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MAN SANG HOLDINGS, INC.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________.
Commission File Number: 33-10639-NY
MAN SANG HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0539570
(State or other jurisdiction of (IRS Employer No.)
incorporation or organization)
21/F Railway Plaza, 39 Chatham Road South, Tsimshatsui, Kowloon, Hong Kong
(Address of principal executive officers)
(852) 2317 5300
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes X
No __
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X
As of December 31, 2003 and February 14, 2004, 4,405,960 shares
of common stock of the registrant were outstanding.
MAN SANG HOLDINGS, INC.
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as at
December 31, 2003 and March 31, 2003 F-1
Condensed Consolidated Statements of Operations and
Comprehensive Income for the three and nine months
ended December 31, 2003 and 2002 F-3
Condensed Consolidated Statements of Cash Flows for
the nine months ended December 31, 2003 and 2002 F-4
Notes to Condensed Consolidated Financial Statements F-5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 1
ITEM 3. Quantitative and Qualitative Disclosures about 7
Market Risk
ITEM 4. Controls and Procedures 7
PART II - OTHER INFORMATION
ITEM 1. Legal proceedings 9
ITEM 6. Exhibits and Reports on Form 8-K 9
SIGNATURES
EXHIBIT INDEX
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts expressed in thousands except share data)
DECEMBER 31, 2003 MARCH 31, 2003
--------------------------- --------------
US$ HK$ HK$
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents 13,409 104,590 83,766
Marketable securities 1,165 9,088 9,978
Accounts receivable, net of allowance for doubtful 7,025 54,795 69,840
accounts of HK$10,933 as of December 31, 2003 and
HK$9,216 as of March 31, 2003
Inventories :
Raw materials 1,773 13,831 12,917
Work in progress 6,273 48,929 29,399
Finished goods 6,712 52,355 91,894
-------- -------- --------
14,758 115,115 134,210
Prepaid expenses 649 5,060 6,340
Deposits and other receivables 959 7,482 5,109
Other current assets 646 5,038 8,732
Income tax receivable 59 458 458
-------- -------- --------
Total current assets 38,670 301,626 318,433
Deferred tax assets 41 318 --
Property, plant and equipment 19,241 150,082 101,807
Accumulated depreciation and impairment loss (5,111) (39,868) (35,529)
-------- -------- --------
14,130 110,214 66,278
Real estate investment 12,770 99,608 108,327
Accumulated depreciation and impairment loss (1,339) (10,444) (11,880)
-------- -------- --------
11,431 89,164 96,447
Long-term investments 332 2,586 2,586
-------- -------- --------
Total assets 64,604 503,908 483,744
======== ======== ========
F-1
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(Amounts expressed in thousands except share data)
DECEMBER 31, 2003 MARCH 31, 2003
------------------------ --------------
US$ HK$ HK$
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debts :
Secured bank loans 715 5,575 5,575
Accounts payable 1,514 11,808 5,554
Accrued payroll and employee benefits 1,211 9,446 7,188
Other accrued liabilities 962 7,504 9,577
Income taxes payable 1,099 8,576 2,224
------- ------- -------
Total current liabilities 5,501 42,909 30,118
Long-term debts :
Secured bank loans 950 7,410 16,435
Deferred tax liabilities 47 367 --
Minority interests 28,073 218,970 179,844
Stockholders' equity:
Series A preferred stock, par value US$0.001 -- 1 1
- authorized, issued and outstanding: 100,000 shares;
(entitled in liquidation to US$2,500 (HK$19,500))
Series B convertible preferred stock, par value US$0.001 -- -- --
- authorized: 100,000 shares; no shares outstanding
Common stock, par value US$0.001 5 34 37
- authorized: 25,000,000 shares;
issued and outstanding: 4,405,960 shares as of
December 31, 2003 and 4,815,960 shares as of
March 31, 2003
Additional paid-in capital 7,813 60,945 60,633
Retained earnings 21,818 170,181 196,491
Accumulated other comprehensive income 397 3,091 185
------- ------- -------
Total stockholders' equity 30,033 234,252 257,347
------- ------- -------
Total liabilities and stockholders' equity 64,604 503,908 483,744
======= ======= =======
F-2
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31
(Amounts expressed in thousands except share data)
THREE MONTHS ENDED DECEMBER 31, NINE MONTHS ENDED DECEMBER 31,
----------------------------------------- ------------------------------------------
2003 2002 2003 2002
-------------------------- ---------- -------------------------- ----------
US$ HK$ HK$ US$ HK$ HK$
Net sales 13,659 106,540 66,839 35,248 274,936 225,060
Cost of goods sold (10,604) (82,713) (51,631) (26,409) (205,992) (157,502)
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 3,055 23,827 15,208 8,839 68,944 67,558
Rental income, gross 217 1,690 1,928 585 4,565 5,628
---------- ---------- ---------- ---------- ---------- ----------
3,272 25,517 17,136 9,424 73,509 73,186
Selling, general and
administrative expenses
- Pearls (2,216) (17,288) (15,457) (6,631) (51,720) (45,060)
- Real estate investment (255) (1,986) (1,658) (1,132) (8,834) (4,805)
---------- ---------- ---------- ---------- ---------- ----------
Operating income 801 6,243 21 1,661 12,955 23,321
Share of result of an associate -- -- 20 -- -- (60)
Non-operating items
- Interest expense (8) (63) (394) (43) (337) (1,430)
- Interest income 6 46 162 26 205 585
- Other income 216 1,682 1,028 351 2,740 2,658
- Other than temporary
decline in fair value of
marketable securities (317) (2,474) -- (317) (2,474) 0
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes and
minority interests 698 5,434 837 1,678 13,089 25,074
Income taxes (484) (3,773) (533) (911) (7,106) (6,060)
---------- ---------- ---------- ---------- ---------- ----------
Income before minority
interests 214 1,661 304 767 5,983 19,014
Minority interests (305) (2,379) (815) (724) (5,647) (9,318)
---------- ---------- ---------- ---------- ---------- ----------
Net (loss) income (91) (718) (511) 43 336 9,696
Other comprehensive income
(loss), net of taxes and
minority interests
- Foreign currency
translation adjustments 5 40 255 1 6 471
- Unrealized holding gain
(loss) on marketable
securities 68 527 60 215 1,678 (1,791)
- Reclassification
adjustment for other
than temporary decline
in fair value of
marketable securities
included in net (loss)
income for the period 157 1,222 -- 157 1,222 --
---------- ---------- ---------- ---------- ---------- ----------
Other comprehensive income
(loss), net of taxes and
minority interests 230 1,789 315 373 2,906 (1,320)
---------- ---------- ---------- ---------- ---------- ----------
Comprehensive income (loss) 139 1,071 (196) 416 3,242 8,376
========== ========== ========== ========== ========== ==========
Basic (loss) earnings per
common share (0.02) (0.16) (0.11) 0.01 0.08 2.06
========== ========== ========== ========== ========== ==========
Diluted (loss) earnings per
common share (0.02) (0.16) (0.11) 0.01 0.07 2.06
========== ========== ========== ========== ========== ==========
Weighted average number of
shares of common stock
- for basic (loss) earnings
per share 4,405,960 4,405,960 4,815,960 4,467,087 4,467,087 4,716,069
========== ========== ========== ========== ========== ==========
- for diluted (loss)
earnings per share 4,405,960 4,405,960 4,815,960 4,742,564 4,742,564 4,716,069
========== ========== ========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements
F-3
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED DECEMBER 31
(Amounts expressed in thousands)
NINE MONTHS ENDED DECEMBER 31,
------------------------------------------
2003 2002
------------------------- --------
US$ HK$ HK$
Cash flow from operating activities:
Net income 43 336 9,696
Adjustments to reconcile net income to net cash
provided by operating activities:
Write-down of inventories 1,016 7,925 5,639
Provision for doubtful debts 281 2,194 1,019
Compensation expense 40 312 --
Depreciation and amortization 916 7,144 7,370
Share of result of an associate -- -- 60
Impairment loss on property, plant and equipment 50 389 --
Impairment loss on real estate investment 226 1,762 --
Loss on disposal of property, plant and equipment 88 685 858
Loss on disposal of real estate investment 255 1,992 --
Loss on disposal of subsidiaries -- -- 98
Other than temporary decline in fair value of marketable securities 317 2,474 --
Realized gain on sales of marketable securities (62) (480) --
Minority interests 724 5,647 9,318
Changes in operating assets and liabilities:
Accounts receivable 1,679 13,094 360
Inventories 1,412 11,013 (28,814)
Prepaid expenses 164 1,278 (2,031)
Deposits and other receivables (304) (2,373) (449)
Other current assets 469 3,661 3,155
Income taxes receivable -- -- (449)
Deferred tax assets (41) (318) 1,337
Accounts payable 802 6,254 15,653
Accrued payroll and employee benefits 290 2,260 1,534
Other accrued liabilities (264) (2,060) 2,022
Deferred tax liabilities 47 367 --
Income taxes payable 814 6,351 4,671
-------- -------- --------
Net cash provided by operating activities 8,962 69,907 31,047
-------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,140) (16,692) -7,438
Purchase of real estate investment (4,900) (38,222) --
Purchase of marketable securities (3) (27) --
Purchase of a long-term investment -- -- -156
Decrease in restricted cash -- -- 16,169
Loan to an associate -- -- -300
Proceeds from disposal of a long term investment -- -- 900
Proceeds from disposal of marketable securities 576 4,495 --
Proceeds from disposal of property, plant and equipment 136 1,062 196
Proceeds from disposal of real estate investment 666 5,196 --
Proceeds from disposal of interests in subsidiaries -- -- 489
-------- -------- --------
Net cash (used in) provided by investing activities (5,665) (44,188) 9,860
-------- -------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 2,416 18,848 942
Proceeds from partial disposal of a subsidiary 1,146 8,940 --
Repayment of short-term borrowings (2,416) (18,845) (14,339)
Repayment of long-term debts (1,157) (9,025) (4,181)
Repurchase of common stock (615) (4,797) --
-------- -------- --------
Net cash used in financing activities (626) (4,879) (17,578)
-------- -------- --------
Net increase in cash and cash equivalents 2,671 20,840 23,329
Cash and cash equivalents at beginning of period 10,739 83,766 82,152
Exchange adjustments (1) (16) --
-------- -------- --------
Cash and cash equivalents at end of period 13,409 104,590 105,481
======== ======== ========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest and financing charges 45 352 1,441
-------- -------- --------
Net income taxes paid 101 786 501
-------- -------- --------
See accompanying notes to condensed consolidated financial statements
F-4
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
(UNAUDITED)
1. INTERIM FINANCIAL PRESENTATION
The interim financial statements are prepared pursuant to the requirements for
reporting on Form 10-Q. The March 31, 2003 balance sheet data was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles. The interim financial statements and
notes thereto should be read in conjunction with the financial statements and
notes included in the annual report of Man Sang Holdings, Inc. (the "Company")
on Form 10-K for the fiscal year ended March 31, 2003. In the opinion of
management, the interim financial statements reflect all adjustments of a normal
recurring nature necessary for a fair presentation of the results for the
interim periods presented. Operating results and cash flows for interim periods
are not necessarily indicative of results of the entire year.
2. CURRENCY PRESENTATION AND FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign subsidiaries are translated from their
functional currency to the reporting currency at period end exchange rates,
while revenues and expenses are translated at average exchange rates during the
period. Adjustments arising from such translation are reported as a separate
component of stockholders' equity. Gains or losses from foreign currency
transactions are included in the Statement of Operations. Aggregate net foreign
currency gains or losses were immaterial for all periods.
The consolidated financial statements of the Company are maintained, and its
consolidated financial statements are expressed, in Hong Kong dollars. The
translations of Hong Kong dollar amounts into United States dollars are for
convenience only and have been made at the rate of HK$7.8 to US$1, the
approximate free rate of exchange at December 31, 2003. Such translations should
not be construed as representations that Hong Kong dollar amounts could be
converted into United States dollars at that rate or any other rate.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In August 2001 the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This statement addresses the diverse accounting practices for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The Company has adopted this statement on
April 1, 2003 and there was no impact on the Company's financial position or
results of operations.
On April 30, 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
Nos. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections," to update, clarify,
F-5
and simplify certain existing accounting pronouncements. Specifically, SFAS No.
145: (i) Rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of
Debt," an amendment of APB Opinion 30, and SFAS No. 64, "Extinguishments of Debt
Made to Satisfy Sinking-Fund Requirements" which amended SFAS No. 4, as these
two statements required that all gains and losses from the extinguishment of
debt be aggregate and, if material, classified as an extraordinary item.
Consequently, such gains and losses will now be classified as extraordinary only
if they meet the criteria for extraordinary treatment set forth in APB Opinion
30, Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions; (ii) Rescinds SFAS No. 44, "Accounting for Intangible
Assets of Motor Carriers," an amendment of Chapter 5 of Accounting Research
Bulletins No. 43 and an interpretation of APB Opinions 17 and 30, because the
discrete event to which the Statement relates is no longer relevant; (iii)
Amends SFAS No. 13, "Accounting for leases," to require that certain lease
modifications that have economic effects similar to sale-leaseback transaction
be accounted for in the same manner as such transactions; (iv) Makes certain
technical corrections, which the FASB deemed to be non-substantive, to a number
of existing accounting pronouncements.
The provisions of SFAS No. 145 related to the rescission of SFAS No. 4 and No.
64 are effective for fiscal years beginning after May 15, 2002. The provisions
related to the amendment of SFAS No. 13 are effective for transactions occurring
after May 15, 2002. All other provisions of SFAS No. 145 are effective for
financial statements issued on or after May 15, 2002. There was no significant
impact on the Company's financial position and results of operations as a result
of the adoption of SFAS No. 145.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement No. 133 on
Derivative Instruments and Hedging Activities." The statement amends and
clarifies accounting for derivative instruments, including certain derivatives
instruments embedded in other contracts and for hedging activities under SFAS
No. 133. This statement is generally effective for contracts entered into or
modified after June 30, 2003. There was no significant impact on the Company's
financial position and results of operations as a result of the adoption of SFAS
No. 149.
In May 2003 the FASB issued SFAS No. 150. "Accounting for Certain Financial
Instruments with Characteristic of Both Liabilities and Equity." The statement
establishes standards for how an issuer classifies and measures certain
financial instruments. This statement is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The
statement requires that certain financial instruments that, under previous
guidance, could be accounted for as equity be classified as liabilities, or
assets in some circumstances. This statement does not apply to features embedded
in a financial instrument that is not a derivative in its entirety. The
statement also requires disclosures about alternative ways of settling the
instruments and the capital structure of entities whose shares are mandatorily
redeemable. Management is assessing, but has not yet determined, the impact that
SFAS No. 150 will have, if any, on its financial position and results of
operations.
F-6
In January 2003, the FASB issued Interpretation ("FIN") No. 46, "Consolidation
of Variable Interest Entities -- An Interpretation of Accounting Research
Bulletin No. 51". FIN No. 46 requires a primary beneficiary to consolidate a
variable interest entity ("VIE"), if it has a VIE that will absorb a majority of
the entity's expected losses if they occur, receive a majority of the entity's
expected residual returns if they occur, or both. FIN No. 46 is effective for
the Company for the year ending March 31, 2004. Management does not expect that
the adoption of this interpretation, and related amendments, will have a
significant impact on the Company's financial position and results of
operations.
4. EARNINGS PER SHARE ("EPS")
EPS is calculated in accordance with SFAS No. 128. Per share data is calculated
using the weighted average number of shares of common stock outstanding during
the period.
Man Sang International Limited ("MSIL"), a subsidiary of the Company whose
shares are listed on The Stock Exchange of Hong Kong Limited, adopted a share
option scheme (the "Old Share Option Scheme") on September 8, 1997. The Old
Share Option Scheme is administered by Board of Directors of MSIL, whose
decisions are final and binding on all parties. On August 2, 2002, at the 2002
Annual General Meeting of MSIL, MSIL's shareholders approved a share option
scheme (the "New Share Option Scheme") to replace the Old Share Option Scheme.
No option has been granted under the New Share Option Scheme and all the options
granted under the Old Share Option Scheme lapsed in October 2002.
For the Quarter Ended December 31, 2002
---------------------------------------
Loss No. of shares Loss per share
HK$'000 HK$
Basic loss per share
Net loss available to common stockholders (511) 4,815,960 (0.11)
Diluted loss per share
Net loss available to common stockholders, including
conversion (511) 4,815,960 (0.11)
For the Nine Months Ended December 31, 2002
-------------------------------------------
Earnings No. of shares EPS
HK$'000 HK$
Basic EPS
Net income available to common stockholders
9,696 4,716,069 2.06
Diluted EPS
Net income available to common stockholders,
including conversion 9,696 4,716,069 2.06
F-7
For each of the three-month and nine-month periods ended December 31, 2002, the
effect on consolidated loss per share or EPS of options issued by MSIL and
options issued by the Company was not included in the computation of diluted
loss per share or EPS because it would have resulted in an anti-dilutive effect.
On June 7, 2002, the Company issued in aggregate 410,000 shares of common stock
to two business consultants pursuant to their respective business consulting
agreements. On April 30, 2003, the Company repurchased the consultants' shares
for US$1.5 per share and cancelled those shares on May 12, 2003.
On March 26, 2003, pursuant to the Company's 1996 Stock Option Plan, the
Compensation Committee granted to Cheng Chung Hing, Ricky, the Company's
President, Chairman, Chief Executive Officer and then Chief Financial Officer,
and Cheng Tai Po, the Company's Vice Chairman, non-qualified options to purchase
150,000 and 100,000 shares of the Company's common stock respectively at an
exercise price of US$1.1 per share, the latest closing price of the Company's
common stock as of the date of grant. Half of the options vest on March 26, 2004
and the remaining half vest on March 26, 2005.
For the Quarter Ended December 31, 2003
---------------------------------------
Loss No. of shares Loss per share
HK$'000 HK$
Basic loss per share
Net loss available to common stockholders (718) 4,405,960 (0.16)
Diluted loss per share
Net loss available to common stockholders, including
conversion (718) 4,405,960 (0.16)
For the Nine Months Ended December 31, 2003
-------------------------------------------
Earnings No. of shares EPS
HK$'000 HK$
Basic EPS
Net income available to common stockholders
336 4,467,087 0.08
Effect of dilutive stock options granted by the
Company 275,477
Diluted EPS
Net income available to common stockholders,
including conversion 336 4,742,564 0.07
F-8
5. DISCLOSURE OF GEOGRAPHIC INFORMATION
All of the Company's sales of pearls are coordinated through its Hong Kong
subsidiaries and an analysis by destination is as follows:
For the Quarter For the Nine Months
Ended Ended
December 31 December 31
------------------- ---------------------
2003 2002 2003 2002
HK$'000 HK$'000 HK$'000 HK$'000
Net Sales:
Hong Kong * 12,542 10,413 36,705 37,760
Export:
Germany 16,955 6,571 46,686 16,554
North America 35,366 17,759 85,727 65,316
Europe excluding
Germany 11,710 12,869 31,750 29,436
Japan 17,162 10,599 27,476 27,974
Other Asian
countries 9,464 6,376 35,198 39,390
Others 3,341 2,252 11,394 8,630
------- ------ ------- -------
106,540 66,839 274,936 225,060
======= ====== ======= =======
* A majority of sales (by dollar amount) in Hong Kong are for re-export to
North America and Europe.
The Company operates in Hong Kong and other regions of the People's Republic of
China (the "PRC"). The locations of the Company's identifiable assets are as
follows:
December 31, March 31,
2003 2003
HK$'000 HK$'000
Hong Kong 402,266 399,628
PRC 101,642 84,116
------- ------
503,908 483,744
======= ======
6. DISCLOSURE OF MAJOR CUSTOMERS
During the three and nine months ended December 31, 2003, there was no customer
who accounted for 10% or more of total sales. On the other hand, there was one
customer who accounted for 12.1% of total sales for the three months ended
December 31, 2002 but no customer accounted for 10% or more of total sales for
the nine months ended December 31, 2002.
7. SEGMENT INFORMATION
F-9
Reportable segment profit or loss, and segment assets are disclosed as follows:
REPORTABLE SEGMENT PROFIT OR LOSS, AND SEGMENT ASSETS
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED, DECEMBER 31 ENDED, DECEMBER 31
2003 2002 2003 2002
HK$'000 HK$'000 HK$'000 HK$'000
Revenues from external
customers:
Pearls 106,540 66,839 274,936 225,060
Real estate investment 1,690 1,928 4,565 5,628
------- ------ ------- -------
108,230 68,767 279,501 230,688
======= ====== ======= =======
Operating income:
Pearls 6,539 (248) 17,224 22,499
Real estate investment (296) 269 (4,269) 822
------- ------ ------- -------
6,243 21 12,955 23,321
======= ====== ======= =======
Interest expenses:
Pearls 20 208 102 811
Real estate investment 14 123 118 405
Corporate assets 29 63 117 214
------- ------ ------- -------
63 394 337 1,430
======= ====== ======= =======
Depreciation and
amortization:
Pearls 1,679 1,735 5,148 5,034
Real estate investment 442 457 1,307 1,370
Corporate assets 231 276 689 966
------- ------ ------- -------
2,352 2,468 7,144 7,370
======= ====== ======= =======
Capital expenditure for segment assets:
Pearls 632 5,839 4,185 7,274
Real estate investment 8,577 -- 50,729 --
Corporate assets -- 142 -- 164
------- ------ ------- -------
9,209 5,981 54,914 7,438
======= ====== ======= =======
As of As of
December 31, March 31,
2003 2003
HK$'000 HK$'000
Segment assets:
Pearls 361,778 334,251
Real estate investment 89,164 96,447
Corporate assets 52,966 53,046
------- -------
503,908 483,744
======= =======
F-10
8. OTHER THAN TEMPORARY DECLINE IN VALUE OF MARKETABLE SECURITIES
The Company recognized losses of HK$2.5 million on its marketable securities due
to decline in fair value that were determined by management to be other than
temporary.
9. COMMON STOCK
On June 7, 2002, the Company issued an aggregate of 410,000 shares of common
stock, par value US$0.001 per share, to two business consultants pursuant to
their respective business consulting agreements, both dated June 1, 2002.
Compensation expenses of approximately HK$2.2 million, the fair value of the
stock issued, is being recognized over the consultants' service period. During
the three and nine months ended December 31, 2003, approximately HK$272,000 and
HK$816,000 respectively was charged to the income statement. On April 30, 2003,
the Company repurchased the stock issued to these consultants at a price of
US$1.5 per share. These shares were cancelled on May 12, 2003.
On May 27, 2003, the Company launched a small shareholders buyout program to
purchase shares of the Company's common stock from shareholders who, on May 27,
2003, owned 99 or fewer shares of the Company. Subsequent to the closing of the
buyout program, the Company's transfer agent reported to the Company in July
2003 that none of the shareholders accepted the offer.
On August 6, 2003, Man Sang International Limited ("MSIL"), a subsidiary of the
Company whose shares are listed on The Stock Exchange of Hong Kong Limited,
approved an ordinary share dividend of one share of ordinary share for every ten
ordinary shares owned by each of its record shareholders.
10. PURCHASE OF A PROPERTY
The Company purchased office space at 8th Floor, Harcourt House, No. 39
Gloucester Road, Wanchai, Hong Kong for a consideration of approximately HK$38.2
million including purchase cost and its associated expenses. The transaction was
completed on August 15, 2003.
11. SALE OF PROPERTY
The Company entered into a sales and purchase agreement on August 12, 2003 to
sell Units 14, 15 & 16 of the 6th Floor, Block A, and car parking space numbered
L-30, at Focal Industrial Centre, 21 Man Lok Street, Kowloon, Hong Kong for a
total consideration of approximately HK$6.2 million. The transaction was
completed by October 31, 2003.
In connection with the disposal, the Company recorded an impairment loss of
approximately HK$2.1 million, which represents the excess of the carrying value
of the properties over the consideration. The impairment loss, comprising HK$0.4
million attributable to pearl operations and HK$1.7 million attributable to
real estate operations, has been recorded as a component of "Selling, General
and Administrative Expenses" in the income statement for the nine months ended
December 31, 2003.
F-11
12. RELATED PARTY TRANSACTION
Mr. Cheng Chung Hing, Ricky, who serves as Chairman, President and Chief
Executive Officer of the Company, and Mr. Cheng Tai Po, the Vice Chairman of the
Company, are the beneficial owners of the principal shareholder of the Company,
Cafoong Limited ("Cafoong"). Mr. Cheng Chung Hing, Ricky and Mr. Cheng Tai Po
own 60% and 40% of the issued share capital of Cafoong, respectively. Cafoong
directly and indirectly held 62.42% of Common Stock and 100% of Series A
Preferred Stock of the Company.
At April 1, 2003, the Company, through its wholly owned subsidiary, Man Sang
International (B.V.I.) Limited ("MSBVI"), held 468.6 million issued shares of
Man Sang International Limited ("MSIL"), a company listed on The Hong Kong Stock
Exchange, which represented 56.66% of all the issued shares of MSIL.
On October 6, 2003, Mr. Cheng Chung Hing, Ricky and Mr. Cheng Tai Po purchased
from MSBVI 36 million and 24 million of MSIL shares, respectively. After such
transaction, through MSBVI, the Company held 408.6 million MSIL shares,
representing 49.40% of the shares in issue of MSIL, and remained the principal
shareholder of MSIL. The purchase price per share was the arithmetic average of
the closing price of MSIL shares for each of the five trading days immediately
preceding and including October 6, 2003. Although the Company made no cash
payment in connection with its sale of MSIL shares, it has recorded the amount
by which its attributable share of MSIL's net assets (as represented by the 60
million MSIL shares sold) exceeds the purchase consideration, in the amount of
HK$22 million, as distribution to shareholders. In addition, the Company has
made a tax provision in the amount of HK$1.5 million, which has been recorded as
income tax expense.
13. CONTINGENCIES
On December 2, 2003, Arcadia Jewellery Limited ("Arcadia"), a subsidiary of
the Company, filed a lawsuit in Hong Kong against its former general manager
and certain other parties for breach of certain agreements. On December 22,
2003, this former general manager also filed a lawsuit in Hong Kong against
Arcadia. Arcadia intends to pursue its claim and defend against the former
general manager's claims vigorously. Although it is not possible to predict
with certainty at the moment the outcome of these unresolved legal actions or
the range of possible loss or recovery, the Company does not believe that the
resolution of these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations.
F-12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This section and other parts of this Form 10-Q contain forward-looking
statements that are, by their nature, subject to risks and uncertainties. These
forward-looking statements include, without limitation, statements relating to:
(a) future supplies, demands, and purchase and sale prices of pearl and pearl
jewelry in the international pearl and jewelry markets, and real estate in Hong
Kong and the PRC; (b) sales and profitability of the Company's products and its
future product mix; (c) the amount and nature of, and potential for, future
developments and competitions; (d) expansion, consolidation and other trends in
the pearl and jewelry industry; (e) the Company's business strategy; (f) the
Company's estimated financial information regarding its business; (g) tax
exemptions and tax rates; and (h) exchange rates. These forward-looking
statements are based on assumptions and analyses made by the Company in light of
its experience and perception of historical trends, current conditions and
expected future developments, as well as other factors the Company believes to
be appropriate in particular circumstances. However, whether actual results and
developments will meet the Company's expectations and predictions depends on a
number of known and unknown risks and uncertainties and other factors, any or
all of which could cause actual results, performance or achievements to differ
materially from the Company's expectations, whether expressed or implied by such
forward-looking statements (which may relate to, among other things, the
Company's sales, costs and expenses, income, inventory performance, and
receivables). The Company's ability to achieve its objectives and expectations
are derived at least in part from assumptions regarding economic conditions,
consumer tastes, and developments in its competitive environment. The following
factors, among others, could materially affect the likelihood that the Company
will achieve its objectives and expectations communicated through these
forward-looking statements: (i) low or negative growth in the economies or the
financial markets of our customers, particularly in the United States and in
Europe that reduces discretionary spending on goods that might be perceived as
"luxuries;" (ii) whether the Hong Kong dollar will remain pegged to the US
dollar at US$1 to HK$7.8; (iii) adverse changes in customer's choice of pearls
vis-a-vis other precious stones and metals; (iv) whether the Company will
continue to obtain a stable supply of pearls in the quantities, of the quality
and on terms required by the Company; (v) a substantial adverse change in the
exchange relationship between RMB and the Hong Kong or US dollar; (vi)
substantial increase in tax burden of subsidiaries of the Company operating in
the PRC; (vii) substantial change in climate and environmental conditions at the
source regions of pearls that could have material effect on the supply and
pricing of pearls; and (viii) substantial adverse change in the real estate
market conditions in the PRC and in Hong Kong. The Company does not intend to
update its forward-looking statements made in this Form 10-Q or elsewhere to
reflect changes that may occur after the date such forward-looking statements
are made. The following discussion of results of operation, and liquidity and
capital resources should be read in conjunction with the financial statements
and the notes thereto included elsewhere in this Form 10-Q and with the
Company's annual report on Form 10-K for the year ended March 31, 2003.
OVERVIEW
As economic sentiment continued to improve in the third quarter, the Group
recorded a turnover of approximately HK$274.9 million for the nine months ended
December 31, 2003, representing
1
an increase of 22.2% as compared to the same period in 2002. The improvement in
turnover suggested that our customers' confidence in coming back to Hong Kong
for trading had increased. The increase was also in part due to sales generated
from our jewelry business acquired in December 2002.
Gross profit margin for the nine months ended December 31, 2003 decreased by
4.9% to 25.1% compared to the gross profit margin of 30.0% for the same period
last year. The decrease was mainly attributable to our flexible pricing strategy
on freshwater pearls, as well as our acquired jewelry business which has a
slightly lower gross profit margin than our existing pearl and pearl jewelry
businesses.
Net income for the nine months ended December 31, 2003 was approximately
HK$336K*, compared to net income of HK$9.7 million for the same period in 2002.
The decrease was mainly attributable to higher SG&A expense for the period ended
December 31, 2003 as compared to the same period in 2002, as well as other
non-operating items (an impairment charge recorded for an other than temporary
decline in fair value of certain marketable securities) and an increase in
income taxes.
RESULTS OF OPERATIONS
Nine-Month Period Ended December 31, 2003 compared to Nine-Month Period Ended
December 31, 2002.
Sales and Gross Profit
Net sales for the nine months ended December 31, 2003 increased by HK$49.8
million, or 22.1%, to HK$274.9 million, compared to net sales of HK$225.1
million during the same period in 2002. The overall increase in sales was mainly
attributable to the continual momentum of business recovery after the impact of
the Iraq war and Severe Atypical Respiratory Syndrome ("SARS") on consumer
spending in the first quarter, reflecting a return of customers' confidence. In
addition, the increase is also due to the additional contribution of sales
revenue generated from our jewelry business acquired in December 2002.
Gross profit for the nine months ended December 31, 2003 increased by HK1.3
million, or 2.1%, to HK$68.9 million from HK$67.6 million for the same period in
2002. As a percentage of net sales, gross profit margin decreased 4.9% to 25.1%
for the nine months ended December 31, 2003 from 30.0% for the same period in
2002. The decrease in gross profit margin was mainly attributable to our
flexible pricing strategy on our fresh water pearls to boost sales and to our
jewelry business acquired in December 2002, which has a slightly lower gross
profit margin than our pearl and pearl jewelry business.
*As used in this 10-Q, the letter "K" appearing immediately after a dollar
amount denotes rounding to the nearest HK$1,000; as an example, HK$250,499 may
be rounded to "HK$250K".
2
Rental Income
Gross rental income for the nine months ended December 31, 2003 was
approximately HK$4.6 million, representing a decrease of approximately HK$1.1
million, or 18.9%, as compared to HK$5.6 million in the same period in 2002. The
decrease in gross rental income was mainly attributable to the Company taking
back some of its properties, which had previously been rented to third parties,
for internal use since April 21, 2003. Such decrease was partially offset by the
additional rental income contribution generated by the newly acquired property
at 8th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong.
Selling, General and Administrative Expenses ("SG&A expenses")
SG&A expenses were HK$60.6 million, consisting of HK$51.8 million attributable
to pearl operations and HK$8.8 million attributable to real estate operations.
SG&A expenses for the nine months ended December 31, 2003, increased
approximately HK$10.7 million, or 21.4%, from HK$49.9 million, as compared to
the same period in 2002, consisting of HK$ 45.1 million attributable to pearl
operations and HK$4.8 million attributable to real estate operations, for the
same period in 2002.
The increase in SG&A expenses in the pearl operations was mainly due to (i)
increased headcount and salary expenses related to our acquired jewelry
business, (ii) bad debt provision made on customers while the increase in SG&A
expenses in the real estate operations was mainly due to (i) a loss arising on
the demolition of one of the buildings for reconstruction in Shenzhen, and (ii)
a loss arising from the disposal of one of our properties located at Focal
Industrial Centre, 21 Man Lok Street, Kowloon, Hong Kong.
As a percentage of net sales, SG&A expenses from pearl operations decreased 1.2%
to 18.8% for the nine-month period ended December 31, 2003 from 20.0% for the
same period in 2002. The decrease is mainly attributable to increased net sales.
Interest Expense
Interest expense decreased by HK$1.1 million, or 76.4%, to approximately HK$337K
for the nine months ended December 31, 2003 from HK$1.4 million for the same
period in 2002 as a result of the reduction of the Company's bank borrowings and
the lower interest rate during the period.
Interest Income
Interest income decreased by approximately HK$380K or 65.0%, to approximately
HK$205K for the nine months ended December 31, 2003 from approximately
HK$585,000 in the same period in 2002. The decrease was due to lower interest
rates during the nine months ended December 31, 2003 when compared to same
period in 2002.
3
Other Than Temporary Decline in Fair Value of Marketable Securities
The Company recorded a charge for an other than temporary decline in fair value
of certain marketable securities for the nine months ended December 31, 2003, of
HK$2.5 million due to a decline in value which was considered as other than
temporary after comparing market value to cost.
Income Taxes
Income taxes for the nine months ended December 31, 2003 were HK$7.1 million, an
increase of HK$1.0 million as compared to HK6.1 million for the same period in
2002. Higher income taxes primarily resulted from taxable gain arisen from the
disposal of MSIL shares by MSBVI during the nine months ended December 31, 2003
when compared to same period in 2002.
Net Income
Net income for the nine months ended December 31, 2003 was approximately
HK$336K, compared to net income of HK$9.7 million for the same period in 2002.
The decrease was mainly attributable to higher SG&A expense, and lower gross
profit margin and rental income, for the period ended December 31, 2003 as
compared to the same period in 2002, as well as other non-operating items
(including without limitation an impairment charge recorded for an other than
temporary decline in fair value of certain marketable securities) and an
increase in income taxes.
Three-Month Period Ended December 31, 2003 Compared to Three-Month Period Ended
December 31, 2002.
Sales and Gross Profit
Net sales for the three months ended December 31, 2003 increased by HK$39.7
million, or 59.4%, to HK$106.5 million, compared to net sales of HK$66.8 million
during the same period in 2002. The overall increase in sales of both pearls and
jewelry in the quarter ended December 31, 2003 was mainly attributable to the
continual momentum of business recovery after the impact of Iraq war and SARS on
consumer spending in the first quarter, reflecting a return of customers'
confidence. In addition, the increase is also due to the additional contribution
of sales revenue generated from the jewelry business acquired in December 2002.
Gross profit for the three months ended December 31, 2003 increased by HK$8.6
million or 56.7%, to HK$23.8 million from HK$15.2 million for the same period in
2002. As a percentage of net sales, gross profit margin decreased 0.4% to 22.4%
for the three months ended December 31, 2003 from 22.8% for the same period in
2002. The decrease in gross profit margin was mainly attributable to our
flexible pricing strategy on our fresh water pearls to boost sales and to our
jewelry business acquired in December 2002, which has a slightly lower gross
profit margin than our pearl and pearl jewelry business.
4
Rental Income
Gross rental income for the three months ended December 31, 2003 was
approximately HK$1.7 million representing a decrease of approximately HK$0.2
million, or 12.3%, as compared to HK$1.9 million in the same period in 2002. The
decrease in gross rental income was mainly attributable to the Company taking
back some of its properties, which had previously been rented to third parties,
for internal use since April 21, 2003. Such decrease was partially offset by the
additional rental income contribution generated by the newly acquired property
at 8th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong.
SG&A expenses
SG&A expenses for the three months ended December 31, 2003 were HK$19.3 million,
consisting of HK17.3 million attributable to pearl operations and HK$2.0 million
attributable to real estate operations. SG&A expenses for the three months ended
December 31, 2003, increased approximately HK$2.2 million, or 12.6%, from
HK$17.1 million in the same period in 2002, consisting of HK$15.4 million
attributable to pearl operations and HK$1.7 million attributable to real estate
operations for the same period in 2002. The increase in SG&A expenses was mainly
due to the debt provision made on customers and the increased headcount and
salary expenses related to our jewelry business acquired in December 2002.
As a percentage of net sales, SG&A expenses from pearl operations decreased 7.5%
to 18.1% for the three months ended December 31, 2003 from 25.6% for the same
period in 2002. The decrease is mainly attributable to increased net sales.
Interest Expense
Interest expense decreased by approximately HK$331K or 84.0%, to approximately
HK$63K for the three months ended December 31, 2003 from approximately
HK$394,000 for the same period in 2002 as a result of lower bank borrowings
within the Company for the period and lower interest rate.
Interest Income
Interest income decreased by approximately HK$116K or 71.6%, to approximately
HK$46K for the three months ended December 31, 2003 from approximately HK$162K
in the same period in 2002. The decrease was due to the effect of lower interest
rates during the three months ended December 31, 2003 when compared to same
period in 2002.
Other Than Temporary Decline in Fair Value of Marketable Securities
The Company recorded a charge for an other than temporary decline in fair value
of certain marketable securities for the three months ended December 31, 2003 of
HK$2.5 million due to a decline in value that was considered as other than
temporary after comparing market value to cost.
5
Income Taxes
Income taxes for the three months ended December 31, 2003 were HK$3.8 million,
as compared to approximately HK$533K for the same period in 2002. Higher taxes
resulted from higher taxable operating income and the taxable gain arisen from
the disposal of MSIL shares by MSBVI during the three months ended December 31,
2003 as compared to the same period in 2002.
Net Loss
Net loss for the three months ended December 31, 2003 was approximately HK$718K
compared to net loss of approximately HK$511K for the same period in 2002. The
increase was mainly attributable to the higher income taxes, non-operating items
including without limitation an impairment charge recorded for an other than
temporary decline in fair value of certain marketable securities, as well as
higher SG&A expenses in this period in 2003 as compared to the same period in
2002.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity needs are funded by collection of accounts
receivable and sales of inventories. At December 31, 2003, the Company had
working capital of HK$258.7 million, which included a cash balance of HK$104.6
million and represented the excess of the total current assets over the total
current liabilities. The current ratio was 7.0 to 1 as of December 31, 2003,
calculated by reference to total current assets and total current liabilities.
Net cash provided by operating activities was approximately HK$69.9 million for
the nine months ended December 31, 2003. Net cash used in investing activities
for the nine months ended December 31, 2003 was HK$44.2 million and net cash
used in financing activities was HK4.9 million.
Inventories were HK$115.1 million at December 31, 2003. The inventory turnover
period was 5.4 months for the nine months ended December 31, 2003.
Accounts receivable were HK$54.8 million at December 31, 2003. The accounts
receivable turnover period was 56.8 days for the nine months ended December 31,
2003.
Long-term debts (including current portion of long-term debts) were HK$13.0
million at December 31, 2003. The gearing ratio was 0.06 at December 31, 2003,
calculated by reference to the debt of HK$13.0 million and the stockholders'
equity of HK$234.3 million.
The Company had available working capital facilities of HK$95.6 million in total
with various banks at December 31, 2003. Such banking facilities include letter
of credit arrangements, import loans, overdraft and other facilities commonly
used in the jewelry business. All such banking facilities bear interest at
floating rates generally offered by banks in Hong Kong and in the PRC, and are
subject to periodic review. At December 31, 2003, the Company had not utilized
any of these credit facilities.
6
The Company has a future cash payment obligation in regard of certain properties
under construction in the Man Sang Industrial Centre in Shenzhen which amounts
approximately to HK$4.2 million as at December 31, 2003.
The Company believes that its existing cash, cash equivalents, banking
facilities and funds to be generated from internal operations will be sufficient
to meet its anticipated future liquidity requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of December 31, 2003, the Company had no derivative contracts, such as
forward contracts and options to hedge against foreign exchange fluctuations.
During the nine months ended December 31, 2003, the Company made 33.8% of its
purchases in Hong Kong Dollar and 33.6% in US dollars.
At December 31, 2003, the Company had no short-term RMB bank borrowings. The RMB
is not a fully convertible currency and the PRC government determines its
exchange rate against other currencies. To the best of our knowledge, the PRC
has not declared any intention to either devalue or revalue its currency;
however, there can be no assurance that a decision to allow the currency to
fluctuate in the future will not be taken. The Company's sales are principally
denominated in either US dollars or Hong Kong dollars. Because the Hong Kong
dollar remained pegged to the US dollar at a consistent rate, the Company feels
that the exposure of its sales proceeds to foreign exchange fluctuations is
minimal. Therefore, the Company believes its currency risk in the foreseeable
future is not material.
At December 31, 2003, the Company had Hong Kong dollar bank borrowings of HK
13.0 million, the weighted average interest rate of which was 1.37 % per annum.
The Company's interest expense is sensitive to fluctuations in the general level
of Hong Kong interest rates determined on the basis of Hong Kong Inter-bank
Offer rate ("HIBOR"). Because the Hong Kong dollar is pegged to the US dollar,
which correlates Hong Kong interest rates to US interest rates, any change in US
interest rates will likely affect Hong Kong interest rates. Since the US economy
has slowed down and US interest rates have remained low, the three-month HIBOR
has decreased by 6.35% from 6.5% as at September 30, 2000 to 0.15% as at
December 31, 2003. Therefore, the Company does not foresee material risks of an
increase in Hong Kong interest rates in the foreseeable future and did not enter
into derivative contracts or other arrangements to hedge against such risk.
ITEM 4. CONTROLS AND PROCEDURES
As of December 31, 2003, an evaluation was performed under the supervision and
with the participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on such evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were
7
effective. No change was made in the Company's internal control over financial
reporting during the fiscal quarter ended December 31, 2003 that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
The Company's Chief Executive Officer and Chief Financial Officer do not expect
that the Company's disclosure controls or internal controls will prevent all
error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the system are met. Further, the design of a control system must
reflect the fact that there are resources constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdown
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the control. The design of any system of
controls also is based partly on certain assumptions about the likelihood of
future events, and there can be no assurance that any given design will succeed
in achieving its stated goals under all potential future conditions.
8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 2, 2003, Arcadia Jewellery Limited ("Arcadia"), a subsidiary of
the Company, filed a lawsuit in Hong Kong against its former general manager
and certain other parties for breach of certain agreements. On December 22,
2003, this former general manager filed a lawsuit in Hong Kong against Arcadia.
Arcadia intends to pursue its claim and defend against the former general
manager's claims vigorously. Although it is not possible to predict with
certainty at the moment the outcome of these unresolved legal actions or the
range of possible loss or recovery, the Company does not believe that the
resolution of these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations.
ITEM 6. EXHIBITS
(A) Exhibits
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1 Section 1350 Certification of Chief Executive Officer
32.2 Section 1350 Certification of Chief Financial Officer
(B) Reports on Form 8-K
None
9
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, as amended, Man Sang Holdings, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MAN SANG HOLDINGS, INC.
Date: February 19, 2004
By: /s/ CHENG Chung Hing, Ricky
--------------------------------------
CHENG Chung Hing, Ricky
Chairman of the Board, President,
Chief Executive Officer
10
INDEX TO EXHIBITS
The following documents are filed herewith or have been included as exhibits to
previous filings with the Securities and Exchange Commission and are
incorporated by reference as indicated below.
Exhibit No. Description
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1 Section 906 Certification of Chief Executive Officer
32.2 Section 906 Certification of Chief Executive Officer
11