<PAGE> 1
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 JUNE 30, 1998
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 INCORPORATION OR ORGANIZATION) (IRS EMPLOYER NO.)
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 __
AS OF JUNE 30, 1998, 4,305,960 SHARES OF COMMON STOCK OF THE REGISTRANT
WERE OUTSTANDING.
<PAGE> 2
MAN SANG HOLDINGS, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as at
June 30, 1998 and March 31, 1998.........................F-1
Consolidated Statements of Income and
Comprehensive Income for the three months
ended June 30, 1998 and 1997.............................F-3
Consolidated Statements of Cash Flows for
the three months ended June 30, 1998 and 1997............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
PART II - OTHER INFORMATION...................................................4
SIGNATURES
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts expressed in thousands except share data)
<TABLE>
<CAPTION>
JUNE 30, 1998 MARCH 31, 1998
-------- -------- --------
US$ HK$ HK$
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents 8,913 68,895 83,918
Restricted cash 416 3,214 9,525
Accounts receivable, net of allowance for doubtful 6,969 53,874 52,195
accounts of HK$2,498 as of June 30, 1998 and
HK$1,977 as of March 31, 1998
Inventories
Raw materials 465 3,595 1,421
Work in progress 5,718 44,198 43,876
Finished goods 15,183 117,365 109,198
-------- -------- --------
21,366 165,158 154,495
Prepaid expenses 156 1,203 2,429
Other current assets 923 7,135 14,563
-------- -------- --------
Total current assets 38,743 299,479 317,125
Long-term investments 702 5,430 5,430
Property, plant and equipment 13,625 105,325 61,853
Accumulated depreciation (1,596) (12,337) (11,142)
-------- -------- --------
12,029 92,988 50,711
Real estate investment 4,222 32,638 32,638
Accumulated depreciation (351) (2,716) (2,554)
-------- -------- --------
3,871 29,922 30,084
-------- -------- --------
Total assets 55,345 427,819 403,350
======== ======== ========
</TABLE>
F-1
<PAGE> 4
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET(UNAUDITED) - CONTINUED
(Amounts expressed in thousands except share data)
<TABLE>
<CAPTION>
JUNE 30, 1998 MARCH 31, 1998
------- -------- --------
US$ HK$ HK$
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings 231 1,784 2,084
Current portion of long-term debt
Secured bank loans 735 5,679 3,179
Capital lease obligations 34 262 255
------- -------- --------
769 5,941 3,434
Accounts payable 1,027 7,940 3,887
Accrued payroll and employee benefits 370 2,857 2,922
Other accrued liabilities 1,135 8,774 8,937
Income taxes payable 457 3,531 3,586
------- -------- --------
Total current liabilities 3,989 30,827 24,850
Long-term debt
Secured bank loans 4,134 31,955 18,791
Capital lease obligations 62 482 551
------- -------- --------
4,196 32,437 19,342
Minority interests 11,805 91,252 88,944
Stockholders' equity:
Common stock, par value US$0.001 4 33 33
- authorized: 25,000,000 shares;
issued and outstanding: 4,305,960 shares
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$19,325))
Series B convertible preferred stock, par value US$0.001 -- -- --
- authorized: 100,000 shares; no shares outstanding
Additional paid-in capital 12,144 93,875 93,627
Retained earnings 23,278 179,942 176,808
Foreign currency translation adjustments (71) (548) (255)
------- -------- --------
Total stockholders' equity 35,355 273,303 270,214
------- -------- --------
Total liabilities and stockholders' equity 55,345 427,819 403,350
======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-2
<PAGE> 5
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30
(Amounts expressed in thousands except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
1998 1997
------------------------------------------------------------
US$ HK$ HK$
<S> <C> <C> <C>
Net sales 6,712 51,887 67,021
Cost of goods sold (4,312) (33,333) (40,391)
---------------------- ---------------- ------------------
Gross profit 2,400 18,554 26,630
Rental income, gross 149 1,150 1,459
---------------------- ---------------- ------------------
2,549 19,704 28,089
Selling, general and administrative expenses
- Pearls (1,790) (13,833) (13,294)
- Real estate investment (110) (848) (772)
---------------------- ---------------- ------------------
Operating income 649 5,023 14,023
Non-operating items
- Interest expense (137) (1,062) (1,329)
- Gain on sales of property, plant and equipment 0 0 8,421
- Interest income 74 575 160
- Other income 21 160 165
---------------------- ---------------- ------------------
Income before income taxes and minority interest 607 4,696 21,440
Provision for income taxes (11) (82) (881)
---------------------- ---------------- ------------------
Income before minority interest 596 4,614 20,559
Minority interest (191) (1,480) 0
---------------------- ---------------- ------------------
Net income 405 3,134 20,559
Other comprehensive income, before tax
- Foreign currency translation adjustments (38) (293) (67)
- Income tax expense 0 0 0
---------------------- ---------------- ------------------
Other comprehensive income, net of tax (38) (293) (67)
---------------------- ---------------- ------------------
Comprehensive income 367 2,841 20,492
====================== ================ ==================
Basic earnings per common share 0.09 0.73 4.78
====================== ================ ==================
Diluted earnings per common share 0.09 0.66 4.78
====================== ================ ==================
Weighted average number of shares of
of common stock
- for basic earnings per share 4,305,960 4,305,960 4,304,862
====================== ================ ==================
- for diluted earnings per share 4,721,408 4,721,408 4,304,862
====================== ================ ==================
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-3
<PAGE> 6
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30
(Amounts expressed in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
1998 1997
---------------------- -------
US$ HK$ HK$
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income 405 3,134 20,559
Adjustments to reconcile net income to net cash
used in operating activities:
Provision for doubtful debts 67 520 136
Compensation expense 153 1,184 0
Depreciation and amortization 179 1,384 1,024
Loss (gain) on sale of property, plant and equipment 0 1 (8,423)
Minority interests 191 1,480 0
Changes in operating assets and liabilities:
Accounts receivable (284) (2,199) (3,117)
Inventories (1,392) (10,760) (17,109)
Prepaid expenses 158 1,225 (181)
Other current assets (274) (2,123) (1,352)
Income taxes receivable 0 0 15
Accounts payable 525 4,054 (2,785)
Accrued payroll and employee benefits (8) (63) 1,020
Other accrued liabilities (20) (156) 705
Income taxes payable (7) (55) 464
------- ------- -------
Net cash used in operating activities (307) (2,374) (9,044)
------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (4,394) (33,967) (377)
Decrease in restricted cash 816 6,311 0
Proceeds from sale of property, plant and equipment 0 1 11,007
------- ------- -------
Net cash (used in) provided by investing activities (3,578) (27,655) 10,630
------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of bank overdrafts (350) (2,702) (93,480)
Repayment of short-term borrowings (621) (4,805) (43,027)
Repayment of long-term debt (569) (4,398) (489)
Increase in bank overdrafts 350 2,702 89,402
Increase in short-term borrowings 583 4,504 43,447
Increase in long-term debt 2,587 20,000 0
------- ------- -------
Net cash provided by (used in) in financing activities 1,980 15,301 (4,147)
------- ------- -------
Net decrease in cash and cash equivalents (1,905) (14,728) (2,561)
Cash and cash equivalents at beginning of period 10,856 83,918 7,689
Exchange adjustments (38) (295) (40)
------- ------- -------
Cash and cash equivalents at end of period 8,913 68,895 5,088
======= ======= =======
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest and financing charges 96 739 1,276
------- ------- -------
Income taxes 18 137 401
------- ------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-4
<PAGE> 7
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
1. INTERIM FINANCIAL PRESENTATION
The interim financial statements are prepared pursuant to the requirements for
reporting on Form 10-Q. The March 31, 1998 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, 1998 ("Fiscal 1998"). 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.
In June 1997, the Financial Accounting Standards Board (the "FASB") issued two
new disclosure standards, i.e., Statement of Financial Accounting Standards
("SFAS") No. 130 and No. 131. Both of these new standards are effective for
financial statements for periods beginning after December 15, 1997 and required
comparative information for earlier years to be restated. Results of operations
and financial position are not affected by implementation of these new
standards.
SFAS No. 130, Reporting Comprehensive Income, establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes in equity
except those resulting from investments by, and distributions to, owners. Among
other disclosures, SFAS No. 130 requires that all items that are required to be
recognized under current accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements.
SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, which supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise, establishes standards for the way that public enterprises
report information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS No. 131
defines operating segments as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance.
In February 1998, the FASB issued SFAS No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits, which amends the disclosure
requirements for pensions and other postretirement benefits. Adoption of the
standard will not significantly change the Company's financial statement
disclosures.
F - 5
<PAGE> 8
2. CURRENCY PRESENTATION AND FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign subsidiaries are translated at period end
exchange rates, while revenues and expenses are translated at average exchange
rates during the period. Adjustments arising from translating foreign currency
financial statements are reported as a separate components of stockholders'
equity. Gains or losses from foreign currency translations are included in
income. 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$7.73 to US$1, the
approximate free rate of exchange at June 30, 1998. Such translations should not
be construed as representations that Hong Kong dollars amounts could be
converted into United States dollars at that rate or any other rate.
3. EARNINGS PER SHARE ("EPS")
EPS is calculated in accordance with SFAS No. 128. Per share data is calculated
using the weighted average number of shares of common stock outstanding during
the period. The reconciliation of the basic and diluted EPS is as follows:
<TABLE>
<CAPTION>
For the Quarter Ended June 30, 1998
(Numerator) (Denominator) EPS
HK$ HK$
<S> <C> <C> <C>
Basic EPS
Net income available
to common stockholders 3,134,078 4,305,960 0.73
====
Effect of dilutive
stock options granted
by the Company - 415,448
--------- ---------
Diluted EPS
Net income available to
common stockholders,
including conversion 3,134,078 4,721,408 0.66
========= ========= ====
</TABLE>
There was no dilutive effect on EPS for the quarter ended June 30, 1997.
The effect on consolidated EPS of dilutive stock options and warrants granted
and issued by Man Sang International Limited ("MSIL"), the Company's subsidiary
listed on The Stock Exchange of Hong Kong Limited, was not included in the
computation of diluted EPS because the exercise prices of such stock options
and warrants were greater than their average market prices.
During the quarter ended June 30, 1998, options granted on September 16, 1997
under the 1996 Stock Option Plan to purchase 100,000 shares of the Company's
Common Stock lapsed following the resignation of an executive officer.
F - 6
<PAGE> 9
4. SEGMENT INFORMATION
Reportable segment profit or loss, and segment assets are disclosed as follows:
Reportable Segment Profit or Loss, and Segment Assets
<TABLE>
<CAPTION>
Quarter ended June 30
1998 1997
HK$'000 HK$'000
<S> <C> <C>
Revenues from external customers
Pearls 51,887 67,021
Real estate investment 1,150 1,459
------- -------
53,037 68,480
======= =======
Interest expense
Pearls 645 947
Real estate investment 0 183
------- -------
645 1,130
======= =======
Depreciation and amortization
Pearls 834 784
Real estate investment 167 147
------- -------
1,001 931
======= =======
Segment profit
Pearls 4,459 12,482
Real estate investment 302 504
------- -------
4,761 12,986
======= =======
Segment assets
Pearls 319,545 233,694
Real estate investment 29,922 25,869
------- -------
349,467 259,563
======= =======
Capital expenditure for segment assets
Pearls 1,050 377
Real estate investment 0 0
------- -------
1,050 377
======= =======
</TABLE>
F - 7
<PAGE> 10
The reportable segments are identified on the basis of nature of products and
services.
Reconciliation of Reportable Segment Revenues
Profit or Loss, and Assets
<TABLE>
<CAPTION>
Quarter ended June 30
1998 1997
HK$'000 HK$'000
<S> <C> <C>
REVENUES
Total revenues for reportable segments 53,037 68,480
======== ========
Total consolidated revenues 53,037 68,480
======== ========
PROFIT OR LOSS
Total profit for reportable segments 4,761 12,986
Interest Income 575 160
Other income 160 165
Gain on sales of
property, plant and equipment -- 8,421
Corporate expenses:
- interest expense (417) (199)
- depreciation and amortisation (383) (93)
-------- --------
Income before income taxes and minority interest 4,696 21,440
======== ========
ASSETS
Total assets for reportable segments 349,467 259,563
Corporate assets 78,352 24,648
-------- --------
Consolidated total 427,819 284,211
======== ========
</TABLE>
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:
Quarter ended June 30
1998 1997
HK$'000 HK$'000
Net sales:
Hong Kong 11,661 13,057
Export:
Asian countries excluding Hong Kong 7,720 16,971
North America 12,997 15,252
Europe 17,752 18,028
Others 1,757 3,713
------ ------
51,887 67,021
====== ======
F - 8
<PAGE> 11
**A majority of sales (by dollar amount) in Hong Kong are for re-export to North
America and Europe.
The Company operates in only one geographic area. The location of the Company's
identifiable assets is as follows:
June 30, 1998 March 31, 1998
HK$'000 HK$'000
Hong Kong 340,253 319,191
Other regions of China 87,566 84,159
-------- --------
427,819 403,350
======= =======
6. DISCLOSURE ABOUT MAJOR CUSTOMERS
A substantial percentage of the Company's sales is made to a small number of
customers and is typically on an open account basis. In no periods did sales to
any one customer account for 10% or more of total sales.
7. SIGNIFICANT EVENT
In February 1998, the Company entered into an Agreement for Sale and Purchase to
purchase certain real property located at Flat B on the 20th Floor of The
Mayfair, One May Road, Hong Kong, for HK$39,732,200. The Company closed such
purchase on April 8, 1998, and intends to hold such property on a long-term
basis and use it as the Vice Chairman's residence.
F - 9
<PAGE> 12
ITEMS 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 involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements.
RESULTS OF OPERATIONS
Net sales during the quarter ended June 30, 1998 totalled HK$51.9 million,
representing a 22.6% decrease, compared to net sales of HK$67.0 million during
the same period in 1997. The decrease in net sales was attributable at least in
part to the following:
- - During the quarter ended June 30, 1997, the economic performance of the
countries in the Asia Pacific region was strong, and consumer
confidence and consumption power was high;
- - During the quarter ended June 30, 1998, the economic performance and
prospects of, and consumer confidence in, the Asia Pacific region, has
declined significantly. Demand decreased, especially from Asian
customers, during the quarter ended June 30, 1998, partly because the
weakness in the Asian economies has reduced purchaser confidence, and
partly because the Company's sales are denominated in U.S. dollars and
hence its products are more expensive in local currency terms to almost
all its Asian customers;
- - It appears to the Company that the weak Asian economies may have also
caused the North American and European buyers to become more
conservative in their purchases; the Company's sales in those two
regions decreased slightly in the quarter ended June 30, 1998 as
compared to the same period in 1997. In the Company's past experience,
more purchasers from North America and Europe would attend major
international jewellery trade shows held in Hong Kong in September and
March; therefore, the Company plans to continue its increased efforts
to market pearls and jewellery products to customers in those parts of
the world.
There can be no assurance that the weakness in the Asian economies will not
spread to other parts of the world, or that demand from North America and Europe
will not weaken. Therefore, the results of any interim period are not
necessarily indicative of the results that might be expected during a full year.
The Management's Discussion and Analysis should be read in conjunction with the
condensed consolidated financial statements and notes thereto included elsewhere
in this Form 10-Q and in the Company's annual report on Form 10-K for the year
ended March 31, 1998.
Gross profit for the quarter ended June 30, 1998 decreased by HK$8.1 million,
representing a 30.3% decrease over the gross profit of HK$26.6 million for the
same period in 1997. As a percentage of net sales, gross profit decreased from
39.7% for the quarter ended June 30, 1997 to 35.8% for the same period in 1998.
The drop in gross profit margin was attributable to increased prices of raw
Chinese cultured pearls, and increased sales discount (mainly to buyers
- 1 -
<PAGE> 13
from Asian countries). Due to poor harvests of cultured pearls in Japan, there
has been an increase in demand for, and therefore an increase in the prices of,
Chinese cultured pearls. The decrease in gross profit resulted from the
decrease in both net sales and gross profit margin.
Gross rental income for the quarter ended June 30, 1998 decreased by HK$0.3
million or 21.2% from HK$1.5 million for the same period in 1997. The decrease
in gross rental income was due to economic weakness in Asia which in turn
adversely affected the occupancy rate in the Man Sang Industrial City facility
located in Shenzhen, the People's Republic of China. The occupancy rate
decreased from 89.0% for the quarter ended June 30, 1997 to 78.4% for the same
period in 1998.
Selling, general and administrative expenses ("SG&A") during the quarter ended
June 30, 1998 totalled HK$14.7 million, consisting of HK$13.8 million
attributable to pearl operations and HK$0.8 million attributable to real estate
operations, compared to HK$14.1 million, consisting of HK$13.3 million
attributable to pearl operations and HK$0.8 million attributable to real estate
operations, during the same period in 1997, an increase of HK$0.6 million, or
4.4%. The increase in SG&A was principally due to increased marketing and
promotion expenses, increased depreciation expense for certain fixed assets
acquired during the quarter ended June 30, 1998, and increased provision for
doubtful debts.
As a percentage of net sales, SG&A for pearl operations increased from 19.8% for
the quarter ended June 30, 1997 to 26.7% for the same period in 1998, while SG&A
for real estate operations increased from 1.2% for the quarter ended June 30,
1997 to 1.6% for the same period in 1998. This was attributable to the decrease
in net sales during the quarter ended June 30, 1998 as compared to the same
period in 1997.
Non-operating income for the quarter ended June 30, 1997 was HK$8.6 million
which was HK$8.4 million higher than that for the same period in 1998. The
non-operating income for the quarter ended June 30, 1997 was principally derived
from the sale of a leasehold property for HK$11.0 million.
Net interest expense decreased by HK$0.7 million, or 58.3%, to HK$0.5 million
from the comparable period in the prior year. The decrease in net interest
expense was due principally to a decrease in the amount of bank borrowings and
an increase in working capital. The Company's average short-term borrowing rate
increased from 9.8% per annum for the quarter ended June 30, 1997 to 10.25% for
the same period in 1998.
Net income for the quarter ended June 30, 1998, decreased by HK$17.4 million to
HK$3.1 million, representing an 84.8% decrease from HK$20.6 million for the same
period in 1997. The decrease was attributable to, among other things, (i) a
decrease in net sales and gross profit margin during the quarter ended June 30,
1998; (ii) a minority interest of HK$1.5 million for the quarter ended June 30,
1998 (which did not exist in the quarter ended June 30, 1997); and (iii)
non-recurrence of a non-operating income of HK$8.4 million during the quarter
ended June 30, 1997. Excluding income taxes and minority interest, the segment
profit from pearls and real estate operations during the quarter ended June 30,
1998 was HK$4.8 million, representing a 63.3% decrease from the segment profit
of $13.0 million during the same period in 1997.
- 2 -
<PAGE> 14
Minority interest arose from MSIL's initial public offering in September 1997 of
127.5 million shares of HK$0.1 each at HK$1.08 per share, with warrants in the
proportion of one warrant for every five shares. After MSIL's IPO, the Company
holds 73.02% of MSIL's total issued and outstanding shares and other investors
(i.e., the minority shareholders) in Hong Kong hold the remaining 26.98%.
MATERIAL CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity needs are to fund accounts receivable and
inventories and, to a lesser extent, to expand its business operations. At June
30, 1998, the Company had working capital of HK$ 268.7 million and a cash
balance of HK$72.1 million, compared to working capital of HK$292.3 million and
a cash balance of HK$93.4 million at March 31, 1998. The decrease in working
capital was attributable to additions of property, plant and equipment. The
current ratio was 9.7 as at June 30, 1998 as compared to 12.8 as at
March 31, 1998.
Long-term debt (including current portion of long-term debt) was HK$38.4 million
at June 30, 1998, an increase of HK$15.6 million compared to that at March 31,
1998. The increase was primarily attributable to an increase of an installment
loan for the acquisition of a real property. The interest rates of the
installment loans ranged from HIBOR + 2.5% to 3.0% where HIBOR represents Hong
Kong Interbank Offered Rate. Part of the risk of interest rate fluctuation in
the installment loans bearing interest at floating rates is hedged by a one-year
interest rate swap agreement ("IRSA") with a notional amount of HK$20 million.
The IRSA maturing on May 11, 1999 converts interest rate exposure from a
floating rate to a fixed rate basis. The gearing ratio was 0.48 at June 30,
1998, as compared to 0.41 at March 31, 1998.
The Company had available working capital facilities of HK$94.5 million in total
with various banks at June 30, 1998. Such banking facilities include letter of
credit arrangements, import loans, overdraft protection and other facilities
commonly utilized in the jewellery business. All such banking facilities bear
interest at floating rates generally based on prime lending rates which are
subject to periodic review. At June 30, 1998, the Company had utilized
approximately HK$1.8 million of its credit facilities with HK$92.7 million
unutilized.
The Company believes that funds to be generated from internal operations and the
existing banking facilities will enable the Company to meet its working capital
requirements in the foreseeable future.
- 3 -
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(A) Exhibits
Exhibit No. Description
10.1 Agreement for Sale and Purchase dated February 24, 1998,
between City Empire Limited and Wealth-In Investment Limited,
a subsidiary of the Company, pursuant to which Wealth-In
Investment Limited purchased certain real property located at
Flat B on the 20th Floor of The Mayfair, One May Road, Hong
Kong, at a purchase price of HK$39,732,200
27.1 Financial Data Schedule
(B) Reports on Form 8-K
None
- 4 -
<PAGE> 16
SIGNATURE
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: August 14, 1998
By: /s/ Patrick Ng
-----------------------------------
Patrick Ng, Chief Financial Officer
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<PAGE> 17
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
10.1 Agreement for Sale and Purchase dated February 24, 1998,
between City Empire Limited and Wealth-In Investment Limited,
a subsidiary of the Company, pursuant to which Wealth-In
Investment Limited purchased certain real property located at
Flat B on the 20th Floor of The Mayfair, One May Road, Hong
Kong, at a purchase price of HK$39,732,200
27.1 Financial Data Schedule
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<PAGE> 1
Dated 7 March 1998
AGREEMENT FOR SALE AND PURCHASE
Flat B on the 20th Floor
of The Mayfair,
No. 1 May Road,
Hong Kong
REGISTERED at the Land Registry by
Memorial No.
on
p.Land Registrar
<PAGE> 2
THIS AGREEMENT is made 7 March 1998
BETWEEN the Vendor and the Purchaser whose particulars are set out in
Schedule 1.
WHEREAS : -
RECITALS
(1) The construction of the Building has been completed and the Occupation
Permit in respect of the Building was issued by the Building Authority
on 14 August 1997.
(2) The Land and the Building are notionally divided into such undivided
parts or shares as hereinafter provided.
NOW IT IS HEREBY AGREED AS FOLLOWS:-
1. Interpretations
(1) In this Agreement including the recitals the following
expressions shall have the following meanings except where the
context otherwise permits or requires:-
(a) "Building" means the 37 storeyed building which has
been constructed on the land and known as "The
Mayfair, No. 1 May Road".
(b) "Common Areas" means such areas of the Building as
may be designated common areas by the Vendor in
accordance with the provisions of the Deed of Mutual
Covenant;
(c) "Deed of Mutual Covenant" means the document to be
registered in the Land Registry by which the rights,
interests and obligations of all or any of the
co-owners of the land and the Building among
themselves are defined.
(c) "Government Grant" means the Government Grant
document specified in Schedule 2.
(d) "land" means all that piece or parcel of land known
and registered in the Land Registry as Inland Lot No.
8410.
- 1 -
<PAGE> 3
(e) "Occupation Permit" means the written permission
issued by the Building Authority under the provisions
of the Buildings Ordinance for the Building to be
occupied and includes a Temporary Occupation Permit.
(f) "Office hours" means 10:00 a.m. to 5:00 p.m. on
weekdays and 10:00 a.m. to 1:00 p.m. on Saturdays.
(g) "Property" means the property described in Schedule
3.
(2) In this Agreement, if the context permits or requires, the
singular number shall include the plural and the masculine
gender shall include the feminine and the neuter.
2. Sale and Purchase
The Vendor shall sell and the Purchaser shall purchase the Property
TOGETHER with the right in common with the Vendor or other person or
persons claiming through, under or in trust for the Vendor to use for
the purpose of access to and egress from the Property the lifts,
entrance hall, staircases and landings in the Building and such of the
passages therein intended for common use and serving the Property and
the appurtenances thereto and TOGETHER with all rights of way (if any)
and other rights and all privileges, easements and appurtenances
thereunto belonging or appertaining AND all the estate, right, title,
interest, property, claim and demand whatsoever of the Vendor in and to
the Property EXCEPTING AND RESERVING unto the Vendor and its successors
and assigns other than the Purchaser:-
(a) the right to the exclusive use, occupation and enjoyment of
the whole of the Building including the external walls (if
any) of the Property SAVE AND EXCEPT: -
(i) the Property; and
(ii) such areas and facilities (if any) as may be
designated as common areas or common parts and
facilities in the Deed of Mutual Covenant or are
intended for common use;
(b) the rights excepted and reserved to the Vendor pursuant to
Clause 3 of Part II of the Second Schedule to the Deed of
Mutual Covenant.
- 2 -
<PAGE> 4
(c) the exclusive and unrestricted right and privilege to grant an
easement in favour of the owners from time to time of the land
known as Inland Lot No. 2363 and the building erected thereon
and their occupiers visitors servants licensees and/or such
other persons as may be approved by the Director of Lands to
use any pedestrian footbridge that may be constructed
connecting the Building with Chatham Path and through the
Common Areas for the purpose of passage to May Road subject to
payment of a licence fee of HK$500 per annum and paying a fair
and reasonable percentage of the costs of repairing and
maintaining the footbridge for a term expiring on 30 June 2047
or on such other terms and conditions as the Vendor shall
determine and/or as may be imposed by the Director of Lands
and to sign and execute any documents in connection therewith
in the name of the Vendor and on behalf of the Purchaser and
the other owners of the Building or without the necessity of
joining in the Purchaser and/or other owners of the Building.
(d) in addition to and without prejudice to the Vendor's rights
easements and privileges reserved in the Deed of Mutual
Covenant the Vendor hereby reserves the right to alter the
building plans and to amend the car park layout plans and the
location and configuration of the car parking spaces whenever
the Vendor considers necessary Provided That the Vendor will
not make any alterations which directly affect the flat
purchased by the Purchaser or the Club Area forming part of
the Common Areas and provided further that the Purchaser's
access and egress to the Property shall not be materially
adversely affected.
3. Purchase Price
(1) The purchase price shall be the sum set out in Schedule 4 and
shall be paid by the Purchaser to the Vendor's solicitors as
stakeholders in the manner set out in Schedule 4.
(2) The Vendor declares that Messrs. Deacons Graham & James are
the Vendor's agents for the purposes of receiving all moneys
payable to the Vendor pursuant to this Agreement including the
balance of the purchase money payable upon completion.
(3) The Vendor further declares that the payment to such agents of
any deposit, instalments of the purchase moneys (if any) and
the balance thereof shall be a full and sufficient discharge
of the Purchaser's obligations hereunder.
- 3 -
<PAGE> 5
(4) The Vendor may revoke the authority of the agents and appoint
other solicitors as agents in their place. No such revocation
shall be valid unless it:-
(a) is in writing address to the Purchaser; and
(b) is delivered to the Purchaser or his solicitors, at
least seven clear days prior to completion; and
(c) specifically identifies this Agreement.
(5) In respect of each payment of the purchase price or any part
thereof required to be made hereunder, the Purchaser shall
deliver to the Vendor's solicitors on the date on which such
payment is required to be made hereunder a cashier order
issued or a cheque certified good for payment by a licensed
bank in Hong Kong in favour of the Vendor's solicitors for the
relevant amount.
(6) Subject to sub-clause (3) but without prejudice to any other
remedy hereunder, the Vendor shall be entitled to demand and
receive payment of interest on the amount of any part of the
purchase price not paid on its due date at the rate of 2% per
annum above the prime rate specified by The Hongkong and
Shanghai Banking Corporation Limited from time to time
calculated from the date on which the same ought to have been
paid by the Purchaser to the date of actual payment.
4. Completion
(1) The sale and purchase shall be completed at the office of
Messrs. Deacons Graham & James of 6th Floor Alexandra House,
Central, Hong Kong during office hours on or before 8 April
1998.
(2) The Vendor and the Purchaser authorise their respective
solicitors to complete the transaction by post on the basis of
cross undertakings in the form from time to time recommended
by the Law Society of Hong Kong with such variations thereto
as they may agree.
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<PAGE> 6
5. Possession
On completion of the sale and purchase, the Vendor and all other
necessary parties (if any) will execute a proper assurance of the
Property to the Purchaser or the Purchaser's nominee or sub-purchaser
free from incumbrances but subject to the Government Grant.
6. Rents, profits, outgoings, etc.
The rents and profits shall be received and all outgoing shall be
discharged by the Vendor up to and inclusive of the actual day of
completion, and as from but exclusive of that day all outgoings shall
be discharged by the Purchaser. All such the rents, profits and
outgoings shall, if necessary, be apportioned between the Vendor and
the Purchaser and paid on completion.
7. Risk
Immediately after the signing of this Agreement, the Property shall as
between the Vendor and the Purchaser be at the Purchaser's risk. The
Purchaser is hereby advised to take out proper insurance coverage on
the Property for his own protection and benefit.
8. Requisition on title
(a) Any requisition in respect of the title shall be delivered in
writing to the Vendor's Solicitors within seven working days
after delivery of the title deeds to the Purchaser's
Solicitors and if no requisition or objection is made within
this period the Purchaser shall be deemed to have accepted the
Vendor's title or waived his right to raise requisitions or
object to the Vendor's title.
(b) If the Purchaser shall make and insist on any objection or
requisition in respect of the title or otherwise which the
Vendor shall be unable or (on the ground of difficulty, delay
or expense or on any other reasonable ground) unwilling to
remove or comply with, the Vendor shall, notwithstanding any
previous negotiation or litigation, be at liberty to cancel
the sale on giving to the Purchaser or his Solicitors by
notice in writing to that effect, in which case unless the
objection or requisition shall have been in the meantime
withdrawn, the sale shall on the expiry of the notice be
cancelled and the Purchaser shall be entitled to a return of
the deposit and other sums of money already paid but without
interest, costs or compensation.
- 5 -
<PAGE> 7
9. Government Grant, easements mis-description
(a) The Property is sold subject to and with the benefit of the
Government Grant, for the term of years created thereby and
with any right of renewal thereby granted and subject to all
easements (if any) subsisting therein.
(b) No error, mis-statement or mis-description shall cancel the
sale nor shall any compensation be allowed in respect thereof
save as otherwise provided in this Agreement and except where
such error, mis-statement or mis-description relates to a
matter materially and adversely affecting the value or user of
the Property.
(c) The Purchaser acknowledge that in making this Agreement he has
not relied on any statement save one in made or confirmed in
writing.
10. Physical Condition
The Purchaser purchases with full knowledge of the physical condition
of the Property and the fittings and finishes therein and takes them as
they stand.
11. Rights of Purchaser
The Purchaser shall at any time before completion of the sale and
purchase be at liberty to:-
(i) sub-sell the Property without any interference or charges by
the Vendor or anyone claiming under or through the Vendor; and
(ii) charge, mortgage or assign the benefit of this Agreement
Provided Always that notice in writing of any such charge,
mortgage or assignment is given to the Vendor or his
Solicitors.
12. Documents of title
Such of the documents of title as relate exclusively to the Property
will be delivered to the Purchaser. All other documents of title in the
possession of the Vendor will be retained by him and he will, if
required, give to the Purchaser a covenant for the safe custody,
production and delivery of copies thereof at the expense of the
Purchaser.
- 6 -
<PAGE> 8
13. Costs and disbursements of Agreement
(a) If the Purchaser shall request the Vendor to execute more than
one assignment in respect of the Property the Purchaser shall
on completion pay the additional costs charged by the Vendor's
solicitors for their approval;
(b) If the Purchaser shall request the Vendor to assign the
Property to his nominee or sub-purchaser the Purchaser shall
on completion pay the additional costs charged by the Vendor's
solicitors for the perusal of any instrument of Nomination or
Sub-Sale Agreement;
(c) Stamp duty, etc.
All stamp duty and registration fees payable on the
provisional agreement or this Agreement (if any) and the
Assignment shall be borne and paid by the Purchaser; and
(d) The professional fees for the plan to be annexed to this
Agreement or the Assignment shall be borne and paid by the
Purchaser.
14. Time of the Essence
Time shall in every respect be of the essence of this Agreement.
15. Default of Purchaser
(a) Should the Purchaser fail to observe or comply with any of the
terms and conditions herein contained or to make the payments
in accordance with Schedule 4 or any interest payable
hereunder, the Vendor may determine this Agreement by notice
in writing to the Purchaser without the need to tender an
assignment to the Purchaser.
(b) Upon the determination of this Agreement pursuant to sub-
clause (a):-
(i) all sums paid by the Purchaser up to 10% of the
purchase price by way of deposit shall be forfeited
to the Vendor; and
(ii) the Vendor shall be entitled to retain the part
payment in the sum set out in Schedule 4 as security
for the payment of compensation of any loss or
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<PAGE> 9
damage suffered by the Vendor arising from such
default until such compensation has been assessed.
(c) Upon determination of this Agreement, the Vendor may resell
the Property either by auction or private contract subject to
such stipulations as the Vendor may think fit and any increase
in price on a resale shall belong to the Vendor. On a resale,
any deficiency in price shall be made good and all expenses
attending such resale shall be borne by the Purchaser and such
deficiency and expenses shall be recoverable by the Vendor as
and for liquidated damages. This clause shall not preclude or
be deemed to preclude the Vendor from making other steps or
remedies to enforce the Vendor's right under this Agreement or
otherwise or recovering in addition to liquidated damages,
damages representing interest paid or lost by him by reason of
the Purchaser's failure.
(d) On execution of the Vendor's right of rescission under this
Agreement the Vendor shall have the right if this Agreement
shall have been registered in the Land Registry to register at
the Land Registry an instrument to rescind the sale of the
Property.
(e) The compensation payable pursuant to Clause 15(b)(ii) may, at
the Vendor's absolute discretion, be assessed by one or more
of the following methods:
(i) by an order or judgement of a competent court in Hong
Kong against the Purchaser for damages for the loss
or damage suffered by the Vendor arising from such
default;
(ii) by obtaining a valuation of the Property as at the
Completion Date and adding the cost of the valuation
plus any additional costs (on a full indemnity basis)
incurred by the Vendor to the difference between the
valuation and the purchase price; or
(iii) by taking the difference in price between the
purchase price and the actual price received by the
Vendor if the Vendor elects to sell the Property plus
any additional costs (on a full indemnity basis)
incurred by the Vendor in respect of such sale.
Upon any such assessment the Vendor may utilise the said part payment
or an appropriate part of it in settlement of the assessed compensation
due to it. The Vendor shall then return the balance of the said part
payment (if any) to the Purchaser.
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<PAGE> 10
16. Default of Vendor
In the event of the Vendor failing to complete the sale in accordance
with the terms and conditions hereof, it shall not be necessary for the
Purchaser to tender an Assignment to the Vendor for execution before
taking proceedings to enforce specific performance of this Agreement.
17. Vacant Possession
Vacant possession of the Property shall be given by the Vendor to the
Purchaser on completion.
18. DMC
On completion of the sale and purchase the Purchaser shall EITHER enter
into a Deed of Mutual Covenant and if thought appropriate by the Vendor
a Management Agreement with the Vendor to define their respective
rights and obligations of and in the land and the Building and to make
provisions for the management of the Building OR at the Vendor's option
accept an Assignment of the Property from the Vendor subject to and
with the benefit of a Deed of Mutual Covenant and a Management
Agreement (if any) entered into by the Vendor with another purchaser or
purchasers in respect of the land and the Building.
19. Cost of DMC
The Purchaser shall pay to Messrs. Deacons Graham & James a due
proportion of the costs of and incidental to the preparation stamping
registration and completion of the above mentioned Deed of Mutual
Covenant and Management Agreement (if any) or the entire costs of a
certified copy thereof in accordance with the scale of costs prescribed
in the Solicitors (General) Costs Rules.
20. Adjustment of undivided Shares
The Vendor hereby expressly reserves the right to adjust the number of
undivided shares into which the land and the Building shall be
notionally divided and the fraction which each share bears to the whole
Provided That such adjustment shall not:-
(a) have the effect of increasing the contributions to the
management expenses payable by the Purchaser by more than 5%;
or
- 9 -
<PAGE> 11
(b) affect the Purchaser's sole and exclusive right and privilege
to hold use occupy and enjoy the Property.
21. Utility deposits
Before being entitled to possession of the Property the Purchaser
shall:-
(a) reimburse the Vendor a due proportion of any deposits paid by
the Vendor for the supply of water, electricity and gas (if
any) to the common parts of the Building; and
(b) pay to the Vendor or the manager of the Building all the
deposits and advance payments payable under the Deed of Mutual
Covenant and the deposit for the removal of debris left by the
Purchaser, his agents or contractors.
22. Covenant in assignment
The assignment to the Purchaser shall contain the following covenant:-
"The Purchaser covenants with the Vendor (which expression shall
include its successors assigns (other than the Purchaser) and
attorneys) for the purpose of enabling the Vendor to exercise all or
any of the covenants, rights, liberty, privileges, entitlements,
exceptions and reservations granted under Clause 3 of Part II of the
Second Schedule to the Deed of Mutual Covenant and Management Agreement
dated the [ ] day of [ ] 19[ ] relating to Inland Lot No. 8410 ("the
Deed of Mutual Covenant and Management Agreement") and under this
Assignment and to the intent that these covenants shall run with the
Property and be binding on the Purchaser his executors administrators
successors in title and assigns and the owner or owners thereof for the
time being and any other person or persons deriving title under the
Purchaser (each and all of whom including the Purchaser is and are
hereinafter included in the expression "the Covenanting Purchaser") and
shall ensure for the benefit of the Building and be enforceable by the
Vendor and its successors and assigns that:-
(a) the Covenanting Purchaser grants confirms and acknowledges the
covenants, rights, liberty, privileges, entitlements,
exceptions and reservations granted and conferred on the
Vendor under Clause 3 of Part II of the Second Schedule to the
Deed of Mutual Covenant and Management Agreement and under
this Assignment and the Covenanting Purchaser shall not do or
permit anything to be done which will in any way affect or
hinder the exercise of the said covenants,
- 10 -
<PAGE> 12
rights, liberty, privileges, entitlements, exceptions and
reservations by the Vendor;
(b) the Covenanting Purchaser shall, if required by the Vendor, do
everything necessary, including giving express consents in
writing to the exercise of the said covenants, rights,
liberty, privileges, entitlements, exceptions and reservations
by the Vendor, to facilitate the exercise of the said
covenants, rights, liberty, privileges, entitlements,
exceptions and reservations by the Vendor;
(c) the Covenanting Purchaser hereby expressly and irrevocably
appoints the Vendor to be his attorney (with full power of
substitution and delegation and, who may act through such
officers, employees, agents, nominees and any substitute
attorneys as the Vendor from time to time appoint) and grants
unto the Vendor the full right power and authority to give all
consents and to do all acts deeds matters and things and to
execute and sign seal and as the acts and deeds of the
Covenanting Purchaser deliver such deeds and to sign such
documents or instruments as may be necessary for the exercise
of or incidental to the exercise of the covenants, rights,
liberty, privileges, entitlements, exceptions and reservations
conferred on the Vendor as aforesaid and the Covenanting
Purchaser hereby further covenants to do all acts deeds
matters and things and to execute sign seal and deliver such
deed or deeds and to sign such documents or instruments as may
be necessary to give effect to such appointment and grant and
will ratify and confirm all that the Vendor shall lawfully do
or cause to be done and that the power of attorney hereby
given shall bind the executor(s) and the administrator(s) and
the successor(s) and the assigns of the Covenanting Purchaser
and shall not be revoked by the Covenanting Purchaser or by
the death incapacity or the winding up (as the case may be) of
the Covenanting Purchaser; and
(d) in the event of the Covenanting Purchaser selling or otherwise
disposing of the Property, the Covenanting Purchaser shall
sell or otherwise dispose of the Property upon the condition
that the purchaser or assignee thereof shall enter into the
same binding covenants on terms similar in scope and extent as
the covenants (a), (b) and (c) hereinbefore contained and this
covenant (d).
PROVIDED that the Covenanting Purchaser complying with performing the
covenant (d) hereinabove contained, the Covenanting Purchaser shall not
be liable for any breach of the covenants (a), (b) and (c) hereinbefore
contained which may happen after the Covenanting Purchaser shall have
sold or otherwise disposed of the Property in respect
- 11 -
<PAGE> 13
whereof such purchaser or assignee shall have entered into such
covenants similar in scope and extent as the covenants (a), (b), (c)
and (d) hereinbefore contained."
23. Registration
This Agreement shall be registered at the Land Registry within 1 month
from the date hereof.
24. Release of purchase money
If and so long as there is a mortgage of or charge on the Property, all
money paid hereunder shall be paid to Messrs. Deacons Graham & James as
stakeholders and shall be applied by them only for the purpose of
obtaining reassignment/release of the Property.
25. Notices
Any notice required to be given hereunder shall be deemed to have been
validly given if addressed to the party to whom the notice is given and
sent by ordinary prepaid post to the address of such party herein
stated or to his last known address if a notification of change of
address has previously been given to the other party or his solicitors
and shall be deemed to have been served on the second business day
after the date of posting.
26. The provisions of Clause 12 shall survive completion of the sale and
purchase by the Assignment.
27. Public Holiday etc.
If the day on which completion of the sale and purchase is to take
place as hereinbefore provided shall fall on a public holiday or on a
day on which Typhoon Signal No. 8 or above is hoisted or Rainstorm
Black Warning is issued at any time between the hours of 9:00am and
5:00pm, completion of the sale and purchase shall be automatically
postponed to the immediately following day which is not a public
holiday and on which no Typhoon Signal No. 8 or above is hoisted or
Rainstorm Black Warning is issued at any time between the hours of
9:00am and 5:00pm.
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<PAGE> 14
28. Marginal Notes
The marginal notes to this Agreement shall not be deemed to be part
hereof and shall not affect the interpretation or construction of this
Agreement.
29. Stamp Duty Ordinance
For the purpose of section 29B(l) and (5) of the Stamp Duty Ordinance,
the matters to be specified are as set out in Schedule 5 hereto.
- 13 -
<PAGE> 15
SCHEDULE 1
(a) Vendor : City Empire Limited
whose registered office is situate at 12th Floor, Tsim Sha Tsui
Centre, Salibury Road, Tsim Sha Tsui, Hong Kong
BR No.: 14786250-000-07
(b) Purchaser : Wealth-In Investment Limited
whose registered office is situate at 21th
Floor, Railway Plaza, 39 Chatham Road South,
Tsimshatsui, Kowloon
BR No.: 21532723
- 14 -
<PAGE> 16
SCHEDULE 2
GOVERNMENT GRANT
(a) Conditions of Exchange No. 12280 as varied on modified by a
Modification Letter dated 14 July 1995 and registered in the Land
Registry by Memorial No. 6359772 and a Modification Letter dated 2
January 1997 and registered in the Land Registry by Memorial No.
6885652.
(b) Parties : (i) City Empire Limited
(ii) District Lands Officer, Hong Kong West on behalf
of the Governor of Hong Kong
(c) Date : 17 November 1993
(d) Term : Commencing on 17 November 1993 and expiring on
30 June 2047
(e) User : private residential purposes
(f) Lot Number : Inland Lot No. 8410
- 15 -
<PAGE> 17
SCHEDULE 3
PROPERTY
All Those 251 equal undivided 17,334 parts or shares of and in the land which
for the purposes of identification is shown on the site plan attached hereto and
thereon coloured pink and of and in the Building TOGETHER with the sole and
exclusive right to the use occupation and enjoyment of ALL THAT FLAT B on the
20th FLOOR of the Building as shown and designated "B" on the Floor Plan hereto
attached and thereon coloured pink.
- 16 -
<PAGE> 18
SCHEDULE 4
PURCHASE PRICE
The purchase price mentioned in Clause 3(l) shall be HK$39,732,000.00 and shall
be paid by the Purchaser to Messrs. Deacons Graham & James as follows :-
(1) an initial deposit of HK$2,000,000.00 has been paid by the Purchaser to
the Vendor on signing of the agreement preliminary to this Agreement.
(2) a further deposit of HK$1,973,200.00 is payable by the Purchaser to the
Vendor's solicitors as stakeholders on or before 24 February 1998.
(3) a part payment of HK$3,973,200.00 is payable by the Purchaser to the
Vendor's solicitors as stakeholder on or before 3 March 1998.
(4) the balance of the purchase price in the sum of HK$31,785,600.00 is
payable by the Purchaser to the Vendor's solicitors as stakeholder on
completion.
- 17 -
<PAGE> 19
SCHEDULE 5
Matters required to be specified under Section 29B(5) of the Stamp Duty
Ordinance:
(a) (1) Name of the Vendor - See Schedule 1
Address/Registered
Office of the Vendor -
(2) Name of the Purchaser - See Schedule 1
Address/Registered
Office of the Purchaser -
(b) (1) Business Registration - See Schedule 1
Number of the Vendor -
(2) Business Registration/Identification Number
of the Purchaser - See Schedule 1
(c) Description and location
of the Property - See Schedule 3
- 18 -
<PAGE> 20
(d) The Property is residential property within the meaning of Section
29A(1) of the Stamp Duty Ordinance.
(e) Date of this Agreement - 7 March 1998
(f) This Agreement was preceded by a provisional agreement on the same
terms made between the same parties on the 20 February 1998.
(g) The agreed date for the conveyance on sale or assignment of the
Property is 8 April 1998.
(h) There is an agreed consideration for the conveyancing on sale or
assignment that is to, or may, take place pursuant to this Agreement
and the amount of the consideration is HK$39,732,000.00.
(i) There is no other consideration which the parties signing this
Agreement know has been paid or given, to any person for or in
connection with this Agreement or any conveyance on sale or assignment
pursuant to this Agreement (excluding legal expenses).
- 19 -
<PAGE> 21
AS WITNESS the hands of the said parties hereto the day and year first above
written.
SIGNED by Robert Lee )
for and on behalf of the Vendor ) /s/ Robert Lee
whose signature is verified by:- )
/s/ Ceri Roderick
Solicitor, Hong Kong, SAR
SIGNED by Cheng Chung Hing )
for and on behalf of the Purchaser ) /s/ Cheung Chung Hing
in the presence of:- )
/s/ Cheung Wai Yee, Betty
Solicitor, Hong Kong, SAR
- 20 -
<PAGE> 22
RECEIVED the day and year first above written )
)
of and from the Purchaser the above mentioned )
)
deposit of DOLLARS ONE MILLION NINE ) HK$1,973,200.00
HUNDRED AND SEVENTY THREE )
THOUSAND AND TWO HUNDRED )
/s/ Messrs. Deacons Graham & James
as stakeholders
- 21 -
<PAGE> 23
[NO. 1 MAY ROAD, H.K. FLOOR PLAN ARTWORK]
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> HONG KONG DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 7.73
<CASH> 72,109,000
<SECURITIES> 0
<RECEIVABLES> 56,372,000
<ALLOWANCES> 2,498,000
<INVENTORY> 165,158,000
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0
1,000
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</TABLE>
