The principal components of the Group's provision for deferred taxation liabilities are as follows:
There was no significant unprovided deferred tax in respect of the period (1996: Nil).
The revaluation surplus arising on the revaluation of the Group's leasehold land and buildings does not constitute a timing difference and consequently, the amount of potential deferred tax thereon has not been quantified.
During the period, the following changes in the Company's share capital took place:
(a) A total of 5,500,815 new ordinary shares of HK$0.10 each were issued, of which 5,500,000 shares were issued at HK$0.66 per share and 815 shares were issued at HK$1.22 per share, upon the exercise of share options and warrants respectively as set out below.
(b) A total of 772,000 ordinary shares of HK$0.10 each were repurchased on The Stock Exchange of Hong Kong Limited at an aggregate consideration of HK$864,640. These shares were subsequently cancelled and the premium of HK$787,440 paid thereon was debited to the share premium account. At the same time, an amount of HK$77,000 was transferred from retained profits to the capital redemption reserve as set out in note 22 to the financial statements.
Share options
Pursuant to a share option scheme approved by the shareholders on 21st July, 1995, the directors may at their discretion grant options to any employees of the Group, including executive directors of the Company and its subsidiaries to subscribe for shares in the Company. The maximum number of shares which may be granted under the scheme shall not exceed 10% of the nominal amount of the issued share capital of the Company. The subscription price of the option granted under the scheme is the higher of the amount which the directors may at their discretion determine to be not less than 80% of the average of the closing price of the Company's shares on The Stock Exchange of Hong Kong Limited, for the five business days immediately preceding the date on which an option is granted or the nominal value of the shares.
At the beginning of the period, the Company had outstanding share options granted in accordance with the terms of the scheme entitling the holders thereof to subscribe for a total of 5,500,000 ordinary shares of HK$0.10 each in the Company at an exercise price of HK$0.66 per share. Such options were fully exercised during the period with proceeds of HK$3,630,000. No options were granted during the period and the Company had no outstanding share options at the balance sheet date.
Warrants
At the beginning of the period, the Company had 80,000,000 outstanding warrants entitling the registered holders to subscribe in cash for fully paid ordinary shares of HK$0.10 each in the Company at an exercise price of HK$1.22 per share (subject to adjustment).
During the period, 815 outstanding warrants were exercised resulting in the issue of 815 ordinary shares of HK$0.10 each in the Company. The balance of the warrants outstanding at the beginning of the period expired on 7th August, 1997.
During the period, the Company issued 86,000,000 warrants entitling the registered holders to subscribe in cash at any time on or before 31st December, 1998 for fully paid ordinary shares of HK$0.10 each in the Company at an exercise price of HK$0.65 per share (subject to adjustment) up to the aggregate amount of HK$55,900,000. The warrants were issued at HK$0.30 each for an aggregate cash consideration of HK$24,358,000, net of issue expenses of HK$1,442,000. The net proceeds were credited to the warrant subscription reserve and were intended to be used as working capital of the Group. None of these warrants were exercised during the period. Under the present capital structure of the Company, the exercise in full of such warrants would result in the issue of 86,000,000 additional ordinary shares for aggregate proceeds before expenses, of approximately HK$55,900,000.
The contributed surplus of the Company represents the excess of the fair value of the shares of the subsidiaries acquired pursuant to the Group reorganisation, over the nominal value of the Company's shares issued in exchange.
Under the Companies Act 1981 of Bermuda (as amended), the contributed surplus of the Company is distributable to shareholders in certain circumstances.
(a) Reconciliation of operating profit to net cash inflow from operating activities
(b) Analysis of changes in financing during the period/year
The Company had no significant commitments at the balance sheet date (1996: Nil).
During the period, the Group purchased finished goods amounting to HK$14,614,000 (1996: HK$11,106,000) from an associated company, Golden Bright Manufacturing Company Limited, in which Mr. Yau Tak Wah, Paul and Mr. Tam Ping Wah, directors of the Company, were interested as common directors.
The directors believe that the above transactions were conducted at rates approximating normal commercial terms.
Pursuant to the directors resolution on 29th April, 1997, the Group changed its financial year end reporting date from 31st October to 31st December in order to have a coterminous accounting date among all group companies.
Certain comparative amounts have been reclassified to conform with the current period's presentation.
The financial statements were approved by the board of directors on 8th May, 1998.