monday, 28 May 2001.
(iv) Registered and unregistered holders of Warrants who wish to exercise their subscription rights to receive shares which will qualify for the
proposed final dividends must lodge the relevant Warrant Certificates and/or the relevant Instruments of Transfer and subscription forms duly
completed and accompanied by the requisite subscription monies with the branch share registrars of the Company in Hong Kong, Tengis
Limited at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong for registration not later than 4:00 p.m. on Monday,
28 May 2001.
(v) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy
of that power or authority shall be deposited at the branch share registrars of the Company in Hong Kong, Tengis Limited at 4th Floor,
Hutchison House, 10 Harcourt Road, Central, Hong Kong not less than forty-eight hours before the time for holding the meeting or adjourned
meeting
China Online (Bermuda)Limited
4
Chairman ’s Statement
Dear Shareholders,
On behalf of the Board of Directors of the Company, I have pleasure to report on the operation and other aspects of the
Group for the year ended 31 December 2000.
Finanical Results
Turnover of the Group for the year ended 31 December 2000 was HK$2,442,429,000 representing approximately a 300%
increase as compared to that of the year 1999. Net profit from ordinary activities attributable to shareholders rose approximately
412% to HK$1,332,818,000 which included the gain on realisation of long term investments of HK$2,870,891,000. Basic
earnings per share for the year ended 31 December 2000 was 14.35 HK cents, a rise of approximately 402% as compared
to that of the year 1999.
Dividends
The Directors recommend the payment of a final dividend of 0.5 HK cents per share (1999: Nil) to shareholders whose
names appear on the Register of Members of the Company on 1 June 2001. Dividend warrants will be sent to shareholders
on 28 June 2001.
Closure of Registers of Members and of Warrrantholders
The Registers of Members and of Warrantholders will be closed from Tuesday, 29 May 2001 to Friday, 1 June 2001, both
days inclusive, during which no share and warrant transfer will be effected.
Review of Operations
Performance of the Group’s mobile handset
distribution business was satisfactory during
the year under review, with turnover
increased by approximately 7% to
HK$236,346,000 as compared to that of the
year 1999. Despite keen competition of the
mobile handset distribution business in the
Hong Kong market, Star Telecom Limited
(“Star Telecom”), the Company’s wholly-owned
subsidiary, managed to secure more
distribution rights of popular and trendy
brands during the second half of the year
2000 and is now one of the leading
distributors owning a number of handset
brand distributorships, some of which even
on an exclusive basis and covering the vast
China market.
As one of the leading distributors of mobile phones and telecom-related products,
Star Telecom is dedicated to bringing more choices to customers.
Annual Report 2000
5
The year 2000 was a year of consolidation for the Group’s intelligent building system integration operation in the People’s
Republic of China (the “PRC”) with revenue amounted to HK$10,063,000. The Group’s strategic investment in the distribution
network of mobile handsets and accessories in the major cities of the PRC achieved a steady growth in revenue.
Pursuant to approval given by the shareholders in the special general meeting of the Company on 11 March 2000 to realise
the Group’s long term investment in the shares of Pacific Century CyberWorks Limited (“PCC Shares”), the Group has
realised a total of 190,500,000 PCC Shares during the year under review.
The turnover of trading and investment in financial instruments of the Group during the fiscal year 2000 amounted to
HK$2,196,020,000. The stock market turmoil experienced in the US market and the Hong Kong market which started from
the third quarter of the year 2000 and straddled into the year 2001, has affected the Group’s investment performance in
these areas and offset part of the gain realised from long term investments.
The Group’s 21.7% associated company, Millennium Group Limited (“MGL”) reported a loss attributable to shareholders of
HK$8,649,000 for the six months ended 30 September 2000 as its information technology projects are still in their start-up
stage. During the six months ended 30 September 2000, MGL’s 35% associated company, Jilian (Jilin) Petrochemicals
Limited recorded an operating profit before tax of HK$15.9 million of which MGL’s share was HK$5.6 million as compared
to a loss of HK$0.7 million for the corresponding period.
Up to the year end date, the Group has acquired on market for long term purpose an aggregate of 224,385,000 shares of
Sun Hung Kai & Co. Limited (“SHK & Co”) and 71,848,000 shares of Takson Holdings Limited (“THL”), representing
approximately 19.3% and 19.2% in the issued share capital of SHK & Co and THL respectively. In light of the recent and
forthcoming business and stock market environments, the Group has carried out an annual review of its long term investment
portfolio and made provisions for decline in value of certain of its long term investments which the board of the Directors
considered other than temporary.
Liquidity and Financing
The open offer of 1,856,688,098 units of the Company’s warrants at an issue price of HK$0.05 per warrant on the basis of
one warrant for every five existing shares of the Company held on 15 May 2000 was completed on 2 June 2000 from which
proceeds of approximately HK$93 million before expense was raised. Each warrant will carry the right to subscribe for a new
share of the Company at an initial subscription price of HK$0.30 per share, subject to adjustment, exercisable during the
period from 7 June 2000 to 6 June 2003 (both days inclusive).
The Group’s non-current assets comprised mainly of investment properties of HK$15 million, property, plant and equipment
of HK$41 million, interests in associates of HK$65 million, long term investments of HK$340 million. These non-current
assets were principally financed by shareholders’ funds. As at the year end date, the Group has a net current assets of
HK$1,570 million.
All of the Group’s borrowings are arranged on short term basis, repayable within 1 year and secured by marketable securities.
As at the year end date, the Group’s borrowings amounted to HK$265,519,000 representing an increase of
HK$264,822,000 over last year.
The Group continued to maintain a low gearing ratio, calculated on the basis of the Group’s net borrowings (after deducting
cash and bank balances) over shareholders’ funds, at approximately 11% (1999: nil) at the year end date.
The Group has little foreign exchange exposure and the Group’s borrowings were all denominated in Hong Kong Dollars.
• Chairman ’s Statement
China Online (Bermuda)Limited
6
Pledge of Assets
At the balance sheet date, certain assets of the Group with aggregate carrying value of HK$1,425,212,000 (1999:
HK$24,796,000) were pledged to secure general loan facilities.
Prospects
Although the mobile handset distribution business is operating in a highly competitive market, the Group is cautiously
optimistic to conclude further distribution rights with other top brands in the year to come. To capture the full opportunities
arising from the dynamic and converging telecom market, Star Telecom seeks to expand its business from distributing
mobile handsets to a wider range of telecommunication products including PDA, smartphone, DECT (Digital Enhanced
Cordless Telecommunication) phone, wireless & digital peripherals and telecom accessories.
Being one of the few foreign-owned licensees authorized to provide integration services for intelligent buildings in the PRC,
Shanghai Tricom Telecom Equipment Co., Ltd. (“Shanghai Tricom”), the subsidiary of the Company, has contracted several
new projects of intelligent building system integration in certain major cities in the PRC in the first few months of year 2001.
It is expected that increasing computerization in private and public sectors of the PRC will foster strong internet and e-infrastructure
growth which offers more business opportunities for Shanghai Tricom to capture.
The ups and downs of economic conditions and investment climate in Hong Kong and overseas, especially in the US,
definitely created certain uncertainties as to the financial performance of the Group for the new financial year. The Group
holds cautious view in the coming year and has started to rationalize its investment portfolio and will continue to retain a
substantial pool of liquid assets with low gearing to meet any future challenges and opportunities.
Employees
The Group, including its subsidiaries but excluding its associates, employed approximately 83 (1999: 110) employees at the
year end date. Employees’ cost (excluding directors’ emoluments) amounted to approximately HK$13,232,000 (1999:
HK$35,087,000) for the year. The Group ensures that the pay levels of its employees are competitive and employees are
rewarded on a performance related basis within the general framework of the Group’s salary and bonus system.
Appreciation
A great deal of works have to be done in the current fiscal year and on behalf of all shareholders and I extend our grateful
thanks, in advance, to both our management and staff for their loyalty, hard work and dedication.
Law Wing Kit, Stephen
Chairman
Hong Kong, 24 April 2001
• Chairman ’s Statement
Annual Report 2000
7
Executive Directors
Mr.Law Wing Kit,Stephen,aged 48, was appointed as an
executive director of the Company on 28 December 1999
and was appointed as the Chairman of the Company on
9 February 2001. He has over 20 years of international
managerial experience in the areas of investment services,
corporate finance and securities. Prior to joining the
Company, Mr. Law was executive directors of other listed
companies in Hong Kong and held the positions of
managing director - Capital Markets Group of UBS East Asia
Limited based in Singapore; managing director of Fidelity
Investments (Singapore) Ltd.; director of Asia Pacific
International Office, of Merrill Lynch Pierce, Fenner & Smith
(S) Pte. Ltd. and executive director of Equity Transaction
Group of Merrill Lynch Capital Markets Group respectively.
Mr. Law was a director of the Singapore International
Monetary Exchange Limited from 1985 to 1990. He is also
the Chairman of China Sci-Tech Holdings Limited (“CST”).
Mr.Chang Wang,aged 28, was appointed as an executive
director of the Company on 28 December 1999. He was
graduated from the Bond University of Australia with a
bachelor’s degree in Commerce. Mr. Chang has several years
of experience in property development and investment. He
is also an executive director of CST.
Mr.Chen Chi Lin,Peter,aged 49, was appointed as an
executive director of the Company on 3 November 2000.
He has over 30 years of experience in trading, property
development and investment in Asia Pacific region, especially
in the PRC.
Biographical Details in Respect of
Directors and Senior Management
Independent Non-executive Directors
Mr.Cheng Mo Chi,Moses,aged 51, was appointed as an
independent non-executive director of the Company on 28
December 1999. He is a senior partner of Messrs. P.C. Woo
& Co., a firm of solicitors and notaries in Hong Kong.
Mr. Cheng was a member of the Legislative Council of Hong
Kong between 1991 and 1995. He is currently the Chairman
of the Hong Kong Institute of Directors, the Board of
Education and the Committee on the Promotion of Civic
Education. He also serves on the boards of various other
listed companies as independent non-executive directors.
Mr.Tan Shao Hua,aged 40, was appointed as an
independent non-executive director of the Company on 28
December 1999. He has technical background in
information technology. After receiving his Ph.D. in Electrical
Engineering from Katholicke Universiteil Leuven, Belgium
in 1987, he took on various research and professional
positions in Europe, USA, Japan, Singapore, etc. He is
renowned internationally for his work in selected IT related
technical areas, such as intelligent IT systems, multimedia
technology and has received many awards and recognition
for his contributions to these areas. He is a senior member
of the Institute of Electrical and Electronic Engineers in the
United States of America. He also has extensive experience
in setting up and managing high-tech businesses in the PRC.
He is also an independent non-executive director of CST.
China Online (Bermuda)Limited
8
• Biographical Details in Respect of Directors and Senior Management
Senior Management
Ms.Chen Sai Fang,aged 49, was appointed as the general
manager of China division. Ms. Chen received education in
China and was graduated with specialization in Finance. With
extensive knowledge and experience gained from working
with Provincial Bank in PRC for over 20 years and being in
charge of the credit department for over 10 years, Ms. Chen
has developed expertise in business management, investment
project appraisals as well as various operations of securities
and finance industry and thus earned high reputation among
the industry, both inside and outside China. In 1986, she
was awarded the title of Economist. Prior to joining the
Company, Ms. Chen has been the Division General Manager
of a China-owned Hong Kong company for 7 years.
Ms.Leung Yuk Ming,Jady,aged 40, was appointed as the
chief operating officer of Star Telecom Limited, a wholly-owned
subsidiary of the Company in June 2000. Graduated
from the Chinese University of Hong Kong with an
honorable bachelor degree of Business Administration, she
has over 17 years of working experience in marketing, sales,
customer services and business management profession.
Since 1992, Ms. Leung has been assuming senior positions
in different reputable telecommunications companies
including New World Paging, Cable TV and Peoples Phone.
Being actively involved in the launching and operations of
various telecommunications services ranging from paging,
fixed network services, cable TV, to mobility services such
as GSM/PCS, she is renowned for her extensive experience
in setting up and managing successful telecommunications
business in the industry.
Mr.Chen Da Yi,aged 62, is the general manager of the
Company’s subsidiary, Shanghai Tricom Telecom Equipment
Co., Ltd. and is responsible for all corporate management,
project for building automation, data network infrastructure
development, project design in telecommunications and
related fields. He holds a degree in computer science from
Beijing Qing Hua University, China. He has extensive
experience in telecommunications field over 36 years.
Mr.Yao Wei,David,aged 33, joined the Group as the general
manager of the Group’s strategic investment in a distribution
network in the PRC (the “Investment”) in mid 1998. David
received his BBA from Kingston College of University of
British Colombia in Canada. David had worked in China,
Japan and Canada for more than 10 years before joining
the Group in Shanghai. Most recently, he worked as the
general manager of a multinational corporation in Shanghai
to distribute telecommunications products. David has
extensive experience and knowledge in international trading,
telecommunications products, market entry strategy, and
running China based operations. Since joining the Group,
David has been responsible for all aspects of the day-to-day
operation of the Investment.
Mr.Kong Muk Yin,aged 35, is the financial controller of
the Company. He was graduated from City University of
Hong Kong with a bachelor’s degree in business studies.
He is a fellow member of The Chartered Association of
Certified Accountants and an associate member of Hong
Kong Society of Accountants. He is also the financial
controller and company secretary of CST.
Mr.Chow Wing Lok,Percy,aged 37, is the regional financial
controller of the Group responsible for all financial,
accounting and administration aspects of the Company’s
PRC subsidaries. He holds a degree in Business
Administration from Ottawa University, USA and is a
member of the Australian Association of Taxation and
Management Accountants and is a member of British
Institute of Cost & Executive Accountants. He has extensive
experience in working in PRC for more than 12 years.
Ms.Fung Ching Man,Ada,aged 34, is the company
secretary of the Company. She is an associate member of
The Institute of Chartered Secretaries and Administrators
and has over 10 years of working experience in the company
secretarial profession.
Annual Report 2000
9
The directors present their annual report and the audited
financial statements for the year ended 31 December 2000.
Principal Activities
The Company is an investment holding company. The
activities of its principal subsidiaries and an associate are
set out in notes 42 and 43 to the financial statements,
respectively.
Results and Appropriations
The results and appropriations of the Group for the year
ended 31 December 2000 are set out in the consolidated
income statement on page 13.
The directors recommend the payment of a final dividend
of 0.5 HK cents per share to the shareholders of the
Company whose names appear on the Register of Members
on 1 June 2001 and the retention of the remaining profit
for the year.
Financial Summary
A financial summary of the Group for the past five financial
years is set out on page 52.
Share Capital,Warrants and Share Options
Details of movements in the share capital, warrants and
share options of the Company during the year are set out
in notes 24, 25 and 26 to the financial statements,
respectively.
Reserves
Movements in the reserves of the Group and the Company
during the year are set out in note 27 to the financial
statements.
Investment Properties and Property,Plant and
Equipment
The Group’s investment properties, and land and buildings
were revalued at 31 December 2000 and the resulting
Directors ’ Report
deficits arising on these revaluations of approximately
HK$1,350,000 and HK$2,395,000 respectively have been
charged to the consolidated income statement.
Details of these and other movements in the investment
properties, property, plant and equipment of the Group
during the year are set out in notes 14 and 15 to the financial
statements, respectively.
Directors and Service Contracts
The directors of the Company during the year and up to
the date of this report were:
Executive directors:
Mr. Law Wing Kit, Stephen
Mr. Chang Wang
Mr. Chen Chi Lin, Peter (appointed on 3 November 2000)
Independent non-executive directors:
Mr. Cheng Mo Chi, Moses
Mr. Tan Shao Hua
In accordance with clauses 99 and 182 of the Company’s
bye-laws, Messrs. Chen Chi Lin, Peter and Tan Shao Hua
will retire and, being eligible, offer themselves for re-election
at the forthcoming annual general meeting.
None of the directors has a service contract with the
Company or any of its subsidiaries which is not determinable
by the Group within one year without payment of
compensation, other than statutory compensation.
Directors ’ Interests in Contracts
Other than as disclosed in the “Transactions with the
substantial shareholder” section of this report and note 41
to the financial statements, no contracts of significance to
which the Company or any of its subsidiaries was a party
and in which a director of the Company had a material
interest, whether directly or indirectly, subsisted at the end
of the year or at any time during the year.
China Online (Bermuda)Limited
10
Directors ’and Chief Executives ’Interests in
Shares,Warrants and Share Options
As at 31 December 2000, none of the directors and chief
executives of the Company or any of their associates had
any interests in any securities of the Company or any of its
subsidiaries or associated corporations as defined in the
Hong Kong Securities (Disclosure of Interests) Ordinance
(the “SDI Ordinance”), as recorded in the register maintained
by the Company pursuant to Section 29 of the SDI Ordinance
or as 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 Companies.
Directors ’Rights to Acquire Shares or Debentures
At no time during the year was the Company or any of its
subsidiaries a party to any arrangements to enable the
directors of the Company to acquire benefits by means of
the acquisition of shares in, or debentures of, the Company
or any other body corporate. In addition, none of the
directors or their spouses or children under the age of 18
had any right to subscribe for the securities of the Company.
Substantial Shareholders
The register of substantial shareholders maintained by the
Company pursuant to Section 16(1) of the SDI Ordinance
recorded the following parties as having an interest
representing 10% or more in the issued share capital of
the Company as at 31 December 2000:
Number of
Name shares held Percentage held
China Sci-Tech
Holdings
Limited (“CST”) 3,172,830,000 34.17%
Vigor Online
Offshore Limited
(“Vigor”) 3,000,000,000 32.31%
Note: Harbour Fair Overseas Limited (“Harbour Fair”) held
172,830,000 shares in the Company. Both Harbour
Fair and Vigor are wholly-owned subsidiaries of CST.
Accordingly, CST is deemed by the SDI Ordinance to
be interested in aforementioned shares.
Save as disclosed above, no person has registered an interest
in the share capital of the Company that was required to
be recorded pursuant to Section 16(1) of the SDI Ordinance.
Major Customers and Suppliers
Aggregate sales attributable to the Group’s five largest trade
customers were less than 30% of total sales and the
aggregate purchases attributable to the Group’s five largest
trade suppliers were less than 30% of total purchases.
Transactions with the Substantial Shareholder
During the year, the Group had the following transactions
with CST:
(a) On 2 June 2000, the Company issued a total of
637,148,000 warrants of the Company to Harbour Fair
and Vigor, both of which are wholly-owned subsidiaries
of CST at a price of HK$0.05 per warrant on the basis
of one warrant for every five existing shares held.
Additionally, Cyber Range Limited, another wholly-owned
subsidiary of CST, subscribed 890,292,547
warrants of the Company on the same date pursuant
to an underwriting agreement dated 24 March 2000,
which was subsequently amended by a supplemental
agreement dated 18 April 2000. The total underwriting
commission paid to CST was HK$1,526,000 based on
2.5% of the total issue price of the warrants
underwritten by CST.
(b) In 2000, the Company paid a reimbursement of
expenses of HK$6,000,000 to CST. The reimbursement
includes (i) salaries of two directors of the Company,
both of them also being the directors of CST; (ii) other
staff costs; and (iii) daily operating expenses.
• Directors ’ Report
Annual Report 2000
11
Convertible Securities,Options,Warrants or
Similar Rights
Other than the outstanding warrants and share options as
set out in notes 25 and 26 respectively to the financial
statements, the Company had no outstanding convertible
securities, options, warrants or other similar rights as at
31 December 2000.
Purchase,Sale or Redemption of Listed
Securities
Neither the Company, nor any of its subsidiaries purchased,
sold or redeemed any of the Company’s listed securities
during the year.
Pre-emptive Rights
There are no provisions for pre-emptive rights under the
Company’s bye-laws or the laws of Bermuda, which would
oblige the Company to offer new shares on a pro-rata basis
to existing shareholders.
Corporate Governance
The Company has complied throughout the year ended
31 December 2000 with the Code of Best Practice as set
out in Appendix 14 of the Rules Governing the Listing of
Securities on the Stock Exchange.
• Directors ’ Report
Auditors
During the year, Messrs. Ernst & Young resigned as auditors
of the Company and Messrs. Deloitte Touche Tohmatsu
were then appointed. Except for the fiscal period from
1 January 1999 to 31 December 1999, in which Messrs.
Ernst & Young acted as auditors of the Company, Messrs.
Deloitte Touche Tohmatsu have acted as auditors of the
Company for the preceding two years.
A resolution will be submitted to the forthcoming annual
general meeting of the Company to re-appoint Messrs.
Deloitte Touche Tohmatsu as auditors of the Company.
On behalf of the Board
Law Wing Kit, Stephen
Chairman
Hong Kong, 24 April 2001
China Online (Bermuda)Limited
12
To the Shareholders of
China Online (Bermuda)Limited
(incorporated in Bermuda with limited liability)
We have audited the financial statements on pages 13 to
51 which have been prepared in accordance with accounting
principles generally accepted in Hong Kong.
Respective Responsibilities of Directors and
Auditors
The Company’s directors are responsible for the preparation
of financial statements which give a true and fair view. In
preparing financial statements which give a true and fair
view it is fundamental that appropriate accounting policies
are selected and applied consistently.
It is our responsibility to form an independent opinion, based
on our audit, on those statements and to report our opinion
to you.
Basis of Opinion
We conducted our audit in accordance with Statements of
Auditing Standards issued by the Hong Kong Society of
Accountants. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors
in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the
circumstances of the Company and the Group, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered
necessary in order to provide us with sufficient evidence to
give reasonable assurance as to whether the financial
statements are free from material misstatement. In forming
our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements. We
believe that our audit provides a reasonable basis for our
opinion.
Opinion
In our opinion the financial statements give a true and fair
view of the state of affairs of the Company and the Group
as at 31 December 2000 and of the profit and cash flows
of the Group for the year then ended and have been properly
prepared in accordance with the disclosure requirements
of the Hong Kong Companies Ordinance.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong, 24 April 2001
Auditors ’ Report
Annual Report 2000
13
Auditors ’ Report
Consolidated Income Statement
for the Year Ended 31 December 2000
NOTES 2000 1999
HK HK
Turnover 3 2,442,429 610,823
Cost of sales (2,637,714) (525,796)
Gross (loss) profit (195,285) 85,027
Net gains on investments 4 1,622,602 355,596
Gain on disposal of discontinued operations, net 5 — 95,680
Gain on disposal of an associate 7,800 —
Other revenue 6 55,363 87,274
Distribution costs (10,243) (78,126)
Administrative expenses (46,148) (72,189)
Other operating expenses (76,516) (73,734)
Provision in respect of distribution network
development costs in Mainland China (9,189) (95,133)
Profit from operations 7 1,348,384 304,395
Finance costs 8 (13,723) (5,279)
Share of results of unconsolidated subsidiaries — (11,845)
Share of results of associates (884) (29,927)
Profit before taxation 1,333,777 257,344
Tax credit (charge) 10 2,161 (2,579)
Profit before minority interests 1,335,938 254,765
Minority interests (3,120) 5,616
Profit for the year 11 1,332,818 260,381
Dividends 12 46,432 181,854
Earnings per share 13
- Basic 14.35 HK cents 2.86 HK cents
- Diluted 14.35 HK cents N/A
China Online (Bermuda)Limited
14
Consolidated Balance Sheet
at 31 December 2000
NOTES 2000 1999
HK HK
Non-current assets
Investment properties 14 15,400 16,750
Property, plant and equipment 15 41,448 40,765
Interests in associates 17 65,244 —
Investments in securities 18 339,638 3,620,000
Other non-current assets 1,922 1,022
463,652 3,678,537
Current assets
Inventories 19 8,966 9,685
Investments in securities 18 1,984,138 —
Debtors, deposits and prepayments 20 28,736 51,903
Taxation recoverable — 1,443
Pledged bank deposits — 10,296
Bank balances and cash 37,010 632,232
2,058,850 705,559
Current liabilities
Creditors and accrued charges 21 166,022 158,490
Customers’ deposits and receipts in advance 7,118 1,984
Taxation payable 3,947 3,947
Dividend payable 46,432 —
Bank borrowings - due within one year 22 265,519 697
489,038 165,118
Net current assets 1,569,812 540,441
Total assets less current liabilities 2,033,464 4,218,978
Minority interests 3,695 575
2,029,769 4,218,403
Capital and reserves
Share capital 24 92,865 92,792
Reserves 27 1,936,904 4,125,611
2,029,769 4,218,403
Law Wing Kit, Stephen Chang Wang
Director Director
Annual Report 2000
15
NOTES 2000 1999
HK HK
Non-current assets
Interests in subsidiaries 16 3,397,590 1,120,515
Current assets
Deposits and prepayments 2,147 17,830
Bank balances and cash 13,629 593,046
15,776 610,876
Current liabilities
Accrued charges 830 1,600
Dividend payable 46,432 —
47,262 1,600
Net current (liabilities) assets (31,486) 609,276
Total assets less current liabilities 3,366,104 1,729,791
Non-current liabilities
Amounts due to subsidiaries 23 1,977,892 440,079
1,388,212 1,289,712
Capital and reserves
Share capital 24 92,865 92,792
Reserves 27 1,295,347 1,196,920
1,388,212 1,289,712
Law Wing Kit, Stephen Chang Wang
Director Director
Balance Sheet
at 31 December 2000
China Online (Bermuda)Limited
16
Consolidated Statement of Recognised
Gains and Losses
for the Year Ended 31 December 2000
2000 1999
HK HK
Exchange differences arising on translation of overseas subsidiaries — 1,672
Share of exchange reserve of an associate 70 —
Revaluation (deficit) surplus of non-trading investments (229,223) 3,471,277
Net (losses) gains not recognised in the consolidated income statement (229,153) 3,472,949
Profit for the year 1,332,818 260,381
Total recognised gains 1,103,665 3,733,330
Elimination against reserves of goodwill arising on acquisition of
- subsidiary (569) —
- associate (30,035) —
Share of capital reserve of an associate (668) —
1,072,393 3,733,330
Annual Report 2000
17
NOTES 2000 1999
HK HK
Net cash outflow from operating activities 29 (3,365,566) (124,438)
Returns on investments and servicing of finance
Dividends paid — (181,854)
Interest paid (6,494) (5,273)
Interest on finance lease obligations — (6)
Interest received 25,926 24,180
Dividends from associates — 200
Dividends from investments in securities 26,739 —
Net cash inflow (outflow) from returns on investments
and servicing of finance 46,171 (162,753)
Taxation
Hong Kong Profits Tax refunded 3,571 7,916
Investing activities
Loan advanced to associates — (1,609)
Purchase of interests in associates (96,728) —
Purchase of investments in securities (542,341) (303,040)
Purchase of a subsidiary (net of cash and cash equivalents acquired) 30 (2,999) —
Purchase of property, plant and equipment (7,423) (18,253)
Purchase of other non-current assets (900) —
Mainland China distribution network development costs incurred (9,189) (95,133)
Decrease (increase) in pledged bank deposits 10,296 (10,060)
Proceeds from realisation of non-trading investments 3,012,549 623,188
Proceeds from disposal of an associate 7,800 —
Disposal of subsidiaries and businesses (net of cash
and cash equivalents disposed of) 31 — 490,070
Proceeds from disposal of property, plant and equipment 148 783
Proceeds from disposal of an unconsolidated subsidiary — 500
Net cash inflow from investing activities 2,371,213 686,446
Net cash (outflow) inflow before financing (944,611) 407,171
Consolidated Cash Flow Statement
for the Year Ended 31 December 2000
China Online (Bermuda)Limited
18
Consolidated Cash Flow Statement
for the Year Ended 31 December 2000
NOTES 2000 1999
HK HK
Net cash (outflow) inflow before financing (944,611) 407,171
Financing 32
Proceeds from issue of new shares 1,414 31,793
Net proceeds from issue of warrants 90,382 —
New bank and other loans raised during the year 1,397,866 9,347
Repurchase of own shares — (649)
Repayment of bank and other loans (1,140,255) (56,406)
Repayment of obligations under finance leases — (1,037)
Repayment of advances from ultimate holding company — (2,468)
Net cash inflow (outflow) from financing 349,407 (19,420)
(Decrease) increase in cash and cash equivalents (595,204) 387,751
Cash and cash equivalents at beginning of the year 632,214 244,463
Cash and cash equivalents at end of the year 33 37,010 632,214
Annual Report 2000
19
Notes to the Financial Statements
for the Year Ended 31 December 2000
1.General
The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on
The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The Company is an investment holding company. The activities of its principal subsidiaries and an associate are set out
in notes 42 and 43 respectively.
2.Significant Accounting Policies
The financial statements have been prepared under the historical cost convention as modified for the revaluation of
investment properties, land and buildings, and investments in securities.
The financial statements have been prepared in accordance with accounting principles generally accepted in Hong
Kong. The principal accounting policies adopted are as follows:
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made
up to 31 December each year.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
All significant inter-company transactions and balances within the Group are eliminated on consolidation.
Goodwill and capital reserve
Goodwill or capital reserve arising on the acquisition of a subsidiary or an associate represents, respectively, the excess
or shortfall of the purchase consideration over the Group’s share of the fair value ascribed to the separable net assets
of the subsidiary or associate at the date of acquisition. Goodwill or capital reserve is written off or credited directly to
reserves in the year of acquisition.
On disposal of a subsidiary or an associate, the attributable amount of goodwill or capital reserve previously written off
against or credited to reserves at the time of acquisition is included in the determination of the profit or loss on
disposal.
Turnover
Turnover represents the net amounts received and receivable for goods sold to outside customers and the net proceeds
from sale of listed trading investments during the year.
Notes to the Financial Statements
for the Year Ended 31 December 2000
China Online (Bermuda)Limited
20
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Revenue recognition
Trading of securities are recognised when the relevant transaction is executed.
Sales of goods are recognised when goods are delivered and title has passed.
Dividend income from investments is recognised when the Group’s rights to receive payment have been established.
Interest income is accrued on a time basis by reference to the principal outstanding and at the interest rate applicable.
Rental income, including rental invoiced in advance from properties let under operating leases, is recognised on a
straight line basis over the lease terms.
Investment properties
Investment properties are completed properties which are held for their investment potential, any rental income being
negotiated at arm’s length.
Investment properties are stated at their open market value based on independent professional valuations at the
balance sheet date. Any revaluation increase or decrease arising on the revaluation of investment properties is credited
or charged to the investment property revaluation reserve unless the balance on this reserve is insufficient to cover a
revaluation decrease, in which case the excess of the revaluation decrease over the balance on the investment property
revaluation reserve is charged as expense for the period. Where a revaluation decrease has previously been charged to
as expense and a revaluation increase subsequently arises, this increase is credited as income to the extent of the
decrease previously charged.
On disposal of an investment property, the balance on the investment property revaluation reserve attributable to that
property is included in profit or loss for the period.
No depreciation is provided on investment properties except where the unexpired term of the relevant lease is 20 years
or less.
Property, plant and equipment
Property, plant and equipment are stated at cost or valuation less depreciation and amortisation. The cost of an asset
comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and
location for its intended use. Expenditure incurred after the assets has been put into operation, such as repairs and
maintenance and overhaul costs, is normally charged as expenses in the period in which it is incurred. In situations
where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits
expected to be obtained from the use of the asset, the expenditure is capitalised as an additional cost of the asset.
Annual Report 2000
21
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Property, plant and equipment - continued
Land and buildings are stated in the balance sheet at their revalued amount, being the fair value on the basis of their
existing use at the date of revaluation less any subsequent accumulated depreciation. Revaluations are performed
with sufficient regularity such that the carrying amount does not differ materially from that which would be determined
using fair values at the balance sheet date.
Any surplus arising on revaluation of land and buildings is credited to the revaluation reserve. A decrease in net
carrying amount arising on revaluation of land and buildings is charged as expenses to the extent that it exceeds the
surplus, if any, held in revaluation reserve relating to previous revaluation of that particular property. On the subsequent
sale of land and buildings, the attributable revaluation surplus not yet transferred to retained profits in prior years is
transferred to retained profits.
The gain or loss arising from disposal or retirement of an asset is determined as the difference between the sale
proceeds and the carrying amount of the asset and is included in net profit or loss for the period.
Where the recoverable amount of an asset has declined below its carrying amount, the carrying amount is reduced to
reflect the decline in value. In determining the recoverable amount of assets, expected future cash flows are not
discounted to their present values.
Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful lives, using
the straight line method, at the following rates per annum:
Leasehold land Over the remaining lease terms
Buildings Over the shorter of the lease terms or 30-50 years
Computer and electronic equipment 20%
Furniture and fixtures 20% - 50%
Motor vehicles 20% - 50%
Subsidiaries
A subsidiary is an enterprise in which the Company, directly or indirectly, holds more than half of the issued share
capital, or controls more than half of the voting power, or where the Company controls the composition of its board
of directors or equivalent governing body.
Investments in subsidiaries are included in the Company’s balance sheet at cost, as reduced by any decline in the value
of the subsidiaries that is other than temporary. Results of subsidiaries are accounted for by the Company on the basis
of dividends received and receivable during the year.
China Online (Bermuda)Limited
22
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Associates
An associate is an enterprise over which the Group is in a position to exercise significant influence, including participation
in financial and operational policy decisions.
The consolidated results includes the Group’s share of the post-acquisition results of its associates for the year. In the
consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associates.
Investments in associates are included in the Company’s balance sheet at cost, as reduced by any decline in the value
of the associates that is other than temporary. Results of associates are accounted for by the Company on the basis of
dividends received and receivable during the year.
When the Group transacts with its associates, unrealised profits and losses are eliminated to the extent of the Group’s
interest in the relevant associate, except where unrealised losses provide evidence of an impairment of the asset
transferred.
Investments in securities
Investments in securities are recognised on a trade-date basis and are initially measured at cost.
All securities other than held-to-maturity debt securities are measured at subsequent reporting dates at fair value.
Where securities are held for trading purposes, unrealised gains and losses are included in net profit or loss for the
period. For other securities held for non-trading purposes, unrealised gains and losses are dealt with in equity, until
the security is realised or is determined to be impaired, at which time the cumulative gain or loss is included in net
profit or loss for the period.
Inventories
Inventories, representing trade merchandise, are stated at the lower of cost and net realisable value. Cost, which
comprises all costs of purchase, and where applicable, other costs that have been incurred in bringing the inventories
to their present location and condition, is calculated using the first-in, first-out method. Net realisable value represents
the estimated selling price in the ordinary course of business less all estimated costs of completion and the estimated
costs necessary to make the sale.
Annual Report 2000
23
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Taxation
The charge for taxation is based on the results for the year after adjusting for items which are non-assessable or
disallowed. Certain items of income and expense are recognised for tax purposes in a different accounting period
from that in which they are recognised in the financial statements. The tax effect of the resulting timing differences,
computed using the liability method, is recognised as deferred taxation in the financial statements to the extent that
it is probable that a liability or an asset will crystallise in the foreseeable future.
Operating leases
Rentals payable and receivable under operating leases are charged as expenses and credited as income on a straight
line basis over the terms of the relevant lease.
Retirement benefits scheme
The pension costs charged to the income statement represent the contributions payable in respect of the current year
to the Group’s defined contribution scheme.
Foreign currencies
Transactions in currencies other than Hong Kong dollars are translated into Hong Kong dollars at the rates ruling on
the dates of the transactions. Monetary assets and liabilities denominated in currencies other than Hong Kong dollars
are re-translated into Hong Kong dollars at the rates ruling on the balance sheet date. Gains and losses arising on
exchange are dealt with in net profit or loss for the period.
On consolidation, the financial statements denominated in currencies other than Hong Kong dollars are translated
into Hong Kong dollars at the exchange rates ruling on the balance sheet date. All exchange differences arising on
consolidation are dealt with in reserves.
Cash equivalents
Cash equivalents represent short term highly liquid investments which are readily convertible into known amounts of
cash and which were within three months of maturity when acquired; less advances from banks repayable within
three months from the date of the advance.
China Online (Bermuda)Limited
24
Notes to the Financial Statements
for the Year Ended 31 December 2000
3.Turnover and Contribution to Profit from Operations
An analysis of the Group’s turnover and contribution to profit from operations by principal activity for the year are as
follows:
Contribution to
Turnover profit from operations
2000 1999 2000 1999
HK HK HK HK
Continuing operations
Mobile phone distribution 236,346 220,012 1,959 (639)
Telecommunication products 10,063 1,290 (18,145) (906)
Trading of securities 2,196,020 234,491 (256,643) 9,048
Others — 6,307 — (8,138)
2,442,429 462,100 (272,829) (635)
Net gains on investments 1,622,602 355,596
Gain on disposal of an associate 7,800 —
Provision in respect of distribution
network development costs in the
Mainland China (9,189) (95,133)
1,348,384 259,828
Discontinued operations
Paging services — 80,329 — (103,162)
Customer premises equipment — 53,842 — 9,286
Others — 14,552 — 6,505
— 148,723 — (87,371)
Cellular mobile telecommunication
network — 36,258
Gain on disposal of discontinued
operations, net — 95,680
— 44,567
Total 2,442,429 610,823 1,348,384 304,395
Over 90% of the Group’s turnover and related contribution to profit from operations are derived from activities in
Hong Kong, Special Administrative Region of the People’s Republic of China (“Hong Kong”), and the rest of the
operations are carried out in the Mainland China.
Annual Report 2000
25
Notes to the Financial Statements
for the Year Ended 31 December 2000
4.Net Gains on Investments
2000 1999
HK HK
Gain on realisation of non-trading listed investments, after taking
into account of release of asset revaluation reserve of
HK$3,306,391,000 (note 27) 2,870,891 355,596
Net realised loss on equity linked notes (359,103) —
Net unrealised loss on trading investments (791,730) —
Impairment loss on non-trading investments (97,456) —
1,622,602 355,596
5.Discontinued Operations
In the prior year, the Group disposed of certain subsidiaries, whose principal activities comprised the development and
operation of a cellular mobile telecommunication network, and the marketing, and provision of technical support for
customer premises equipment. The Group also disposed of its paging business. These operations were accounted for
until the dates of their disposals, at which time the assets and liabilities of the subsidiaries and the business were
transferred to the gain on disposal of the discontinued operations, which was calculated as follows:
THE GROUP
2000 1999
HK HK
Net gain on disposal/deemed disposal of interests in subsidiaries,
a subsidiary not consolidated and associates (note a) — 371,734
Less: goodwill previously written off against reserves — (296,901)
exchange reserve realised — (1,945)
— 72,888
Gain on disposal of business (note b) — 22,792
— 95,680
Notes:
(a) In respect of the year ended 31 December 1999, the net gain on disposal/deemed disposal of interests in subsidiaries and a subsidiary not
consolidated comprised (i) the net gain on dilution and partial disposal of the Group’s interest in Tricom Holdings Limited (“Tricom”, whose
name was changed to Pacific Century CyberWorks Limited (“PCCW”)) of HK$220,111,000; (ii) the loss on disposal of the Group’s interest in Star
Digitel Limited (“SDL”) of HK$150,437,000; and (iii) the gain on the disposals of the interests in other subsidiaries of HK$3,214,000.
(b) The amount represented the gain on the disposal of the Group’s business in the provision of paging services to China Moti
China Online (Bermuda)Limited
26
Notes to the Financial Statements
for the Year Ended 31 December 2000
6.Other Revenue
2000 1999
HK HK
Dividend income from listed investments 26,739 —
Forfeited pension scheme contribution 542 10,161
Gross rental income from investment properties 1,653 3,479
Interest income 25,926 26,004
Write back of the provision for litigation — 36,258
Others 503 11,372
55,363 87,274
7.Profit from Operations
2000 1999
HK HK
Profit from operations has been arrived at after charging:
Auditors’ remuneration 995 1,506
Cost of inventories recognised as expenses 219,660 220,262
Cost of services rendered — 80,540
Redundancy and severance payments 206 16,431
Deficit arising on revaluation of investment properties 1,350 2,650
Deficit on revaluation of land and buildings 2,395 19,897
Depreciation and amortisation 3,491 17,322
Loss on disposal of property, plant and equipment 706 2,709
Operating lease rentals in respect of rented premises 4,980 19,441
Provision for diminution in values of interests in associates — 9,057
Provision for diminution in value of property, plant and equipment — 16,321
Staff costs, inclusive of directors’ emoluments 13,525 43,345
8.Finance Costs
2000 1999
HK HK
Interest on:
- bank and other borrowings wholly repayable within five years 13,723 5,273
- finance leases — 6
13,723 5,279on Telecom (H.K.)
Annual Report 2000
27
Notes to the Financial Statements
for the Year Ended 31 December 2000
9.Directors ’ Emoluments and Highest Paid Employees
Directors’ emoluments
The directors’ emoluments are analysed as follows:
2000 1999
HK HK
Fees:
Executive directors — —
Independent non-executive directors 100 285
100 285
Other emoluments to executive directors:
Salaries and other benefits 193 1,162
Performance related bonus — 6,811
Retirement benefit scheme contribution — —
Total directors’ emoluments 293 8,258
The emoluments of the directors were within the following bands:
2000 1999
Number of Number of
directors directors
Nil to HK$1,000,000 5 10
HK$1,500,001 to HK$2,000,000 — 1
HK$4,500,001 to HK$5,000,000 — 1
Highest paid employees
During the current year, the five highest paid employees of the Group do not include any directors. In 1999, the five
highest paid employees of the Group included three directors, details of whose emoluments are set out above. The
emoluments of the five highest paid employees (1999: two employees) are as follows:
2000 1999
HK HK
Salaries and other benefits 3,054 3,235
Performance related bonus — 100
Retirement benefit scheme contribution 80 154
3,134 3,489
China Online (Bermuda)Limited
28
Notes to the Financial Statements
for the Year Ended 31 December 2000
9.Directors ’ Emoluments and Highest Paid Employees ((continued)
The emoluments of the five (1999: two) highest paid employees were within the following bands:
2000 1999
Number of Number of
employees employees
Nil to HK$1,000,000 5 1
HK$2,500,001 to HK$3,000,000 — 1
10.Tax Credit (Charge)
2000 1999
HK HK
The credit (charge) comprises:
Hong Kong Profits Tax
Current year — (2,615)
Overprovision in prior years 2,128 472
2,128 (2,143)
Tax in elsewhere — (436)
Share of taxation of an associate 33 —
2,161 (2,579)
No provision for Hong Kong Profits Tax has been made in the financial statements, as the Group has no assessable
profit for the current year.
Hong Kong Profits Tax was calculated at 16% on the estimated assessable profits in 1999.
Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the
Group operates in 1999.
11.Profit for the Year
Of the Group’s profit for the year of HK$1,332,818,000 (1999: HK$260,381,000), a profit of HK$53,136,000
(1999: HK$396,141,000) has been dealt with in the financial statements of the Company.
Annual Report 2000
29
Notes to the Financial Statements
for the Year Ended 31 December 2000
12.Dividends
2000 1999
HK HK
Proposed final of 0.5 HK cents (1999: nil) per ordinary share 46,432 —
Special interim of 2 HK cents per ordinary share — 181,854
46,432 181,854
The special interim dividend in 1999 had been adjusted for the one to ten shares subdivision on 30 July 1999.
The final dividend of 0.5 HK cents (1999: nil) per ordinary share has been proposed by the directors and is subject to
approval by shareholders in general meeting.
13.Earnings Per Share
The calculation of basic and diluted earnings per share is based on the following data:
2000 1999
HK HK
Earnings for the purpose of basic and diluted earnings per share 1,332,818 260,381
Number of shares Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 9,284,793,767 9,114,936,517
Effect of dilutive potential shares:
Options 855,804
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 9,285,649,571
Diluted earning per share for the year ended 31 December 1999 had not been presented as no dilutive potential
ordinary shares were outstanding.
14.Investment Properties
THE GROUP
2000
HK
At 1 January 2000 16,750
Deficit arising on revaluation (1,350)
At 31 December 2000 15,400
The Group’s investment properties are situated in Hong Kong and are held under medium term leases. They were
revalued at 31 December 2000 by DTZ Debenham Tie Leung Limited, a firm of independent professional property
valuers, at HK$15,400,000 on an open market, existing use basis. The resulting deficit arising on the revaluation of
HK$1,350,000 (1999: HK$2,650,000) has been charged to the consolidated income statement.
As at 31 December 1999, certain of the Group’s investment properties with an aggregate carrying value of approximately
HK$14,500,000 were pledged to secure general banking facilities granted to the Group. This charge had been released
during the year.
China Online (Bermuda)Limited
30
Notes to the Financial Statements
for the Year Ended 31 December 2000
15.Property,Plant and Equipment
Computer
Leasehold and Furniture
land and electronic and Motor
buildings equipment fixtures vehicles Total
HK HK HK HK HK
THE GROUP
COST OR VALUATION:
At 1 January 2000 34,650 5,492 8,159 745 49,046
Additions — 2,327 4,074 1,022 7,423
Disposals — (2,073) (4,151) (145) (6,369)
Deficit arising on revaluation (2,750) — — — (2,750)
At 31 December 2000 31,900 5,746 8,082 1,622 47,350
COMPRISING:
At cost — 5,746 8,082 1,622 15,450
At valuation - 2000 31,900 — — — 31,900
31,900 5,746 8,082 1,622 47,350
DEPRECIATION AND
AMORTISATION:
At 1 January 2000 — 2,160 5,376 745 8,281
Provided for the year 355 2,112 779 245 3,491
Eliminated on disposals — (2,001) (3,369) (145) (5,515)
Eliminated on valuation (355) — — — (355)
At 31 December 2000 — 2,271 2,786 845 5,902
NET BOOK VALUES:
At 31 December 2000 31,900 3,475 5,296 777 41,448
At 31 December 1999 34,650 3,332 2,783 — 40,765
The land and buildings of the Group are analysed as follows:
THE GROUP
2000 1999
HK HK
Properties situated in Hong Kong, held under medium term leases 8,100 8,750
Properties situated in the Mainland China, held under:
- long leases 3,100 3,700
- medium term leases 20,700 22,200
31,900 34,650
Annual Report 2000
31
Notes to the Financial Statements
for the Year Ended 31 December 2000
15.Property,Plant and Equipment (continued)
All the land and buildings of the Group were revalued at 31 December 2000 by DTZ Debenham Tie Leung Limited, a
firm of independent professional property valuers, on an open market value basis. The resulting deficit arising on the
revaluation of HK$2,395,000 (1999: HK$19,897,000) has been charged to the consolidated income statement.
Had all the land and buildings of the Group been carried at cost less accumulated depreciation and amortisation, the
carrying values of these properties would have been stated at HK$51,423,000 (1999: HK$52,834,000).
16.Interests in Subsidiaries
THE COMPANY
2000 1999
HK HK
Unlisted shares, at cost 32,168 32,168
Amounts due from subsidiaries 3,428,946 1,207,487
3,461,114 1,239,655
Less: Impairment loss recognised (63,524) (119,140)
3,397,590 1,120,515
Particulars of the principal subsidiaries as at 31 December 2000 are set out in note 42.
In the opinion of the directors, the amounts due from subsidiaries will not be repaid within twelve months from the
balance sheet date. Accordingly, it is classified as non-current.
17.Interests in Associates
THE GROUP
2000 1999
HK HK
Share of net assets 73,056 9,507
Less: Impairment loss recognised (7,812) (9,507)
65,244 —
Particulars of the principal associate as at 31 December 2000 are set out in note 43.
China Online (Bermuda)Limited
32
Notes to the Financial Statements
for the Year Ended 31 December 2000
18.Investments in Securities
THE GROUP
Trading investments Non-trading investments Total
2000 1999 2000 1999 2000 1999
HK HK HK HK HK HK
Equity securities
- listed in Hong Kong 1,395,154 — 430,447 3,620,000 1,825,601 3,620,000
- unlisted 492,175 — 6,000 — 498,175 —
1,887,329 — 436,447 3,620,000 2,323,776 3,620,000
Carrying amount analysed
for reporting purposes as
- Non-current — — 339,638 3,620,000 339,638 3,620,000
- Current 1,887,329 — 96,809 — 1,984,138 —
1,887,329 — 436,447 3,620,000 2,323,776 3,620,000
Market value of listed
securities 1,395,154 — 430,447 3,620,000 1,825,601 3,620,000
As at 31 December 2000, included in the equity securities shown above, the Group has interests in the following
companies, the details of which are disclosed pursuant to Section 129 of the Hong Kong Companies Ordinance as
follows:
Percentage of
issued share
Place of Class of capital held
Name of company incorporation shares by the Group
Sun Hung Kai & Co. Limited Hong Kong Ordinary 19.3%
PCCW Hong Kong Ordinary 0.67%
19.Inventories
THE GROUP
2000 1999
HK HK
Inventories held for resale 8,966 9,685
At 31 December 1999, inventories of HK$119,000 were carried at net realisable value.
Annual Report 2000
33
Notes to the Financial Statements
for the Year Ended 31 December 2000
20.Debtors,Deposits and Prepayments
The Group has a policy of allowing an average credit period of 30-90 days to its trade customers.
An aged analysis of trade debtors is as follows:
THE GROUP
2000 1999
HK HK
Within 90 days 5,688 2,516
91 – 180 days 41 237
181 – 360 days — 198
Over 360 days — 1,108
5,729 4,059
Other debtors, deposits and prepayments 23,007 47,844
28,736 51,903
21.Creditors and Accrued Charges
An aged analysis of trade creditors is as follow:
THE GROUP
2000 1999
HK HK
Within 90 days 999 7,035
91 – 180 days 121 6,235
181 – 360 days 3,064 269
Over 360 days 3,849 3,858
8,033 17,397
Other creditors and accrued charges 157,989 141,093
166,022 158,490
China Online (Bermuda)Limited
34
Notes to the Financial Statements
for the Year Ended 31 December 2000
22.Bank Borrowings
THE GROUP
2000 1999
HK HK
Bank borrowings comprise:
Short term bank loan - secured 265,519 679
Bank overdrafts — 18
265,519 697
23.Amounts Due to Subsidiaries
The amounts are unsecured, interest free and have no fixed terms of repayment. Repayment of the amounts will not
be demanded within the next twelve months from the balance sheet date. Accordingly, the amounts are shown as
non-current.
24.Share Capital
Number of shares Value
2000 1999 2000 1999
HK HK
Ordinary shares of HK$0.01
(before 30 July 1999: HK$0.1) each
Authorised:
At beginning of the year 15,000,000,000 1,500,000,000 150,000 150,000
Subdivision of shares (note c) — 13,500,000,000 — —
Increase during the year 15,000,000,000 — 150,000 —
At end of the year 30,000,000,000 15,000,000,000 300,000 150,000
Issued and fully paid:
At beginning of the year 9,279,190,490 910,654,049 92,792 91,065
Shares repurchased (note a) — (1,310,000) — (131)
Share options exercised (note b) — 1,500,000 — 150
9,279,190,490 910,844,049 92,792 91,084
Subdivision of shares (note c) — 8,197,596,441 — —
Share options exercised (note d) 7,250,000 170,750,000 72 1,708
Warrant
China Online (Bermuda)Limited
2
Board of Directors
Law Wing Kit, Stephen (Chairman)
Chang Wang (Executive Director)
Chen Chi Lin, Peter (Executive Director)
Cheng Mo Chi, Moses (Independent Non-executive Director)
Tan Shao Hua (Independent Non-executive Director)
Secretary
Fung Ching Man, Ada
Auditors
Deloitte Touche Tohmatsu
Certified Public Accountants
Registered Office
Cedar House, 41 Cedar Avenue
Hamilton HM12, Bermuda
Head Office and Principal Place of Business in Hong Kong
47/F, China Online Centre
333 Lockhart Road
Wan Chai
Hong Kong
Principal Bankers
American Express Bank Ltd.
Banque Cantonale Vaudoise
Commerzbank (South East Asia) Limited
Deutsche Bank AG, Hong Kong
Sin Hua Bank Ltd.
Société Générale
The Hongkong Chinese Bank, Ltd.
Solicitors
P.C. Woo & Co.
Fred Kan & Co.
Richards Butler
Preston Gates & Ellis
Hong Kong Branch Share Registrars
Tengis Limited
4/F Hutchison House
10 Harcourt Road
Central
Hong Kong
Corporate Information
Annual Report 2000
3
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at Board Room, 7th
Floor, The Dynasty Club Limited, South West Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on
Friday, 1 June 2001 at 10:00 a.m. for the following purposes:-1.
To receive and consider the Audited Financial Statements and the Reports of the Directors and Auditors for
the year ended 31 December 2000.
2. To declare final dividends.
3. To re-elect Directors and authorise the Directors to fix their remuneration.
4. To re-appoint Auditors and authorise the Directors to fix their remuneration.
5. To transact any other business.
By Order of the Board
Fung Ching Man, Ada
Company Secretary
Hong Kong, 24 April 2001
Notes:
(i) Any member of the Company entitled to attend and vote at a meeting of the Company or a meeting of the holder of any class of shares in
the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of
the Company. A member may appoint more than one proxy to attend on the same occasion.
(ii) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the
appointor is a corporation, either under seal, or under the hand of an officer or attorney duly authorised.
(iii) The Register of Members will be closed from Tuesday, 29 May 2001 to Friday, 1 June 2001, both days inclusive, during which period no
transfer of shares will be effected. In order to qualify for the proposed final dividends, all share certificates with completed transfer forms
either overleaf or separately, must be lodged with the branch share registrars of the Company in Hong Kong, Tengis Limited at 4th Floor,
Hutchison House, 10 Harcourt Road, Central, Hong Kong for registration not later than 4:00 p.m. on Monday, 28 May 2001.
(iv) Registered and unregistered holders of Warrants who wish to exercise their subscription rights to receive shares which will qualify for the
proposed final dividends must lodge the relevant Warrant Certificates and/or the relevant Instruments of Transfer and subscription forms duly
completed and accompanied by the requisite subscription monies with the branch share registrars of the Company in Hong Kong, Tengis
Limited at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong for registration not later than 4:00 p.m. on Monday,
28 May 2001.
(v) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy
of that power or authority shall be deposited at the branch share registrars of the Company in Hong Kong, Tengis Limited at 4th Floor,
Hutchison House, 10 Harcourt Road, Central, Hong Kong not less than forty-eight hours before the time for holding the meeting or adjourned
meeting
China Online (Bermuda)Limited
4
Chairman ’s Statement
Dear Shareholders,
On behalf of the Board of Directors of the Company, I have pleasure to report on the operation and other aspects of the
Group for the year ended 31 December 2000.
Finanical Results
Turnover of the Group for the year ended 31 December 2000 was HK$2,442,429,000 representing approximately a 300%
increase as compared to that of the year 1999. Net profit from ordinary activities attributable to shareholders rose approximately
412% to HK$1,332,818,000 which included the gain on realisation of long term investments of HK$2,870,891,000. Basic
earnings per share for the year ended 31 December 2000 was 14.35 HK cents, a rise of approximately 402% as compared
to that of the year 1999.
Dividends
The Directors recommend the payment of a final dividend of 0.5 HK cents per share (1999: Nil) to shareholders whose
names appear on the Register of Members of the Company on 1 June 2001. Dividend warrants will be sent to shareholders
on 28 June 2001.
Closure of Registers of Members and of Warrrantholders
The Registers of Members and of Warrantholders will be closed from Tuesday, 29 May 2001 to Friday, 1 June 2001, both
days inclusive, during which no share and warrant transfer will be effected.
Review of Operations
Performance of the Group’s mobile handset
distribution business was satisfactory during
the year under review, with turnover
increased by approximately 7% to
HK$236,346,000 as compared to that of the
year 1999. Despite keen competition of the
mobile handset distribution business in the
Hong Kong market, Star Telecom Limited
(“Star Telecom”), the Company’s wholly-owned
subsidiary, managed to secure more
distribution rights of popular and trendy
brands during the second half of the year
2000 and is now one of the leading
distributors owning a number of handset
brand distributorships, some of which even
on an exclusive basis and covering the vast
China market.
As one of the leading distributors of mobile phones and telecom-related products,
Star Telecom is dedicated to bringing more choices to customers.
Annual Report 2000
5
The year 2000 was a year of consolidation for the Group’s intelligent building system integration operation in the People’s
Republic of China (the “PRC”) with revenue amounted to HK$10,063,000. The Group’s strategic investment in the distribution
network of mobile handsets and accessories in the major cities of the PRC achieved a steady growth in revenue.
Pursuant to approval given by the shareholders in the special general meeting of the Company on 11 March 2000 to realise
the Group’s long term investment in the shares of Pacific Century CyberWorks Limited (“PCC Shares”), the Group has
realised a total of 190,500,000 PCC Shares during the year under review.
The turnover of trading and investment in financial instruments of the Group during the fiscal year 2000 amounted to
HK$2,196,020,000. The stock market turmoil experienced in the US market and the Hong Kong market which started from
the third quarter of the year 2000 and straddled into the year 2001, has affected the Group’s investment performance in
these areas and offset part of the gain realised from long term investments.
The Group’s 21.7% associated company, Millennium Group Limited (“MGL”) reported a loss attributable to shareholders of
HK$8,649,000 for the six months ended 30 September 2000 as its information technology projects are still in their start-up
stage. During the six months ended 30 September 2000, MGL’s 35% associated company, Jilian (Jilin) Petrochemicals
Limited recorded an operating profit before tax of HK$15.9 million of which MGL’s share was HK$5.6 million as compared
to a loss of HK$0.7 million for the corresponding period.
Up to the year end date, the Group has acquired on market for long term purpose an aggregate of 224,385,000 shares of
Sun Hung Kai & Co. Limited (“SHK & Co”) and 71,848,000 shares of Takson Holdings Limited (“THL”), representing
approximately 19.3% and 19.2% in the issued share capital of SHK & Co and THL respectively. In light of the recent and
forthcoming business and stock market environments, the Group has carried out an annual review of its long term investment
portfolio and made provisions for decline in value of certain of its long term investments which the board of the Directors
considered other than temporary.
Liquidity and Financing
The open offer of 1,856,688,098 units of the Company’s warrants at an issue price of HK$0.05 per warrant on the basis of
one warrant for every five existing shares of the Company held on 15 May 2000 was completed on 2 June 2000 from which
proceeds of approximately HK$93 million before expense was raised. Each warrant will carry the right to subscribe for a new
share of the Company at an initial subscription price of HK$0.30 per share, subject to adjustment, exercisable during the
period from 7 June 2000 to 6 June 2003 (both days inclusive).
The Group’s non-current assets comprised mainly of investment properties of HK$15 million, property, plant and equipment
of HK$41 million, interests in associates of HK$65 million, long term investments of HK$340 million. These non-current
assets were principally financed by shareholders’ funds. As at the year end date, the Group has a net current assets of
HK$1,570 million.
All of the Group’s borrowings are arranged on short term basis, repayable within 1 year and secured by marketable securities.
As at the year end date, the Group’s borrowings amounted to HK$265,519,000 representing an increase of
HK$264,822,000 over last year.
The Group continued to maintain a low gearing ratio, calculated on the basis of the Group’s net borrowings (after deducting
cash and bank balances) over shareholders’ funds, at approximately 11% (1999: nil) at the year end date.
The Group has little foreign exchange exposure and the Group’s borrowings were all denominated in Hong Kong Dollars.
• Chairman ’s Statement
China Online (Bermuda)Limited
6
Pledge of Assets
At the balance sheet date, certain assets of the Group with aggregate carrying value of HK$1,425,212,000 (1999:
HK$24,796,000) were pledged to secure general loan facilities.
Prospects
Although the mobile handset distribution business is operating in a highly competitive market, the Group is cautiously
optimistic to conclude further distribution rights with other top brands in the year to come. To capture the full opportunities
arising from the dynamic and converging telecom market, Star Telecom seeks to expand its business from distributing
mobile handsets to a wider range of telecommunication products including PDA, smartphone, DECT (Digital Enhanced
Cordless Telecommunication) phone, wireless & digital peripherals and telecom accessories.
Being one of the few foreign-owned licensees authorized to provide integration services for intelligent buildings in the PRC,
Shanghai Tricom Telecom Equipment Co., Ltd. (“Shanghai Tricom”), the subsidiary of the Company, has contracted several
new projects of intelligent building system integration in certain major cities in the PRC in the first few months of year 2001.
It is expected that increasing computerization in private and public sectors of the PRC will foster strong internet and e-infrastructure
growth which offers more business opportunities for Shanghai Tricom to capture.
The ups and downs of economic conditions and investment climate in Hong Kong and overseas, especially in the US,
definitely created certain uncertainties as to the financial performance of the Group for the new financial year. The Group
holds cautious view in the coming year and has started to rationalize its investment portfolio and will continue to retain a
substantial pool of liquid assets with low gearing to meet any future challenges and opportunities.
Employees
The Group, including its subsidiaries but excluding its associates, employed approximately 83 (1999: 110) employees at the
year end date. Employees’ cost (excluding directors’ emoluments) amounted to approximately HK$13,232,000 (1999:
HK$35,087,000) for the year. The Group ensures that the pay levels of its employees are competitive and employees are
rewarded on a performance related basis within the general framework of the Group’s salary and bonus system.
Appreciation
A great deal of works have to be done in the current fiscal year and on behalf of all shareholders and I extend our grateful
thanks, in advance, to both our management and staff for their loyalty, hard work and dedication.
Law Wing Kit, Stephen
Chairman
Hong Kong, 24 April 2001
• Chairman ’s Statement
Annual Report 2000
7
Executive Directors
Mr.Law Wing Kit,Stephen,aged 48, was appointed as an
executive director of the Company on 28 December 1999
and was appointed as the Chairman of the Company on
9 February 2001. He has over 20 years of international
managerial experience in the areas of investment services,
corporate finance and securities. Prior to joining the
Company, Mr. Law was executive directors of other listed
companies in Hong Kong and held the positions of
managing director - Capital Markets Group of UBS East Asia
Limited based in Singapore; managing director of Fidelity
Investments (Singapore) Ltd.; director of Asia Pacific
International Office, of Merrill Lynch Pierce, Fenner & Smith
(S) Pte. Ltd. and executive director of Equity Transaction
Group of Merrill Lynch Capital Markets Group respectively.
Mr. Law was a director of the Singapore International
Monetary Exchange Limited from 1985 to 1990. He is also
the Chairman of China Sci-Tech Holdings Limited (“CST”).
Mr.Chang Wang,aged 28, was appointed as an executive
director of the Company on 28 December 1999. He was
graduated from the Bond University of Australia with a
bachelor’s degree in Commerce. Mr. Chang has several years
of experience in property development and investment. He
is also an executive director of CST.
Mr.Chen Chi Lin,Peter,aged 49, was appointed as an
executive director of the Company on 3 November 2000.
He has over 30 years of experience in trading, property
development and investment in Asia Pacific region, especially
in the PRC.
Biographical Details in Respect of
Directors and Senior Management
Independent Non-executive Directors
Mr.Cheng Mo Chi,Moses,aged 51, was appointed as an
independent non-executive director of the Company on 28
December 1999. He is a senior partner of Messrs. P.C. Woo
& Co., a firm of solicitors and notaries in Hong Kong.
Mr. Cheng was a member of the Legislative Council of Hong
Kong between 1991 and 1995. He is currently the Chairman
of the Hong Kong Institute of Directors, the Board of
Education and the Committee on the Promotion of Civic
Education. He also serves on the boards of various other
listed companies as independent non-executive directors.
Mr.Tan Shao Hua,aged 40, was appointed as an
independent non-executive director of the Company on 28
December 1999. He has technical background in
information technology. After receiving his Ph.D. in Electrical
Engineering from Katholicke Universiteil Leuven, Belgium
in 1987, he took on various research and professional
positions in Europe, USA, Japan, Singapore, etc. He is
renowned internationally for his work in selected IT related
technical areas, such as intelligent IT systems, multimedia
technology and has received many awards and recognition
for his contributions to these areas. He is a senior member
of the Institute of Electrical and Electronic Engineers in the
United States of America. He also has extensive experience
in setting up and managing high-tech businesses in the PRC.
He is also an independent non-executive director of CST.
China Online (Bermuda)Limited
8
• Biographical Details in Respect of Directors and Senior Management
Senior Management
Ms.Chen Sai Fang,aged 49, was appointed as the general
manager of China division. Ms. Chen received education in
China and was graduated with specialization in Finance. With
extensive knowledge and experience gained from working
with Provincial Bank in PRC for over 20 years and being in
charge of the credit department for over 10 years, Ms. Chen
has developed expertise in business management, investment
project appraisals as well as various operations of securities
and finance industry and thus earned high reputation among
the industry, both inside and outside China. In 1986, she
was awarded the title of Economist. Prior to joining the
Company, Ms. Chen has been the Division General Manager
of a China-owned Hong Kong company for 7 years.
Ms.Leung Yuk Ming,Jady,aged 40, was appointed as the
chief operating officer of Star Telecom Limited, a wholly-owned
subsidiary of the Company in June 2000. Graduated
from the Chinese University of Hong Kong with an
honorable bachelor degree of Business Administration, she
has over 17 years of working experience in marketing, sales,
customer services and business management profession.
Since 1992, Ms. Leung has been assuming senior positions
in different reputable telecommunications companies
including New World Paging, Cable TV and Peoples Phone.
Being actively involved in the launching and operations of
various telecommunications services ranging from paging,
fixed network services, cable TV, to mobility services such
as GSM/PCS, she is renowned for her extensive experience
in setting up and managing successful telecommunications
business in the industry.
Mr.Chen Da Yi,aged 62, is the general manager of the
Company’s subsidiary, Shanghai Tricom Telecom Equipment
Co., Ltd. and is responsible for all corporate management,
project for building automation, data network infrastructure
development, project design in telecommunications and
related fields. He holds a degree in computer science from
Beijing Qing Hua University, China. He has extensive
experience in telecommunications field over 36 years.
Mr.Yao Wei,David,aged 33, joined the Group as the general
manager of the Group’s strategic investment in a distribution
network in the PRC (the “Investment”) in mid 1998. David
received his BBA from Kingston College of University of
British Colombia in Canada. David had worked in China,
Japan and Canada for more than 10 years before joining
the Group in Shanghai. Most recently, he worked as the
general manager of a multinational corporation in Shanghai
to distribute telecommunications products. David has
extensive experience and knowledge in international trading,
telecommunications products, market entry strategy, and
running China based operations. Since joining the Group,
David has been responsible for all aspects of the day-to-day
operation of the Investment.
Mr.Kong Muk Yin,aged 35, is the financial controller of
the Company. He was graduated from City University of
Hong Kong with a bachelor’s degree in business studies.
He is a fellow member of The Chartered Association of
Certified Accountants and an associate member of Hong
Kong Society of Accountants. He is also the financial
controller and company secretary of CST.
Mr.Chow Wing Lok,Percy,aged 37, is the regional financial
controller of the Group responsible for all financial,
accounting and administration aspects of the Company’s
PRC subsidaries. He holds a degree in Business
Administration from Ottawa University, USA and is a
member of the Australian Association of Taxation and
Management Accountants and is a member of British
Institute of Cost & Executive Accountants. He has extensive
experience in working in PRC for more than 12 years.
Ms.Fung Ching Man,Ada,aged 34, is the company
secretary of the Company. She is an associate member of
The Institute of Chartered Secretaries and Administrators
and has over 10 years of working experience in the company
secretarial profession.
Annual Report 2000
9
The directors present their annual report and the audited
financial statements for the year ended 31 December 2000.
Principal Activities
The Company is an investment holding company. The
activities of its principal subsidiaries and an associate are
set out in notes 42 and 43 to the financial statements,
respectively.
Results and Appropriations
The results and appropriations of the Group for the year
ended 31 December 2000 are set out in the consolidated
income statement on page 13.
The directors recommend the payment of a final dividend
of 0.5 HK cents per share to the shareholders of the
Company whose names appear on the Register of Members
on 1 June 2001 and the retention of the remaining profit
for the year.
Financial Summary
A financial summary of the Group for the past five financial
years is set out on page 52.
Share Capital,Warrants and Share Options
Details of movements in the share capital, warrants and
share options of the Company during the year are set out
in notes 24, 25 and 26 to the financial statements,
respectively.
Reserves
Movements in the reserves of the Group and the Company
during the year are set out in note 27 to the financial
statements.
Investment Properties and Property,Plant and
Equipment
The Group’s investment properties, and land and buildings
were revalued at 31 December 2000 and the resulting
Directors ’ Report
deficits arising on these revaluations of approximately
HK$1,350,000 and HK$2,395,000 respectively have been
charged to the consolidated income statement.
Details of these and other movements in the investment
properties, property, plant and equipment of the Group
during the year are set out in notes 14 and 15 to the financial
statements, respectively.
Directors and Service Contracts
The directors of the Company during the year and up to
the date of this report were:
Executive directors:
Mr. Law Wing Kit, Stephen
Mr. Chang Wang
Mr. Chen Chi Lin, Peter (appointed on 3 November 2000)
Independent non-executive directors:
Mr. Cheng Mo Chi, Moses
Mr. Tan Shao Hua
In accordance with clauses 99 and 182 of the Company’s
bye-laws, Messrs. Chen Chi Lin, Peter and Tan Shao Hua
will retire and, being eligible, offer themselves for re-election
at the forthcoming annual general meeting.
None of the directors has a service contract with the
Company or any of its subsidiaries which is not determinable
by the Group within one year without payment of
compensation, other than statutory compensation.
Directors ’ Interests in Contracts
Other than as disclosed in the “Transactions with the
substantial shareholder” section of this report and note 41
to the financial statements, no contracts of significance to
which the Company or any of its subsidiaries was a party
and in which a director of the Company had a material
interest, whether directly or indirectly, subsisted at the end
of the year or at any time during the year.
China Online (Bermuda)Limited
10
Directors ’and Chief Executives ’Interests in
Shares,Warrants and Share Options
As at 31 December 2000, none of the directors and chief
executives of the Company or any of their associates had
any interests in any securities of the Company or any of its
subsidiaries or associated corporations as defined in the
Hong Kong Securities (Disclosure of Interests) Ordinance
(the “SDI Ordinance”), as recorded in the register maintained
by the Company pursuant to Section 29 of the SDI Ordinance
or as 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 Companies.
Directors ’Rights to Acquire Shares or Debentures
At no time during the year was the Company or any of its
subsidiaries a party to any arrangements to enable the
directors of the Company to acquire benefits by means of
the acquisition of shares in, or debentures of, the Company
or any other body corporate. In addition, none of the
directors or their spouses or children under the age of 18
had any right to subscribe for the securities of the Company.
Substantial Shareholders
The register of substantial shareholders maintained by the
Company pursuant to Section 16(1) of the SDI Ordinance
recorded the following parties as having an interest
representing 10% or more in the issued share capital of
the Company as at 31 December 2000:
Number of
Name shares held Percentage held
China Sci-Tech
Holdings
Limited (“CST”) 3,172,830,000 34.17%
Vigor Online
Offshore Limited
(“Vigor”) 3,000,000,000 32.31%
Note: Harbour Fair Overseas Limited (“Harbour Fair”) held
172,830,000 shares in the Company. Both Harbour
Fair and Vigor are wholly-owned subsidiaries of CST.
Accordingly, CST is deemed by the SDI Ordinance to
be interested in aforementioned shares.
Save as disclosed above, no person has registered an interest
in the share capital of the Company that was required to
be recorded pursuant to Section 16(1) of the SDI Ordinance.
Major Customers and Suppliers
Aggregate sales attributable to the Group’s five largest trade
customers were less than 30% of total sales and the
aggregate purchases attributable to the Group’s five largest
trade suppliers were less than 30% of total purchases.
Transactions with the Substantial Shareholder
During the year, the Group had the following transactions
with CST:
(a) On 2 June 2000, the Company issued a total of
637,148,000 warrants of the Company to Harbour Fair
and Vigor, both of which are wholly-owned subsidiaries
of CST at a price of HK$0.05 per warrant on the basis
of one warrant for every five existing shares held.
Additionally, Cyber Range Limited, another wholly-owned
subsidiary of CST, subscribed 890,292,547
warrants of the Company on the same date pursuant
to an underwriting agreement dated 24 March 2000,
which was subsequently amended by a supplemental
agreement dated 18 April 2000. The total underwriting
commission paid to CST was HK$1,526,000 based on
2.5% of the total issue price of the warrants
underwritten by CST.
(b) In 2000, the Company paid a reimbursement of
expenses of HK$6,000,000 to CST. The reimbursement
includes (i) salaries of two directors of the Company,
both of them also being the directors of CST; (ii) other
staff costs; and (iii) daily operating expenses.
• Directors ’ Report
Annual Report 2000
11
Convertible Securities,Options,Warrants or
Similar Rights
Other than the outstanding warrants and share options as
set out in notes 25 and 26 respectively to the financial
statements, the Company had no outstanding convertible
securities, options, warrants or other similar rights as at
31 December 2000.
Purchase,Sale or Redemption of Listed
Securities
Neither the Company, nor any of its subsidiaries purchased,
sold or redeemed any of the Company’s listed securities
during the year.
Pre-emptive Rights
There are no provisions for pre-emptive rights under the
Company’s bye-laws or the laws of Bermuda, which would
oblige the Company to offer new shares on a pro-rata basis
to existing shareholders.
Corporate Governance
The Company has complied throughout the year ended
31 December 2000 with the Code of Best Practice as set
out in Appendix 14 of the Rules Governing the Listing of
Securities on the Stock Exchange.
• Directors ’ Report
Auditors
During the year, Messrs. Ernst & Young resigned as auditors
of the Company and Messrs. Deloitte Touche Tohmatsu
were then appointed. Except for the fiscal period from
1 January 1999 to 31 December 1999, in which Messrs.
Ernst & Young acted as auditors of the Company, Messrs.
Deloitte Touche Tohmatsu have acted as auditors of the
Company for the preceding two years.
A resolution will be submitted to the forthcoming annual
general meeting of the Company to re-appoint Messrs.
Deloitte Touche Tohmatsu as auditors of the Company.
On behalf of the Board
Law Wing Kit, Stephen
Chairman
Hong Kong, 24 April 2001
China Online (Bermuda)Limited
12
To the Shareholders of
China Online (Bermuda)Limited
(incorporated in Bermuda with limited liability)
We have audited the financial statements on pages 13 to
51 which have been prepared in accordance with accounting
principles generally accepted in Hong Kong.
Respective Responsibilities of Directors and
Auditors
The Company’s directors are responsible for the preparation
of financial statements which give a true and fair view. In
preparing financial statements which give a true and fair
view it is fundamental that appropriate accounting policies
are selected and applied consistently.
It is our responsibility to form an independent opinion, based
on our audit, on those statements and to report our opinion
to you.
Basis of Opinion
We conducted our audit in accordance with Statements of
Auditing Standards issued by the Hong Kong Society of
Accountants. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors
in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the
circumstances of the Company and the Group, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered
necessary in order to provide us with sufficient evidence to
give reasonable assurance as to whether the financial
statements are free from material misstatement. In forming
our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements. We
believe that our audit provides a reasonable basis for our
opinion.
Opinion
In our opinion the financial statements give a true and fair
view of the state of affairs of the Company and the Group
as at 31 December 2000 and of the profit and cash flows
of the Group for the year then ended and have been properly
prepared in accordance with the disclosure requirements
of the Hong Kong Companies Ordinance.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong, 24 April 2001
Auditors ’ Report
Annual Report 2000
13
Auditors ’ Report
Consolidated Income Statement
for the Year Ended 31 December 2000
NOTES 2000 1999
HK HK
Turnover 3 2,442,429 610,823
Cost of sales (2,637,714) (525,796)
Gross (loss) profit (195,285) 85,027
Net gains on investments 4 1,622,602 355,596
Gain on disposal of discontinued operations, net 5 — 95,680
Gain on disposal of an associate 7,800 —
Other revenue 6 55,363 87,274
Distribution costs (10,243) (78,126)
Administrative expenses (46,148) (72,189)
Other operating expenses (76,516) (73,734)
Provision in respect of distribution network
development costs in Mainland China (9,189) (95,133)
Profit from operations 7 1,348,384 304,395
Finance costs 8 (13,723) (5,279)
Share of results of unconsolidated subsidiaries — (11,845)
Share of results of associates (884) (29,927)
Profit before taxation 1,333,777 257,344
Tax credit (charge) 10 2,161 (2,579)
Profit before minority interests 1,335,938 254,765
Minority interests (3,120) 5,616
Profit for the year 11 1,332,818 260,381
Dividends 12 46,432 181,854
Earnings per share 13
- Basic 14.35 HK cents 2.86 HK cents
- Diluted 14.35 HK cents N/A
China Online (Bermuda)Limited
14
Consolidated Balance Sheet
at 31 December 2000
NOTES 2000 1999
HK HK
Non-current assets
Investment properties 14 15,400 16,750
Property, plant and equipment 15 41,448 40,765
Interests in associates 17 65,244 —
Investments in securities 18 339,638 3,620,000
Other non-current assets 1,922 1,022
463,652 3,678,537
Current assets
Inventories 19 8,966 9,685
Investments in securities 18 1,984,138 —
Debtors, deposits and prepayments 20 28,736 51,903
Taxation recoverable — 1,443
Pledged bank deposits — 10,296
Bank balances and cash 37,010 632,232
2,058,850 705,559
Current liabilities
Creditors and accrued charges 21 166,022 158,490
Customers’ deposits and receipts in advance 7,118 1,984
Taxation payable 3,947 3,947
Dividend payable 46,432 —
Bank borrowings - due within one year 22 265,519 697
489,038 165,118
Net current assets 1,569,812 540,441
Total assets less current liabilities 2,033,464 4,218,978
Minority interests 3,695 575
2,029,769 4,218,403
Capital and reserves
Share capital 24 92,865 92,792
Reserves 27 1,936,904 4,125,611
2,029,769 4,218,403
Law Wing Kit, Stephen Chang Wang
Director Director
Annual Report 2000
15
NOTES 2000 1999
HK HK
Non-current assets
Interests in subsidiaries 16 3,397,590 1,120,515
Current assets
Deposits and prepayments 2,147 17,830
Bank balances and cash 13,629 593,046
15,776 610,876
Current liabilities
Accrued charges 830 1,600
Dividend payable 46,432 —
47,262 1,600
Net current (liabilities) assets (31,486) 609,276
Total assets less current liabilities 3,366,104 1,729,791
Non-current liabilities
Amounts due to subsidiaries 23 1,977,892 440,079
1,388,212 1,289,712
Capital and reserves
Share capital 24 92,865 92,792
Reserves 27 1,295,347 1,196,920
1,388,212 1,289,712
Law Wing Kit, Stephen Chang Wang
Director Director
Balance Sheet
at 31 December 2000
China Online (Bermuda)Limited
16
Consolidated Statement of Recognised
Gains and Losses
for the Year Ended 31 December 2000
2000 1999
HK HK
Exchange differences arising on translation of overseas subsidiaries — 1,672
Share of exchange reserve of an associate 70 —
Revaluation (deficit) surplus of non-trading investments (229,223) 3,471,277
Net (losses) gains not recognised in the consolidated income statement (229,153) 3,472,949
Profit for the year 1,332,818 260,381
Total recognised gains 1,103,665 3,733,330
Elimination against reserves of goodwill arising on acquisition of
- subsidiary (569) —
- associate (30,035) —
Share of capital reserve of an associate (668) —
1,072,393 3,733,330
Annual Report 2000
17
NOTES 2000 1999
HK HK
Net cash outflow from operating activities 29 (3,365,566) (124,438)
Returns on investments and servicing of finance
Dividends paid — (181,854)
Interest paid (6,494) (5,273)
Interest on finance lease obligations — (6)
Interest received 25,926 24,180
Dividends from associates — 200
Dividends from investments in securities 26,739 —
Net cash inflow (outflow) from returns on investments
and servicing of finance 46,171 (162,753)
Taxation
Hong Kong Profits Tax refunded 3,571 7,916
Investing activities
Loan advanced to associates — (1,609)
Purchase of interests in associates (96,728) —
Purchase of investments in securities (542,341) (303,040)
Purchase of a subsidiary (net of cash and cash equivalents acquired) 30 (2,999) —
Purchase of property, plant and equipment (7,423) (18,253)
Purchase of other non-current assets (900) —
Mainland China distribution network development costs incurred (9,189) (95,133)
Decrease (increase) in pledged bank deposits 10,296 (10,060)
Proceeds from realisation of non-trading investments 3,012,549 623,188
Proceeds from disposal of an associate 7,800 —
Disposal of subsidiaries and businesses (net of cash
and cash equivalents disposed of) 31 — 490,070
Proceeds from disposal of property, plant and equipment 148 783
Proceeds from disposal of an unconsolidated subsidiary — 500
Net cash inflow from investing activities 2,371,213 686,446
Net cash (outflow) inflow before financing (944,611) 407,171
Consolidated Cash Flow Statement
for the Year Ended 31 December 2000
China Online (Bermuda)Limited
18
Consolidated Cash Flow Statement
for the Year Ended 31 December 2000
NOTES 2000 1999
HK HK
Net cash (outflow) inflow before financing (944,611) 407,171
Financing 32
Proceeds from issue of new shares 1,414 31,793
Net proceeds from issue of warrants 90,382 —
New bank and other loans raised during the year 1,397,866 9,347
Repurchase of own shares — (649)
Repayment of bank and other loans (1,140,255) (56,406)
Repayment of obligations under finance leases — (1,037)
Repayment of advances from ultimate holding company — (2,468)
Net cash inflow (outflow) from financing 349,407 (19,420)
(Decrease) increase in cash and cash equivalents (595,204) 387,751
Cash and cash equivalents at beginning of the year 632,214 244,463
Cash and cash equivalents at end of the year 33 37,010 632,214
Annual Report 2000
19
Notes to the Financial Statements
for the Year Ended 31 December 2000
1.General
The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on
The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The Company is an investment holding company. The activities of its principal subsidiaries and an associate are set out
in notes 42 and 43 respectively.
2.Significant Accounting Policies
The financial statements have been prepared under the historical cost convention as modified for the revaluation of
investment properties, land and buildings, and investments in securities.
The financial statements have been prepared in accordance with accounting principles generally accepted in Hong
Kong. The principal accounting policies adopted are as follows:
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made
up to 31 December each year.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
All significant inter-company transactions and balances within the Group are eliminated on consolidation.
Goodwill and capital reserve
Goodwill or capital reserve arising on the acquisition of a subsidiary or an associate represents, respectively, the excess
or shortfall of the purchase consideration over the Group’s share of the fair value ascribed to the separable net assets
of the subsidiary or associate at the date of acquisition. Goodwill or capital reserve is written off or credited directly to
reserves in the year of acquisition.
On disposal of a subsidiary or an associate, the attributable amount of goodwill or capital reserve previously written off
against or credited to reserves at the time of acquisition is included in the determination of the profit or loss on
disposal.
Turnover
Turnover represents the net amounts received and receivable for goods sold to outside customers and the net proceeds
from sale of listed trading investments during the year.
Notes to the Financial Statements
for the Year Ended 31 December 2000
China Online (Bermuda)Limited
20
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Revenue recognition
Trading of securities are recognised when the relevant transaction is executed.
Sales of goods are recognised when goods are delivered and title has passed.
Dividend income from investments is recognised when the Group’s rights to receive payment have been established.
Interest income is accrued on a time basis by reference to the principal outstanding and at the interest rate applicable.
Rental income, including rental invoiced in advance from properties let under operating leases, is recognised on a
straight line basis over the lease terms.
Investment properties
Investment properties are completed properties which are held for their investment potential, any rental income being
negotiated at arm’s length.
Investment properties are stated at their open market value based on independent professional valuations at the
balance sheet date. Any revaluation increase or decrease arising on the revaluation of investment properties is credited
or charged to the investment property revaluation reserve unless the balance on this reserve is insufficient to cover a
revaluation decrease, in which case the excess of the revaluation decrease over the balance on the investment property
revaluation reserve is charged as expense for the period. Where a revaluation decrease has previously been charged to
as expense and a revaluation increase subsequently arises, this increase is credited as income to the extent of the
decrease previously charged.
On disposal of an investment property, the balance on the investment property revaluation reserve attributable to that
property is included in profit or loss for the period.
No depreciation is provided on investment properties except where the unexpired term of the relevant lease is 20 years
or less.
Property, plant and equipment
Property, plant and equipment are stated at cost or valuation less depreciation and amortisation. The cost of an asset
comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and
location for its intended use. Expenditure incurred after the assets has been put into operation, such as repairs and
maintenance and overhaul costs, is normally charged as expenses in the period in which it is incurred. In situations
where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits
expected to be obtained from the use of the asset, the expenditure is capitalised as an additional cost of the asset.
Annual Report 2000
21
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Property, plant and equipment - continued
Land and buildings are stated in the balance sheet at their revalued amount, being the fair value on the basis of their
existing use at the date of revaluation less any subsequent accumulated depreciation. Revaluations are performed
with sufficient regularity such that the carrying amount does not differ materially from that which would be determined
using fair values at the balance sheet date.
Any surplus arising on revaluation of land and buildings is credited to the revaluation reserve. A decrease in net
carrying amount arising on revaluation of land and buildings is charged as expenses to the extent that it exceeds the
surplus, if any, held in revaluation reserve relating to previous revaluation of that particular property. On the subsequent
sale of land and buildings, the attributable revaluation surplus not yet transferred to retained profits in prior years is
transferred to retained profits.
The gain or loss arising from disposal or retirement of an asset is determined as the difference between the sale
proceeds and the carrying amount of the asset and is included in net profit or loss for the period.
Where the recoverable amount of an asset has declined below its carrying amount, the carrying amount is reduced to
reflect the decline in value. In determining the recoverable amount of assets, expected future cash flows are not
discounted to their present values.
Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful lives, using
the straight line method, at the following rates per annum:
Leasehold land Over the remaining lease terms
Buildings Over the shorter of the lease terms or 30-50 years
Computer and electronic equipment 20%
Furniture and fixtures 20% - 50%
Motor vehicles 20% - 50%
Subsidiaries
A subsidiary is an enterprise in which the Company, directly or indirectly, holds more than half of the issued share
capital, or controls more than half of the voting power, or where the Company controls the composition of its board
of directors or equivalent governing body.
Investments in subsidiaries are included in the Company’s balance sheet at cost, as reduced by any decline in the value
of the subsidiaries that is other than temporary. Results of subsidiaries are accounted for by the Company on the basis
of dividends received and receivable during the year.
China Online (Bermuda)Limited
22
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Associates
An associate is an enterprise over which the Group is in a position to exercise significant influence, including participation
in financial and operational policy decisions.
The consolidated results includes the Group’s share of the post-acquisition results of its associates for the year. In the
consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associates.
Investments in associates are included in the Company’s balance sheet at cost, as reduced by any decline in the value
of the associates that is other than temporary. Results of associates are accounted for by the Company on the basis of
dividends received and receivable during the year.
When the Group transacts with its associates, unrealised profits and losses are eliminated to the extent of the Group’s
interest in the relevant associate, except where unrealised losses provide evidence of an impairment of the asset
transferred.
Investments in securities
Investments in securities are recognised on a trade-date basis and are initially measured at cost.
All securities other than held-to-maturity debt securities are measured at subsequent reporting dates at fair value.
Where securities are held for trading purposes, unrealised gains and losses are included in net profit or loss for the
period. For other securities held for non-trading purposes, unrealised gains and losses are dealt with in equity, until
the security is realised or is determined to be impaired, at which time the cumulative gain or loss is included in net
profit or loss for the period.
Inventories
Inventories, representing trade merchandise, are stated at the lower of cost and net realisable value. Cost, which
comprises all costs of purchase, and where applicable, other costs that have been incurred in bringing the inventories
to their present location and condition, is calculated using the first-in, first-out method. Net realisable value represents
the estimated selling price in the ordinary course of business less all estimated costs of completion and the estimated
costs necessary to make the sale.
Annual Report 2000
23
Notes to the Financial Statements
for the Year Ended 31 December 2000
2.Significant Accounting Policies (continued)
Taxation
The charge for taxation is based on the results for the year after adjusting for items which are non-assessable or
disallowed. Certain items of income and expense are recognised for tax purposes in a different accounting period
from that in which they are recognised in the financial statements. The tax effect of the resulting timing differences,
computed using the liability method, is recognised as deferred taxation in the financial statements to the extent that
it is probable that a liability or an asset will crystallise in the foreseeable future.
Operating leases
Rentals payable and receivable under operating leases are charged as expenses and credited as income on a straight
line basis over the terms of the relevant lease.
Retirement benefits scheme
The pension costs charged to the income statement represent the contributions payable in respect of the current year
to the Group’s defined contribution scheme.
Foreign currencies
Transactions in currencies other than Hong Kong dollars are translated into Hong Kong dollars at the rates ruling on
the dates of the transactions. Monetary assets and liabilities denominated in currencies other than Hong Kong dollars
are re-translated into Hong Kong dollars at the rates ruling on the balance sheet date. Gains and losses arising on
exchange are dealt with in net profit or loss for the period.
On consolidation, the financial statements denominated in currencies other than Hong Kong dollars are translated
into Hong Kong dollars at the exchange rates ruling on the balance sheet date. All exchange differences arising on
consolidation are dealt with in reserves.
Cash equivalents
Cash equivalents represent short term highly liquid investments which are readily convertible into known amounts of
cash and which were within three months of maturity when acquired; less advances from banks repayable within
three months from the date of the advance.
China Online (Bermuda)Limited
24
Notes to the Financial Statements
for the Year Ended 31 December 2000
3.Turnover and Contribution to Profit from Operations
An analysis of the Group’s turnover and contribution to profit from operations by principal activity for the year are as
follows:
Contribution to
Turnover profit from operations
2000 1999 2000 1999
HK HK HK HK
Continuing operations
Mobile phone distribution 236,346 220,012 1,959 (639)
Telecommunication products 10,063 1,290 (18,145) (906)
Trading of securities 2,196,020 234,491 (256,643) 9,048
Others — 6,307 — (8,138)
2,442,429 462,100 (272,829) (635)
Net gains on investments 1,622,602 355,596
Gain on disposal of an associate 7,800 —
Provision in respect of distribution
network development costs in the
Mainland China (9,189) (95,133)
1,348,384 259,828
Discontinued operations
Paging services — 80,329 — (103,162)
Customer premises equipment — 53,842 — 9,286
Others — 14,552 — 6,505
— 148,723 — (87,371)
Cellular mobile telecommunication
network — 36,258
Gain on disposal of discontinued
operations, net — 95,680
— 44,567
Total 2,442,429 610,823 1,348,384 304,395
Over 90% of the Group’s turnover and related contribution to profit from operations are derived from activities in
Hong Kong, Special Administrative Region of the People’s Republic of China (“Hong Kong”), and the rest of the
operations are carried out in the Mainland China.
Annual Report 2000
25
Notes to the Financial Statements
for the Year Ended 31 December 2000
4.Net Gains on Investments
2000 1999
HK HK
Gain on realisation of non-trading listed investments, after taking
into account of release of asset revaluation reserve of
HK$3,306,391,000 (note 27) 2,870,891 355,596
Net realised loss on equity linked notes (359,103) —
Net unrealised loss on trading investments (791,730) —
Impairment loss on non-trading investments (97,456) —
1,622,602 355,596
5.Discontinued Operations
In the prior year, the Group disposed of certain subsidiaries, whose principal activities comprised the development and
operation of a cellular mobile telecommunication network, and the marketing, and provision of technical support for
customer premises equipment. The Group also disposed of its paging business. These operations were accounted for
until the dates of their disposals, at which time the assets and liabilities of the subsidiaries and the business were
transferred to the gain on disposal of the discontinued operations, which was calculated as follows:
THE GROUP
2000 1999
HK HK
Net gain on disposal/deemed disposal of interests in subsidiaries,
a subsidiary not consolidated and associates (note a) — 371,734
Less: goodwill previously written off against reserves — (296,901)
exchange reserve realised — (1,945)
— 72,888
Gain on disposal of business (note b) — 22,792
— 95,680
Notes:
(a) In respect of the year ended 31 December 1999, the net gain on disposal/deemed disposal of interests in subsidiaries and a subsidiary not
consolidated comprised (i) the net gain on dilution and partial disposal of the Group’s interest in Tricom Holdings Limited (“Tricom”, whose
name was changed to Pacific Century CyberWorks Limited (“PCCW”)) of HK$220,111,000; (ii) the loss on disposal of the Group’s interest in Star
Digitel Limited (“SDL”) of HK$150,437,000; and (iii) the gain on the disposals of the interests in other subsidiaries of HK$3,214,000.
(b) The amount represented the gain on the disposal of the Group’s business in the provision of paging services to China Moti
China Online (Bermuda)Limited
26
Notes to the Financial Statements
for the Year Ended 31 December 2000
6.Other Revenue
2000 1999
HK HK
Dividend income from listed investments 26,739 —
Forfeited pension scheme contribution 542 10,161
Gross rental income from investment properties 1,653 3,479
Interest income 25,926 26,004
Write back of the provision for litigation — 36,258
Others 503 11,372
55,363 87,274
7.Profit from Operations
2000 1999
HK HK
Profit from operations has been arrived at after charging:
Auditors’ remuneration 995 1,506
Cost of inventories recognised as expenses 219,660 220,262
Cost of services rendered — 80,540
Redundancy and severance payments 206 16,431
Deficit arising on revaluation of investment properties 1,350 2,650
Deficit on revaluation of land and buildings 2,395 19,897
Depreciation and amortisation 3,491 17,322
Loss on disposal of property, plant and equipment 706 2,709
Operating lease rentals in respect of rented premises 4,980 19,441
Provision for diminution in values of interests in associates — 9,057
Provision for diminution in value of property, plant and equipment — 16,321
Staff costs, inclusive of directors’ emoluments 13,525 43,345
8.Finance Costs
2000 1999
HK HK
Interest on:
- bank and other borrowings wholly repayable within five years 13,723 5,273
- finance leases — 6
13,723 5,279on Telecom (H.K.)
Annual Report 2000
27
Notes to the Financial Statements
for the Year Ended 31 December 2000
9.Directors ’ Emoluments and Highest Paid Employees
Directors’ emoluments
The directors’ emoluments are analysed as follows:
2000 1999
HK HK
Fees:
Executive directors — —
Independent non-executive directors 100 285
100 285
Other emoluments to executive directors:
Salaries and other benefits 193 1,162
Performance related bonus — 6,811
Retirement benefit scheme contribution — —
Total directors’ emoluments 293 8,258
The emoluments of the directors were within the following bands:
2000 1999
Number of Number of
directors directors
Nil to HK$1,000,000 5 10
HK$1,500,001 to HK$2,000,000 — 1
HK$4,500,001 to HK$5,000,000 — 1
Highest paid employees
During the current year, the five highest paid employees of the Group do not include any directors. In 1999, the five
highest paid employees of the Group included three directors, details of whose emoluments are set out above. The
emoluments of the five highest paid employees (1999: two employees) are as follows:
2000 1999
HK HK
Salaries and other benefits 3,054 3,235
Performance related bonus — 100
Retirement benefit scheme contribution 80 154
3,134 3,489
China Online (Bermuda)Limited
28
Notes to the Financial Statements
for the Year Ended 31 December 2000
9.Directors ’ Emoluments and Highest Paid Employees ((continued)
The emoluments of the five (1999: two) highest paid employees were within the following bands:
2000 1999
Number of Number of
employees employees
Nil to HK$1,000,000 5 1
HK$2,500,001 to HK$3,000,000 — 1
10.Tax Credit (Charge)
2000 1999
HK HK
The credit (charge) comprises:
Hong Kong Profits Tax
Current year — (2,615)
Overprovision in prior years 2,128 472
2,128 (2,143)
Tax in elsewhere — (436)
Share of taxation of an associate 33 —
2,161 (2,579)
No provision for Hong Kong Profits Tax has been made in the financial statements, as the Group has no assessable
profit for the current year.
Hong Kong Profits Tax was calculated at 16% on the estimated assessable profits in 1999.
Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the
Group operates in 1999.
11.Profit for the Year
Of the Group’s profit for the year of HK$1,332,818,000 (1999: HK$260,381,000), a profit of HK$53,136,000
(1999: HK$396,141,000) has been dealt with in the financial statements of the Company.
Annual Report 2000
29
Notes to the Financial Statements
for the Year Ended 31 December 2000
12.Dividends
2000 1999
HK HK
Proposed final of 0.5 HK cents (1999: nil) per ordinary share 46,432 —
Special interim of 2 HK cents per ordinary share — 181,854
46,432 181,854
The special interim dividend in 1999 had been adjusted for the one to ten shares subdivision on 30 July 1999.
The final dividend of 0.5 HK cents (1999: nil) per ordinary share has been proposed by the directors and is subject to
approval by shareholders in general meeting.
13.Earnings Per Share
The calculation of basic and diluted earnings per share is based on the following data:
2000 1999
HK HK
Earnings for the purpose of basic and diluted earnings per share 1,332,818 260,381
Number of shares Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 9,284,793,767 9,114,936,517
Effect of dilutive potential shares:
Options 855,804
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 9,285,649,571
Diluted earning per share for the year ended 31 December 1999 had not been presented as no dilutive potential
ordinary shares were outstanding.
14.Investment Properties
THE GROUP
2000
HK
At 1 January 2000 16,750
Deficit arising on revaluation (1,350)
At 31 December 2000 15,400
The Group’s investment properties are situated in Hong Kong and are held under medium term leases. They were
revalued at 31 December 2000 by DTZ Debenham Tie Leung Limited, a firm of independent professional property
valuers, at HK$15,400,000 on an open market, existing use basis. The resulting deficit arising on the revaluation of
HK$1,350,000 (1999: HK$2,650,000) has been charged to the consolidated income statement.
As at 31 December 1999, certain of the Group’s investment properties with an aggregate carrying value of approximately
HK$14,500,000 were pledged to secure general banking facilities granted to the Group. This charge had been released
during the year.
China Online (Bermuda)Limited
30
Notes to the Financial Statements
for the Year Ended 31 December 2000
15.Property,Plant and Equipment
Computer
Leasehold and Furniture
land and electronic and Motor
buildings equipment fixtures vehicles Total
HK HK HK HK HK
THE GROUP
COST OR VALUATION:
At 1 January 2000 34,650 5,492 8,159 745 49,046
Additions — 2,327 4,074 1,022 7,423
Disposals — (2,073) (4,151) (145) (6,369)
Deficit arising on revaluation (2,750) — — — (2,750)
At 31 December 2000 31,900 5,746 8,082 1,622 47,350
COMPRISING:
At cost — 5,746 8,082 1,622 15,450
At valuation - 2000 31,900 — — — 31,900
31,900 5,746 8,082 1,622 47,350
DEPRECIATION AND
AMORTISATION:
At 1 January 2000 — 2,160 5,376 745 8,281
Provided for the year 355 2,112 779 245 3,491
Eliminated on disposals — (2,001) (3,369) (145) (5,515)
Eliminated on valuation (355) — — — (355)
At 31 December 2000 — 2,271 2,786 845 5,902
NET BOOK VALUES:
At 31 December 2000 31,900 3,475 5,296 777 41,448
At 31 December 1999 34,650 3,332 2,783 — 40,765
The land and buildings of the Group are analysed as follows:
THE GROUP
2000 1999
HK HK
Properties situated in Hong Kong, held under medium term leases 8,100 8,750
Properties situated in the Mainland China, held under:
- long leases 3,100 3,700
- medium term leases 20,700 22,200
31,900 34,650
Annual Report 2000
31
Notes to the Financial Statements
for the Year Ended 31 December 2000
15.Property,Plant and Equipment (continued)
All the land and buildings of the Group were revalued at 31 December 2000 by DTZ Debenham Tie Leung Limited, a
firm of independent professional property valuers, on an open market value basis. The resulting deficit arising on the
revaluation of HK$2,395,000 (1999: HK$19,897,000) has been charged to the consolidated income statement.
Had all the land and buildings of the Group been carried at cost less accumulated depreciation and amortisation, the
carrying values of these properties would have been stated at HK$51,423,000 (1999: HK$52,834,000).
16.Interests in Subsidiaries
THE COMPANY
2000 1999
HK HK
Unlisted shares, at cost 32,168 32,168
Amounts due from subsidiaries 3,428,946 1,207,487
3,461,114 1,239,655
Less: Impairment loss recognised (63,524) (119,140)
3,397,590 1,120,515
Particulars of the principal subsidiaries as at 31 December 2000 are set out in note 42.
In the opinion of the directors, the amounts due from subsidiaries will not be repaid within twelve months from the
balance sheet date. Accordingly, it is classified as non-current.
17.Interests in Associates
THE GROUP
2000 1999
HK HK
Share of net assets 73,056 9,507
Less: Impairment loss recognised (7,812) (9,507)
65,244 —
Particulars of the principal associate as at 31 December 2000 are set out in note 43.
China Online (Bermuda)Limited
32
Notes to the Financial Statements
for the Year Ended 31 December 2000
18.Investments in Securities
THE GROUP
Trading investments Non-trading investments Total
2000 1999 2000 1999 2000 1999
HK HK HK HK HK HK
Equity securities
- listed in Hong Kong 1,395,154 — 430,447 3,620,000 1,825,601 3,620,000
- unlisted 492,175 — 6,000 — 498,175 —
1,887,329 — 436,447 3,620,000 2,323,776 3,620,000
Carrying amount analysed
for reporting purposes as
- Non-current — — 339,638 3,620,000 339,638 3,620,000
- Current 1,887,329 — 96,809 — 1,984,138 —
1,887,329 — 436,447 3,620,000 2,323,776 3,620,000
Market value of listed
securities 1,395,154 — 430,447 3,620,000 1,825,601 3,620,000
As at 31 December 2000, included in the equity securities shown above, the Group has interests in the following
companies, the details of which are disclosed pursuant to Section 129 of the Hong Kong Companies Ordinance as
follows:
Percentage of
issued share
Place of Class of capital held
Name of company incorporation shares by the Group
Sun Hung Kai & Co. Limited Hong Kong Ordinary 19.3%
PCCW Hong Kong Ordinary 0.67%
19.Inventories
THE GROUP
2000 1999
HK HK
Inventories held for resale 8,966 9,685
At 31 December 1999, inventories of HK$119,000 were carried at net realisable value.
Annual Report 2000
33
Notes to the Financial Statements
for the Year Ended 31 December 2000
20.Debtors,Deposits and Prepayments
The Group has a policy of allowing an average credit period of 30-90 days to its trade customers.
An aged analysis of trade debtors is as follows:
THE GROUP
2000 1999
HK HK
Within 90 days 5,688 2,516
91 – 180 days 41 237
181 – 360 days — 198
Over 360 days — 1,108
5,729 4,059
Other debtors, deposits and prepayments 23,007 47,844
28,736 51,903
21.Creditors and Accrued Charges
An aged analysis of trade creditors is as follow:
THE GROUP
2000 1999
HK HK
Within 90 days 999 7,035
91 – 180 days 121 6,235
181 – 360 days 3,064 269
Over 360 days 3,849 3,858
8,033 17,397
Other creditors and accrued charges 157,989 141,093
166,022 158,490
China Online (Bermuda)Limited
34
Notes to the Financial Statements
for the Year Ended 31 December 2000
22.Bank Borrowings
THE GROUP
2000 1999
HK HK
Bank borrowings comprise:
Short term bank loan - secured 265,519 679
Bank overdrafts — 18
265,519 697
23.Amounts Due to Subsidiaries
The amounts are unsecured, interest free and have no fixed terms of repayment. Repayment of the amounts will not
be demanded within the next twelve months from the balance sheet date. Accordingly, the amounts are shown as
non-current.
24.Share Capital
Number of shares Value
2000 1999 2000 1999
HK HK
Ordinary shares of HK$0.01
(before 30 July 1999: HK$0.1) each
Authorised:
At beginning of the year 15,000,000,000 1,500,000,000 150,000 150,000
Subdivision of shares (note c) — 13,500,000,000 — —
Increase during the year 15,000,000,000 — 150,000 —
At end of the year 30,000,000,000 15,000,000,000 300,000 150,000
Issued and fully paid:
At beginning of the year 9,279,190,490 910,654,049 92,792 91,065
Shares repurchased (note a) — (1,310,000) — (131)
Share options exercised (note b) — 1,500,000 — 150
9,279,190,490 910,844,049 92,792 91,084
Subdivision of shares (note c) — 8,197,596,441 — —
Share options exercised (note d) 7,250,000 170,750,000 72 1,708
Warrant
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