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enterpriseAsia plc - 2002 Interim Report
Chairman's statement
For the 6 months ended 30 June, 2002
30 September, 2002
Results
The Company and its subsidiaries recorded an unaudited consolidated loss of
£6,608,372 for the 6-month period ended 30 June, 2002 (the "Period") (6 months ended 30 June, 2001 (the "Previous Period") :
£283,811). Of this loss £6,243,485 resulted from the provisions for permanent diminution in the values of the investment projects across our portfolio (Previous Period : nil), and
£32,865 (Previous Period : £6,786 gain) was due to exchange rate differences. The provisions include :
|
iAsia £
2,280,368
Net Fun £ 1,182,359
Cybermax £ 1,115,201
P & S £ 855,423
innoVision £ 810,134
|
Total income for the Period was
£72,923 (Previous Period :
£83,767), with the reduction in bank interest income, due to low interest rates and lower cash balances, partly compensated by consultancy fees and other income received from our investment projects.
As at 30 June, 2002, the Company's unaudited net asset value per share was 1.32 p, and the cash balance under control was approximately 0.75 p per share.
|
DIVIDENDS
The directors are not recommending the payment of a dividend for the Period.
Business Strategy
During the Period under review the Company continued the strategy of concentrating our resources to support the development of the more promising projects in our existing portfolio. Where appropriate, our executive team provided consultancy services to individual projects on a fee charging basis with the twin objectives of enhancing the project's performance and providing for a closer supervision of its progress. For those projects in which we had a relatively small shareholding, we maintained the role as a minority investor, with a management focus on these projects' overall business development and financial performance.
In addition to managing the existing portfolio, we have also been actively exploring merger and acquisition opportunities offered by businesses with proven track records, aiming at bringing more immediately available revenue sources to the Company before any significant profitable exit of existing investments takes place.
To reflect the strategy of expanding our business scope beyond the IT sector, we dropped the ".com" component in our company name in July, 2002.
In view of the limited financial resources remaining available to the Company for its future investing activities and working capital, we started the implementation of significant expense reduction during the Period. Impact of the cost cutting programmes is expected to come into effect in the 2nd half of 2002, and will become even more visible in the 1st half of 2003.
THE INVESTMENT PORTFOLIO
Our portfolio consisted of 8 investments during the Period :
|
|
Month
Investment
Was Made |
Total
investment
up to 30 June, 2002 (approximate
amount in £s) |
%
of Equity Held
as on
30 June 2002 |
| iAsia
Technology Limited |
Nov
2001
Dec 2001 |
895,000
1,765,000 |
7.396%
in total |
Cybermax
Network Technology
Limited |
Sept
2000
Jan 2002 |
1,378,000
230,000 |
49%
Loan |
| innoVision
Holding Limited |
June
2001 |
1,266,000 |
49% |
| Net
Fun Limited |
Sept
2000 |
1,222,000 |
8% |
| P
& S International Limited |
June
2000 |
856,000 |
2.178% |
| UFO
Solutions Limited |
Sept
2000 |
1,280,000 |
49.87% |
| ecAgent.com
Limited |
Aug
2000 |
1,258,000 |
100% |
| iBASE
Holdings Limited |
Jan
2000
Jan 2001 |
256,000
130,000 |
49%
loan |
|
A description of the business nature and status of these investments can be found under "Our Investment Portfolio" after this statement.
PREPARING FOR THE FUTURE
In order to bolster its ability to emerge from the current difficult market conditions, the Company is taking a number of positive steps. These include:
- Optimising the value of the existing investment portfolio by concentrating resources on the more promising ones;
- Scaling down the executive team and reducing other operating costs significantly, including Directors' fees;
- Exploring investments which can generate significant cash inflow streams;
- Developing revenue sources leveraging on the Company's strengths as a bridge between western investors and the Greater China market.
Peter So
Chairman
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THE INVESTMENT PORTFOLIO
iAsia Technology Limited (iAsia)
iAsia is listed on the Growth Enterprise Market (GEM) of the Hong Kong Stock Exchange. It is engaged in the provision of real time online trading and related systems for securities brokers and other financial institutions in Asia.
Although iAsia is maintaining a sizeable customer base, it recorded significant losses up to 30 June, 2002. However, its efficiency is expected to be further improved as results of its cost reduction programmes become more visible in the foreseeable future.
Owing to an iAsia share placement in July, 2002, our holding in their shares is now reduced to approximately 6.24%. As the placement price was at HK$0.1 per share, the Directors have proposed to write down the value of our iAsia investment to this level.
Cybermax Network Technology Limited ("Cybermax")
Cybermax operates a Hong Kong website, "Part-time.com", displaying recruitment advertising for part-time, temporary and second jobs. As at 30 June, 2002, the website was maintaining the profiles of over 220,000 registered jobseekers and over 19,000 registered recruiters. It has consistently been rated one of Hong Kong's top consumer websites in terms of traffic.
During the Period, the Company increased its investment in Cybermax to HK$17,539,000, and a further HK$2,000,000 is expected to be funded in 2002 and early 2003. The additional investment has been used to develop offline products such as a printed version of recruitment advertising distributed in a wide network of retail outlets. In the near future, more revenue-generating products will also be developed to leverage on the database of its young members.
Cybermax is at present facing a low working capital situation. However, based on the current projections for a scaled down operation, the additional funding already committed by the Company should be sufficient to bring the project into a self-sustaining stage in 2003. The Directors have proposed to write down the value of this investment to reflect its reduced scale at this stage.
innoVision Holding Limited ("innoVision")
innoVision manufactures and markets an advertising light-box displaying multiple poster visuals with a "dissolve" effect based on a patented technology in China and Hong Kong. It also utilizes this unique form of light-box to build partnerships in out-of-home media networks.
Direct sales of the innoVision light-box has so far been sluggish due to its novelty nature and unstable quality. However, as market awareness of the product increases and measures to maintain quality consistency become effective, the sales performance is expected to improve.
In contrast, the establishment of media partnerships has been more encouraging. Although the development of media networks has, as expected, taken an extended period of time, some initial success is now recorded. At present, innoVision light-boxes are progressively installed in subway stations in Hong Kong and Shanghai, and in a major railway station in Guangzhou. Advertisers using the innoVision light-boxes are mainly international consumer brands.
innoVision has also participated in Guangzhou's i-Kiosk project, under which streetside telephone booths are being converted into newsstands for retail product distribution. As innoVision is at present facing a low working capital situation, investment income from the i-Kiosk project will be critical in maintaining innoVision's continuous operations. Therefore, the Directors have proposed to write down the value of this investment to account for the uncertainty faced by it.
Net Fun Limited (“Net Fun”)
Net Fun provides interactive educational games for teenagers and children. Although the contents development work and sales results have been disappointing, considerable breakthroughs were achieved during the Period.
Starting July, 2002, the online services offered by Net Fun were accessible in over 5,800 households of residential estates developed and managed by the Cheung Kong Group of Companies, which also has interests in Net Fun. Penetration into other Cheung Kong estates is expected to take place progressively.
As a result of Net Fun's decision to speed up its development in the Mainland China market, which offers a much larger scale than just the Hong Kong market, a China marketing team has been formed. In September, 2002, contracts for distributing Net Fun games were signed up with China Telecom, the largest mobile telecommunication operator in Mainland China, and ChinaNetcom, one of China's largest broadband providers.
In July, 2002, a Net Fun shareholder, Excel Technology International Holdings Limited, offered to buy our Company's shares in Net Fun at our pro rata share of Net Fun's net asset value. Although we declined the offer, it would be appropriate that this should be regarded as a market valuation on our investment in Net Fun, which should be revalued in the Company's accounts accordingly.
P & S International ("P & S")
P & S is involved in the development of semiconductor chips for connecting appliances and equipment with the Internet. Owing to slow market response and lack of further funding, its operations in the U.S.A. has been closed. With only limited resources now available in its base in Wuhan, China, P & S is not expected to achieve its original business plans. Therefore, the Directors have proposed to write off the total value of this investment.
UFO Solutions Limited ("UFO")
The Company has acquired certain iAsia shares through UFO. Subsequent to this transaction, UFO has remained inactive. Termination of UFO will be considered before the end of 2002 if no concrete opportunities for any alternative business arise. No provision by the Company is expected to be required upon dissolution of UFO.
ecAgent.com Limited ("ecAgent")
The project terminated in 2001. The Company has now taken 100% control of ecAgent and its cash balance of approximately HK$8.4 million (approximately
£700,000). ecAgent is being dissolved and its remaining cash will be absorbed into the Company's cash reserve. No further provision by the Company is expected to be required upon dissolution of ecAgent.
iBASE Holdings Limited ("iBASE")
iBASE provides IT and e-business solutions to companies in Greater China. It is currently running on a minimal scale and its growth prospect is very limited. The soccer website operated by iBASE, Goal4u, has also been terminated. This investment was written off in our accounts at the end of 2001.
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enterpriseAsia plc
Consolidated Profit and Loss Account
|
Unaudited
6 months ended
30
June
2002
GBP |
Unaudited
6 months ended
30 June 2001
GBP |
Year Ended
31 December 2001
GBP |
|
|
|
|
|
Turnover |
|
|
|
| Gain on disposal of investment |
-
|
- |
23,606 |
| |
|
|
|
| Administration costs |
(437,810) |
(367,578) |
(849,688) |
| Provision for diminution in value of investment |
(6,243,485) |
- |
(494,614) |
|
________ |
________ |
________ |
| |
|
|
|
| Other operating income |
22,082 |
5,979 |
38,722 |
|
________ |
________ |
________ |
| Operating
loss |
(6,659,213) |
(361,599) |
(1,282,780) |
| |
|
|
|
| Other interest receivable and similar income |
50,841 |
77,788 |
105,974 |
|
________ |
________ |
________ |
| Loss for the period before taxation |
(6,608,372) |
(283,811) |
(1,176,806) |
| |
|
|
|
| Taxation |
-
|
- |
- |
| |
________ |
________ |
________ |
Loss for the period after taxation |
(6,608,372) |
(283,811) |
(1,176,806) |
|
======== |
======== |
======== |
| Basic loss per share |
|
|
|
| |
(2.758)p |
(0.118)p |
(0.491)p |
|
======== |
======== |
======== |
|
| enterpriseAsia plc |
| Consolidated
balance sheet |
|
Unaudited
As at
30 June 2002
GBP |
|
|
|
|
| Tangible fixed assets |
8,142 |
9,008 |
| Fixed asset investments |
2,642,635 |
8,655,9 |
| |
________ |
________ |
|
2,650,777 |
8,664,931 |
| Current assets |
|
|
| Debtors |
96,364 |
71,105 |
| Investments |
697,575 |
1,149,334 |
| Bank |
1,102,190 |
1,276,848 |
|
_________ |
________ |
|
1,896,129 |
2,497,287 |
| |
|
|
| Current liabilities |
(52,152) |
(59,092) |
|
________ |
________ |
| Net current assets |
1,843,977 |
2,438,195 |
|
________ |
________ |
| Total assets less current liabilities |
4,494,754 |
11,103,126 |
|
========= |
========= |
| Creditors: amounts falling due after more than one year |
(1,343,077) |
(1,343,077) |
|
________ |
________ |
|
3,151,677 |
9,760,049 |
|
========= |
========= |
| Called-up share capital |
2,395,985 |
2,395,985 |
| Share premium account |
9,175,770 |
9,175,770 |
| Profit & loss account |
(8,420,078) |
(1,811,706) |
|
_________ |
________ |
| Equity shareholders funds |
3,151,677 |
9,760,049 |
|
========= |
========= |
| Net asset value per Ordinary Share: |
|
|
| Basic |
1.315p |
4.074p |
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===== |
===== |
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|
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enterpriseAsia plc
Consolidated cash
flow statement
|
|
|
|
|
| |
|
|
|
| Net Cash Outflow from Operating Activities |
|
|
|
| Operating
loss |
(6,659,213) |
(361,599) |
(1,282,780) |
| Depreciation of tangible assets |
2,311 |
1,453 |
3,207 |
| Decrease/(Increase) in debtors |
(25,259) |
13,630 |
(32,893) |
| Increase/(Decrease) in creditors |
(6,940) |
19,703 |
7,875 |
| Provision for diminution in value of investment |
6,243,485 |
- |
494,614 |
| Exchange (gain) / loss on investments |
33,548 |
- |
(46,093) |
| Gain on disposal of investment |
- |
- |
(22,800) |
| |
________ |
________ |
________ |
| Net cash outflow from operation activities |
(412,068) |
(326,813) |
(878,870) |
| |
|
|
|
| Returns on Investments and Servicing of Finance |
|
|
|
| Interest received |
50,841 |
77,788 |
105,974 |
|
|
|
|
| Investing Activities |
|
|
|
| Payment to acquire tangible fixed assets: |
(1,445) |
(4,077) |
(7,732) |
| |
|
|
|
| Payments to acquire fixed asset investments |
(230,197) |
(1,396,335) |
(1,534,210) |
| |
|
|
|
| Loan from an investee company |
418,211 |
- |
- |
|
________ |
________ |
________ |
| Decrease in cash balances |
(174,658) |
(1,649,437) |
(2,314,838) |
| |
========= |
========= |
========= |
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|
|
|
| Reconciliation of net cash flow to movement in funds |
|
|
|
| Decrease in cash in period |
( 174,658) |
( 1,649,437) |
( 2,314,838) |
|
________ |
________ |
________ |
| Movement in net funds in period |
(174,658) |
(1,649,437) |
(2,314,838) |
| Opening net funds |
1,276,848 |
3,591,686 |
3,591,686 |
|
________ |
________ |
________ |
| Closing net funds |
1,102,190 |
1,942,249 |
1,276,848 |
|
========= |
========= |
========= |
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enterpriseAsia plc
Consolidated interim Announcement - Notes
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| 1. |
The information relating to the six month periods ended 30 June 2001 and 30 June 2002 is
unaudited. The information relating to the year ended 31 December 2001 is extracted from the audited accounts of the Company which have been filed at Companies House and on which the auditors issued an unqualified opinion. |
| 2. |
The above financial information does not constitute statutory accounts within the meaning of Section 240 Companies Act 1985. |
| 3. |
The above financial information was approved by the Board of Directors on 30 September, 2002. |
| 4. |
Loss per share is based on the number of shares in issue during the period ended 30 June 2002 of 239,598,496 (2001: 239,598,496). |
| 5. |
Unquoted
investments have been valued at cost less impairment losses
for any permanent diminution in value. |
| 6. |
The Directors' direct and beneficial interests in the Company's share capital at 30 June 2002 is as follows:-
Peter So
Benjamin Ng
Phillip Brown
Philip Lam
|
20,000,000
400,001
10,000,000
0
|
| (i) |
startIT.com plc
("startIT") holds 10,000,000 enterpriseAsia plc
("enterpriseAsia") ordinary shares. Peter So and Phillip Brown are directors of
startIT. Vintage Investments Limited (of which Peter So and Phillip Brown are both directors and shareholders) holds 5,000,000 startIT ordinary shares. |
| (ii) |
Clarest Holdings Limited (of which Peter So is a director and shareholder) holds 10,000,000 enterpriseAsia ordinary shares and is also a shareholder of Vintage Investments Limited. |
|
| 7. |
The Directors hold the following options over ordinary shares of 1p each in the Company at 30 June 2002 :-
| Director |
Option Scheme |
Number of options |
Exercise Price |
Exercise period |
| Peter So |
Unapproved |
200,000 |
5p |
To 7 February 2010 |
| Benjamin Ng |
Unapproved |
400,000 |
5p |
To 7 February 2010 |
| Phillip Brown |
Unapproved |
200,000 |
5p |
To 7 February 2010 |
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enterpriseAsia plc
INDEPENDENT REVIEW REPORT
Introduction
We have been instructed by the company to review the financial information for the six months ended 30 June 2002 set out on pages 5 to 8, and we have read the other information contained in the interim report for any apparent misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where changes, and the reason for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data, and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30th June 2002.
PRIDIE BREWSTER
Carolyn House
29-30 Greville Street
London
EC1N 8RB
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