CONDENSED CONSOLIDATED BALANCE SHEET31st March€͊຾ᄲࣨ� - PDF document

2CONDENSED CONSOLIDATED BALANCE SHEET31
2CONDENSED CONSOLIDATED BALANCE SHEET31st March€ÍŠàº¾á„²à£¨€ÊŠá„²à£¨Non-current assetsProperty, plant and equipmentInvestment propertiesInterest in an associateDeferred income tax assetsAvailable-for-sale financial assetsTotal non-current assetsCurrent assetsDue from customers on installationTrade and bills receivablesPrepayments, deposits andother receivablesTotal current assetsCurrent liabilitiesTrade and bills payablesDue to customers on installationCurrent income tax liabilitiesBorrowingsTotal current liabilities331st March€ÍŠàº¾á„²à£¨€ÊŠá„²à£¨Net current assetsTotal assets less current liabilitiesNon-current liabilitiesBorrowingsDeferred income tax liabilitiesTotal non-current liabilitiesNet assets760,259Capital and reservesof the CompanyShare capitalMinority interestsTotal equityfinancial Information.4CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYProfit for the periodChange in fair value ofavailable-for-sale financial assets(1,107)(5

,376)Share option scheme Capital contrib
,376)Share option scheme Capital contributions from aminority shareholder of(4,055)(8,109)shareholder of a subsidiary(611)(391)Currency translation differencesBalance as at 30th September747,770financial Information.5CONDENSED CONSOLIDATED CASH FLOW STATEMENTNet cash generated from/(used in)(46,201)Net cash (used in)/generated from(31,137)(86,273)(19,722)Net decrease in cash and(78,636)(62,501)Cash and cash equivalents asCash and cash equivalents asat 30th September129,485financial Information.6NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION1GENERAL INFORMATIONVan Shung Chong Holdings Limited (the shares of the Company have been listed on the Main Board of The StockExchange of Hong Kong Limited since 18th February 1994. The addressof its registered office is Clarendon House, 2 Church Street, HamiltonVSC Groupprincipally engaged in (i) China Advanced Materials Processing, includingprocessing/manufacturing of industrial products such as rolled flat steelproducts and enclosure systems, and trading of engineer

ing plasticresins, and (ii) Construction
ing plasticresins, and (ii) Construction Materials Group, including stockholding andtrading of construction materials such as steel products, sanitary waresand kitchen cabinets, and installation work of kitchen cabinets.The condensed consolidated interim financial information are presentedin Hong Kong dollars, unless otherwise stated. It has been approved forissue by the Board of Directors on 8th December 2006.ຬන׹ණྠϞࠢʮ̡˜Í‰Ê®Ì¡™Clarendon House, 2͉ʮ̡ʿՉڝ᙮ʮ̡€à­•áˆ˜àº¬à¶±×¹à¶«72BASIS OF PREPARATION AND ACCOUNTING POLICIESThe unaudited condensed consolidated interim financial information forthe six months ended 30th September 2006 has been prepared inaccordance with Hong Kong Accounting Standard 34 Interim Financial issued by the Hong Kong Institute of Certified PublicHKICPAThe unaudited condensed consolidated interim financial informationshould be read in conjunction with the annual financial statements forthe year ended 31st March 2006.The accounting policies are consistent w

ith those as described in theannual fina
ith those as described in theannual financial statements for the year ended 31st March 2006, exceptthat the VSC Group has changed certain of its accounting policiesfollowing its adoption of the new/revised Hong Kong Financial ReportStandards () and Hong Kong Accounting Standards (which are effective from accounting periods beginning on or after 1stJanuary 2006 and relevant to its operations. The changes to the VSCGroups accounting policies and the effect of adopting the new policiesare set out in Note 3 below.࠰ಥึࠇࢪʮึ˜à °à²¥à¸¶à ‡à¢ªÊ®à¸¶™˜Ê•à²‚ৌਕజѓ™83IMPACT OF ADOPTING NEW/REVISED HONG KONGFINANCIAL REPORTING STANDARDS AND HONG KONGACCOUNTING STANDARDSIn 2006, the VSC Group adopted the following HKFRS and HKAS and theimpact on the VSC Groups accounting policies are set out below.HKAS 39 & HKFRS 4 (Amendments) these amendments require issued financial guarantees, other than thosepreviously asserted by the entity to be insurance contracts, to be initiallyrecognised at their fair

value, and subsequently measured at the
value, and subsequently measured at the higherof (a) the unamortised balance of the related fees received and deferred,and (b) the expenditure required to settle the commitment at thebalance sheet date. There is no financial guarantee contract issued atgroup level. For guarantees provided by the Company for bankingfacilities granted to subsidiaries, the effect of adoption is not significantThe following HK(IFRIC)-Interpretations, HKFRS and amendment to HKAShave been issued by the HKICPA but are not yet effective for 2006 andHK(IFRIC)-Interpretation 8, Scope of HKFRS 2, effective fordoes not expect the interpretation to be relevant for the VSCGroup.€à¡Œà ˆ˜à§Œà¨•á‹„ڭΥߒ™j༈ഃࡌࠈ஝֛dʊ೯̈ʘৌਕዄڭ€à¾¼áœ—΋ۃᗇྼމڭᎈΥߒ٫ৰ̮Ú‹Ó‰à¶²Ü²Ê®Ì»à ½á†½€à¨·áƒ§à§Œà¨•à°œÑ“༕ᙑ։ࡰึh࠰ಥ€à¨·áƒ§à§Œà¨•à°œÑ“༕ᙑ։ࡰึÃ‘༕ᙇ˜à °à²¥à§Œà¨•à°œÑ“๟ۆٙᇍఖ™dІɚཧཧ93IMPACT OF ADOPTING NEW/REVISED HONG KONGFINANCIAL REP

ORTING STANDARDS AND HONG KONGACCOUNTING
ORTING STANDARDS AND HONG KONGACCOUNTING STANDARDS (ContÕd)HK(IFRIC)-Interpretation 9, , effective for annual periods beginning on or after 1stJune 2006. Management does not expect the interpretation to berelevant for the VSC Group.Financial instruments: Disclosures, effective for annualperiods beginning on or after 1st January 2007. HKSA 1Capital disclosures, effective for annual periodsbeginning on or after 1st January 2007. The VSC Group assessesthe impact of HKFRS 7 and HKAS 1 (Amendment) and concludesthat the main additional disclosures will be the sensitivity analysis tomarket risk and capital disclosures required by HKAS 1(Amendment). The VSC Group will apply HKFRS 7 and HKAS 1(Amendment) from annual period beginning 1st April 2007.h࠰ಥ€à¨·áƒ§à§Œà¨•à°œÑ“༕ᙑ։ࡰึÃ‘༕ᙑ˜à  à¸­àµ™ÐŸà¨–ɝόࠃ͛ʈՈ™dІɚཧཧh࠰ಥৌਕజѓ๟ۆ˜Ú–ፄʈՈjמᚣ™€à¡Œà ˆÍ‰×žáš£™dІɚཧཧɖϋɓ˜ɓ˚א˸ܝ€à¡Œà ˆÙ™á…‚ᚤdഐሞމ˴ࠅٙᕘ̮מᚣ

€à¡Œà ˆ×”஝֛࿁̹ఙ&#x
€à¡Œà ˆ×”஝֛࿁̹ఙ€à¡Œà ˆ104SEGMENT INFORMATIONPrimary reporting format business segmentsAt 30th September 2006, the VSC Group operates predominately inHong Kong and Mainland China in two business segments:(1)China Advanced Materials Processing ((2)Construction Materials Group (The segment results for the six months ended 30th September 2006 areCAMPOtherCMGoperationsEliminationsTotalҿࣘ̋ʈܔጘҿࣘՉ˼ุਕൗቖᐼᕘ000HK$000HK$000HK$000HK$ɷಥʩɷಥʩɷಥʩɷಥʩɷಥʩExternal sales825,6881,514,6551,929Inter-segment sales(52,128)825,6881,566,7831,929(52,128)2,342,272Segment results38,23762,014(2,460)97,791 net4,3182,5053,80810,631(30,254)Operating profit(18,082)Profit beforeIncome tax expense(14,821)Profit for the period114SEGMENT INFORMATION (ContÕd)Primary reporting format business segments The segment results for the six months ended 30th September 2005 areCAMPOtherCMGoperationsEliminationsTotalҿࣘ̋ʈܔጘҿࣘՉ˼ุਕൗቖᐼᕘ000HK$000HK$000HK$000HK$ɷಥ

ʩɷಥʩɷಥʩɷಥʩɷಥʩExternal
ʩɷಥʩɷಥʩɷಥʩɷಥʩExternal sales753,7651,558,7511,157Inter-segment sales(51,732)753,7651,610,4831,157(51,732)2,313,673Segment results31,16433,21453464,912 net3,1291,3975,1689,694(23,403)Operating profit(20,968)Profit before(4,254)Profit for the period€ášƒ124SEGMENT INFORMATION (ContÕd)Primary reporting format business segments Other segment items included in the income statements are as follows:30th September 2006CAMPOtherCAMPOtherCMGoperationsTotalCMGoperationsTotalҿࣘ̋ʈܔጘҿࣘՉ˼ุਕᐼᕘҿࣘ̋ʈܔጘҿࣘՉ˼ุਕᐼᕘ000HK$000HK$000HK$000HK$000HK$000HK$ɷಥʩɷಥʩɷಥʩɷಥʩɷಥʩɷಥʩɷಥʩɷಥʩDepreciation of property,plant and equipment6,3943,14973810,2816,8331,0162,27910,128101231201326Impairment of goodwillÑÑÑÑtrade receivables1,0644,564151,287Write-down of2,3294,675€ášƒ134SEGMENT INFORMATION (ContÕd)Primary reporting format business segments expenditure for the six months ended 30th September 2006 are asCAMPOtherCMGoperationsUnalloca

tedTotalҿࣘ̋ʈܔጘҿࣘՉ˼ุਕ͊Ê
tedTotalҿࣘ̋ʈܔጘҿࣘՉ˼ุਕ͊ʱৣᐼᕘ000HK$000HK$000HK$000HK$ɷಥʩɷಥʩɷಥʩɷಥʩɷಥʩTotal assets916,368881,78651,22559,9991,909,378Total liabilities461,755598,4153,03540,4191,103,624Capital expenditure15,6051,9892,194The segment assets and liabilities at 31st March 2006 and capitalexpenditure for the six months ended 30th September 2005 are asCAMPOtherCMGoperationsUnallocatedTotalҿࣘ̋ʈܔጘҿࣘՉ˼ุਕ͊ʱৣᐼᕘ000HK$000HK$000HK$000HK$ɷಥʩɷಥʩɷಥʩɷಥʩɷಥʩTotal assets869,860871,85465,98839,5011,847,203Total liabilities369,611716,1581,0441311,086,944Capital expenditure3,8683,4011,177€ášƒ144SEGMENT INFORMATION (ContÕd)Primary reporting format business segments Unallocated cost represents corporate expenses. Inter-segment transfersor transactions are entered into under the normal commercial terms andconditions that would also be available to unrelated third parties.Segment assets consist primarily of property, plant and equipment,leasehold land and land u

se rights, goodwill, interest in an asso
se rights, goodwill, interest in an associate,deferred income tax assets, inventories, receivables, operating assetsexclude investment properties and available-for-sale financial assets.financial instruments). They exclude corporate borrowings.Capital expenditures comprise additions to property, plant andequipment, investment properties, leasehold land and land use rightsand available-for-sale financial assets, including additions resulting fromacquisitions through business combination.Other operations mainly comprise the provision of rental services innot constitute separately reportable segments.€ášƒà®¬eᏐϗሪಛe຾ᐄ༟ପ€ÌÜ¼à ƒÍ›Ú–ፄʈՈÊ¿à¬¤Ú–f຅ʕԨʔܼ̍ҳ༟يุʿʱ௅ࠋවܼ̍຾ᐄࠋව€ÌÜ¼à ƒÍ›Ú–ፄʈf຅ʕԨʔܼ̍Άุ࠾൲f154SEGMENT INFORMATION (ContÕd)Secondary reporting format geographical segmentsThe VSC GroupAnalysis of the VSC Groups sales, total assets and capital expendituresby geographical location are as follows:SalesTotal assetsCapital expendituresá‰

–ਯᐼ༟ପ༟͉˕̈For the sixAs atFo
–ਯᐼ༟ପ༟͉˕̈For the sixAs atFor the sixmonths ended30th30th SeptemberSeptemberMarch࿚Їɘ˜ɧɤ˚˟ʬࡈ˜׵ɚཧཧʬϋHong Kong600,173528,997558,5114,123Mainland China1,713,5001,380,3811,288,69218,6814,3232,342,2722,313,6731,909,3781,847,20319,7888,446Sales is allocated based on the places in which customers are located.Total assets and capital expenditures are allocated based on where theassets are located.165OPERATING PROFITThe following items have been credited/charged to the operating profitCrediting: netInterest incomeSurplus on revaluationof investment propertiesDepreciation of property,Loss on disposals of property,Loss on disposal ofImpairment of goodwilltrade receivablesWrite-down of inventories176FINANCE COSTSrepresent the interest expenses on borrowings.7INCOME TAX EXPENSEHong Kong profits tax has been provided at the rate of 17.5% (2005:17.5%) on the estimated assessable profit for the period. Taxation onoverseas profits has been calculated on the estimated assessable profitfor the period at

the rates of taxation prevailing in the
the rates of taxation prevailing in the countries in whichthe VSC Group operates.Current income tax Hong Kong profits tax Mainland Chinaenterprise income taxDeferred income tax(1,001)Income tax expense8DIVIDENDSA 2006 final dividend of HK1.1 cents (2005 final: HK2.2 cents) perordinary share; totaling approximately HK$4,055,000 (2005 final:HK$8,109,000) was paid on 29th September 2006.A 2007 interim dividend of HK2.2 cents (2006 interim: Nil) per ordinaryshare; totaling approximately HK$8,109,000 (2006 interim: Nil) has beenrecommended by the directors.€Éšà½§à½§ÊžÏ‹jЪ̈ᅡ௪fऎ̮๐лʘ೼ධɗ࣬€Éšà½§à½§ÊžÏ‹Í‹à²‚jಥ̀à²¥Ê©€Éšà½§à½§ÊžÏ‹Í‹à²‚jಥʩÊŠ×µÉšà½§à½§Ê¬Ï‹É˜ËœÉš€Éšà½§à½§Ê¬Ï‹Ê•à²‚jೌà²¥Ê©€Éšà½§à½§Ê¬Ï‹Ê•à²‚jೌ189EARNINGS PER SHAREBasic earnings per share is calculated by dividing the consolidated profitattributable to equity holders of the Company for the six months ended30th September 2006 by the weighted-average number of ordinaryshares in is

sue during the period.Profit attributab
sue during the period.Profit attributable to equity holdersWeighted average number ofordinary shares in issue (Basic earnings per share (HK cents)Diluted earnings per share is calculated by adjusting the weighted-average number of ordinary shares outstanding to assume conversion ofall dilutive potential ordinary shares. The Companys dilutive ordinaryshares arising from share options, for which a calculation is done todetermine the number of shares that could have been acquired at fairvalue (determined as the average annual market share price of thes shares) based on the monetary value of the subscriptionrights attached to outstanding share options. The number of sharescalculated as above is compared with the number of shares that wouldhave been issued assuming the exercise of the share options.Ꮠ˸ʮ̻ᄆ࠽€á”¾à ˆÞ‰Í‰Ê®Ì¡Ù°Î…ʘӊϋ̻ѩ̹ఙٰᄆÏ—ᒅʘٰ΅ʘᅰͦfɪ˖199EARNINGS PER SHARE Profit attributable to equity holdersWeighted average numberof ordinary shares in issue (share options (Weighted

average numberof ordinary shares for dil
average numberof ordinary shares for dilutedearnings per share (Diluted earnings per share (HK cents)The share options are anti-dilutive to the earnings per share for the six€ášƒ€ášƒ2010CAPITAL EXPENDITUREProperty,Leaseholdplant andland andequipmentInvestmentland use rightspropertiesᅀגʿண௪ҳ༟يุɺήԴ͜ᛆਠᚑ000HK000HK000HKɷಥʩɷಥʩɷಥʩɷಥʩ103,19848,00022,7416,775(149)ÑÑÑDepreciation/amortisation(10,281)(231)Disposal of a subsidiary(7,473)ÑÑÑTranslation adjustments104,15748,00025,1736,775103,01271,10023,0918,026Adjustment to purchaseÑÑÑsubsidiary acquiredÑÑÑDepreciation/amortisation(10,128)(326)ÑÑÑ(1,437)Translation adjustments101,10777,48822,8846,775ÑÑÑ(86)(34,288)Depreciation/amortisation(9,778)(334)Translation adjustmentsas at 31st March 2006103,19848,00022,7416,7752111GOODWILLGoodwill is allocated to the VSC Groupidentified according to place of incorporation and business segment.The VSC Grouparose as a consequence of operating loss incurred by the CGU encl

osuresystems in Mainland China.The recov
osuresystems in Mainland China.The recoverable amount of a CGU is determined based on value-in-usecalculations. These calculations use cash flow projections based onfinancial budgets approved by management covering a five-year period.The key assumptions used for value-in-use calculations are gross margin,growth rate and discount rate of 10.0%, 5.0% and 4.9%, respectively.ৣЇຬන׹ණྠତږପ͛ఊЗ˜à¬¤Ú–à¬ªÍ›à°ŠÐ—™2212TRADE AND BILLS RECEIVABLESSales are either (i) covered by letters of credit with bills payable at sight,or (ii) on open account with credit terms of generally 15 to 90 days.Ageing analysis of trade and bills receivables was as follows:31st March 60 days 120 days 180 days 365 daysLess: provision for impairment of trade receivables(17,659)(15,105)729,6152313TRADE AND BILLS PAYABLESPayment terms with suppliers are on letters of credit and open account.Certain suppliers grant credit period ranging from 30 to 210 days.Ageing analysis of the trade and bills payables was as follows:31st Mar

ch 60 days 120 days 180 days 365 days1
ch 60 days 120 days 180 days 365 days186,5962414BORROWINGS31st March Trust receipts bank loans Short-term bank loans Long-term bank loan,Other loan from a minorityshareholder of a subsidiary770,219repayable within one year in the second year in the third to fifth yearscurrent liabilities(7,800)25€Éšà½§à½§Ê¬Ï‹É§Ëœà²¥Ê©15SHARE CAPITALNumber ofNominalsharesvalueٰ΅ᅰͦࠦ࠽000HK$ɷٰɷಥʩAuthorised (Ordinary sharesج֛€ÓŠÙ°à ¦à ½1,000,000100,000As at 31st March 2006 and368,60536,861At no time during the six months ended 30th September 2006 was thereany purchase, sale or redemption by the Company, or any of itss shares.16GUARANTEESAs at 30th September 2006, the VSC Group has given performancebonds in the ordinary course of business amounting to approximatelyHK$2,334,000 (31st March 2006: HK$1,612,000) to third parties.26€Éšà½§à²¥Ê©ÍŠÐ‘ԴʘჃಂ̮€Éšà½§à½§Ê¬Ï‹É§ËœÉ§É¤É“Ëšjߕʩdމڭღຬන׹17COMMITMENTS(a)Commitments under operating leasesTotal commitments

payable under various non-cancellable o
payable under various non-cancellable operatinglease agreements in respect of rented premises were analysed as31st MarchNot later than one year2,373Later than one year and not1later than five years5,929(b)Capital commitmentsCapital commitments in relation to purchase of property, plant and31st Marchprovided for(c)Commitments under forward foreign currency contractsAs at 30th September 2006, the VSC Group had outstandingforward foreign currency contracts to purchase approximatelyUS$74,800,000 (31st March 2006: US$97,400,000) forapproximately HK$577,722,000 (31st March 2006:HK$752,602,000), to cover the VSC Groupfrom its trading activities.2718RELATED-PARTY TRANSACTONSThe following is a summary of significant related party transactions,which were carried out in the normal course of the VSC Group business:(a)Transactions sales made by the VSC Group administrative service fees earnedby the VSC Group interest earned by the VSC GroupiSteelAsia (Hong Kong) Limited (i)ԭݲ፻᚛ཥɿʹ׸ה€à °à²¥Ïžà ¢Ê®Ì¡ admin

istrative services fee earnedby the VSC
istrative services fee earnedby the VSC Group rental earned by the VSC GroupPurchases of goods and services: (ii) purchase of goods by the VSC GroupInterest received/(paid):ʊϗÿ€ÊŠË¹Ð»à¢¹jInterest received from Metal LogisticsInterest paid to Shinsho Corporation 2818RELATED-PARTY TRANSACTONS (a)Transactions(i)Metal Logistics Company Limited and iSteelAsia (Hong Kong) Limitedare wholly owned by North Asia Strategic Holdings Limited, acompany in which the VSC Group has a 6.6% equity interest as at30th September 2006 (31st March 2006: 6.6%).Shinsho Corporation is a minority shareholder of VSC ShinshoCompany Limited, a 70% owned subsidiary of the VSC Group.(b)Period/Year-end balances (included in trade receivables and31st MarchReceivables from Metal LogisticsPayables to Shinsho Corporation (ii)65,288These trade receivables and trade payables are unsecuredand payable according to normal trade terms. These balancesare non-interest bearing, unsecured and repayable accordingto normal commercial terms.€á

šƒáš›à½¥É¿Í´×¸×”€à °à²¥&#
šƒáš›à½¥É¿Í´×¸×”€à °à²¥Ïžà ¢Ê®Ì¡Ñ©€×µÉšà½§à½§Ê¬Ï‹É§ËœÉ§É¤É“Ëšj€àº¬à¶±×¹à¶«à¾ áŠ¹ÏžÚá™®Ê®Ì¡Ê˜É“Зˇᅰٰ؇fಂ͋ÿϋ୞ഐቱ€ÌÜ¼Î¯áÏ—ሪಛʿᏐ˹ሪಛ2918RELATED-PARTY TRANSACTONS (b)Period/Year-end balances (included in trade receivables and(i)Metal Logistics Company Limited and iSteelAsia (Hong Kong) Limitedare wholly owned by North Asia Strategic Holdings Limited, acompany in which the VSC Group has a 6.6% equity interest as at30th September 2006 (31st March 2006: 6.6%).Shinsho Corporation is a minority shareholders of VSC ShinshoCompany Limited, a 70% owned subsidiary of the VSC Group.(c)Key management compensation defined contributionShare option scheme value of services2,499ಂ͋ÿϋ୞ഐቱ€ÌÜ¼Î¯áÏ—ሪಛʿᏐ˹ሪಛ€ášƒáš›à½¥É¿Í´×¸×”€à °à²¥Ïžà ¢Ê®Ì¡Ñ©€×µÉšà½§à½§Ê¬Ï‹É§ËœÉ§É¤É“Ëšj€àº¬à¶±×¹à¶«à¾ áŠ¹ÏžÚá™®Ê®Ì¡Ê˜É“Зˇᅰٰ؇f3019EVENTS AFTER BALANCE SHEET DATE(a)Deemed disposal

of 40% equity interest in a subsidiaryI
of 40% equity interest in a subsidiaryIn October 2006, Ryerson Pan-Pacific LLC (Ryerson LLC), a third-subscribed for 600 new shares of VSC-Ryerson China LimitedVSC-Ryerson China), a subsidiary of the VSC Group,representing 40% of the enlarged share capital of VSC-RyersonChina for approximately HK$222,300,000.(b)Acquisition of 4.9% equity interest in a subsidiaryIn October 2006, the VSC Group completed the acquisition of 4.9%equity interest of CAMP (B.V.I.) Holdings Limited, a subsidiary of theVSC Group, from the minority shareholders at a consideration ofapproximately HK$30,576,000 and recognised a goodwill ofapproximately HK$19,018,000.20SEASONALITYThere is no material seasonality impact on the operations of the VSCGroup.31RESULTSOur continued strategies in creating value for our customers, togetherwith our highly motivated professional team with proven expertise andexperience in value-added processing, supply chain management andtotal solution services contributed to our favorable performance. Ourresults for the first si

x months ended 30th September 2006demons
x months ended 30th September 2006demonstrated significant improvement when compared with that of thesame period of last year. Our sales for the six months ended 30thSeptember 2006 reached HK$2,342 million, a 1.2% increase ascompared with HK$2,314 million for the same period of last year. Ourgross margin increased 2.5 percentage points to 7.8% as compared with5.3% for the same period of last year. Despite upsurge in our selling andprofit reached HK$78 million, a remarkable increase of HK$27 million(an increase of 52.7%) as compared with HK$51 million for the sameperiod of last year. General and administrative expenses increased fromthe same period of last year due mainly to higher salaries and incentivenecessary for motivating initiativeness and good performance. Theincrease in general and administrative expenses also include legal andprofessional fees incurred in the first six months for the transaction withRyerson Inc. (Ryerson). Despite relatively high interest rates during thefirst six months ended 30th September 2006, co

upled with an increasein the VSC Groups
upled with an increasein the VSC Groups trading volume, we still managed to reduce ourfinancing cost through better cash and asset management. Financingcosts for the first six months reduced to HK$18 million, a 14% decreasefrom HK$21 million of the same period of last year.Profit attributed to the equity holders of the Company was HK$42million, which almost doubled the amount of HK$22 million for thesame period of last year.Basic earnings per share increase by 88% to HK11.3 cents as comparedwith HK6.0 cents of the same period of last year. An interim dividend ofHK2.2 cents per share was declared for the period (2005: Nil).˸ᘱᚃમ՟މ܄˒௴ிᄆ࠽ʘഄଫdÔ¨€ÉªÊºÍ´×¸Ï¾à¬ªÍ›Ê˜Ø¬Ü›Ê¿à©™€Éšà½§à½§ÊžÏ‹jೌ32In terms of assets performance, the VSC Groupturns improved from 5.1 times to 8.5 times as compared with the same periodof last year. The VSC Groupfor the first six months ended 30th September 2006 was 59 days whichshowed a modest improvement from that of the same period last year. TheVSC Group str

ives to further improve its average DSO.
ives to further improve its average DSO.Compared with last fiscal year ended 31st March 2006, the VSC Groupassets increased HK$62 million to HK$1,909 million, the VSC Groupreceivables increased HK$62 million whereas the VSC Groupreduced by HK$16 million. During the six months period, the VSC Groupbegan its investment in a new greenfield plant facility in Kunshan.Compared with the financial position at book close of previous fiscal yearended 31st March 2006, the VSC Groupincluding pledged bank deposit, reduced HK$64 million whereas the VSCGroups borrowing reduced HK$43 million. Current ratios improved from 1.5to 1.6, gearing ratios (borrowings net of cash and cash equivalents divided bycapital and reserves attributable to equity holders of the Company)The VSC Groups businesses were primarily transacted in Hong Kong dollar,dollar and RMB, the VSC Group believes its exposure to exchange rate risk isnot material. The VSC Group will continue to match RMB payments with RMBreceipts to minimise exchange exposure.VSC Groups trade fina

ncing remained primarily supported by it
ncing remained primarily supported by its HK$1.3billions bank trading facilities. About 69% of the VSC Groupborrowings were denominated in Hong Kong Dollars, 10% in U.S. Dollars and21% in RMB. These facilities are either secured by VSC Groupunder short-term trust receipts bank loan arrangements and/or with corporateguaranteed provided by VSC.As at 30th September 2006, net assets value of the VSC Group increasedfrom HK$760 million to HK$806 million, equivalent to HK$2.2 per share.ʘ̻ѩ዆᜗Ꮠϗሪಛ඄ᔷ˚ᅰ˜áÏ—ሪಛ඄ᔷ˚ᅰ™Ú–ʿତږഃ࠽€ÌÜ¼ÊŠ×ª×¥áƒ•Ð‘πಛà²¯Ë‡à¼ŸÍ‰à ‹à·€Ë¢à¬Ÿ€à ¾àµ²à²¯à¬¤Ú–ʿତږഃ࠽ৰ˸͉ʮٰ̡ᛆܵϞɛᏐЦ༟͉ʿᎷ௪áªÜµ×µ33As at 30th September 2006, the VSC Group had outstanding performancebonds for its sanitary ware supply projects amounting to approximatelyAs at 30th September 2006, the VSC Group had certain charges on assetswhich included (i) buildings of approximately HK$13 million, leasehold landand land use rights of approximately

HK$13 million and inventories ofapproxi
HK$13 million and inventories ofapproximately HK$20 million pledged for certain of the VSC Groupterm bank loans; (ii) certain inventories were held under short-term trustreceipts bank loan arrangements; (iii) bank deposits of approximately HK$15million were pledged as collateral for the VSC Group(iv) approximately HK$5 million bank deposits in China was restricted asCustoms deposits in Mainland China.REVIEW OF OPERATIONS(1)China Advanced Materials Processing (The VSC Groups CAMP operation comprises of three business unitsengaging in processing of rolled steel in coil (coil centres), manufactureof enclosure systems (VJY) and distribution of engineering plastic resins.For the six months ended 30th September 2006, sales of CAMPincreased by 10% to HK$826 million and segment results increased by23% to HK$38 million.For the period under review, the volatility of the steel price continues toimpact adversely on the market which saw the lower average sellingprice against that of the same period of last year. Sales of the coil centreo

perations decreased by 3% from that of t
perations decreased by 3% from that of the same period of last year. Tosustain continual growth and create shareholders value, the coil centreshave implemented the strategy of creating higher profit margin throughmore selective measures on choosing the best mix of customers andmore focus on delivering value to those key accounts. As a result, theaverage gross margin reached 8.3%, an increase of 1.4 percentage pointwhen compared with 6.9% for the same period of last year.ʕ਷΋ආҿࣘ̋ʈ CAMP੽ԫ՜፻̋ʈ€Õœá»Ê•Ëeӻ୕ண௪̮ಠႡி€àº¬à¾—๕Ê¿Ê±á‰–ʈ೻෧ᇭዓইʘ34In order to deliver our value proposition to our customers as a reliablesupplier, our strategy was to focus on key customers and to buildstrategic relationship. For our mature coil centres in Dongguan andGuangzhou, tonnage sales volume for the first six months ended 30thSeptember 2006 slightly decreased by 6%, due to tighter credit controlmeasure and key account management approach, which also led to 18%reduction in combi

ned trade receivable of the two coil cen
ned trade receivable of the two coil centres, comparewith that of 2005 interim period. And, with our ramping up of capacityin Tianjin and the starting up of business in our Kunshan Coil Centre,total tonnage sold for all the coil centres was 87,194 metric tons, a 10%increase from the same period of last year.increased by HK$3.5 million as compared with the same period of lastyear of HK$14.7 million. The increases were due to the start-up ofKunshan Coil Centre operation as well as increase in importation &transportation expenses commensurate with our growth in tonnage salesvolume. To implement our business strategies for key account focus,improvement on inventory turns and operating profitability, we continueto invest in our human resources including aggressive incentive plan,training and development programs. We are confident that with thesupport from this team of highly dedicated employees, we are in thebest position to offer value proposition to our customers and give them35For the six months ended 30th September 2006, Tia

njin Coil Centrecontinued to ramp up the
njin Coil Centrecontinued to ramp up their plant utilisation and capacity with moretonnage output than the same period last year. Tianjin Coil Centre sold24,832 metric tons during the first six months, a 58% surge from lastyear. The market environment in Northern China is, to certain extent,different from the South. Average production scale of customers overthere is larger than their Southern counterpart. Aimed at a quickermarket entry, Tianjin Coil Centre adopted a more competitive strategy,this coupled with continued market price volatility, gross margin droppedby 0.4 percentage point amid a stiff price competition with a drop inaverage selling price of 19%. The Tianjin Coil Centre will need to worktowards an optimal balance between sales and profit margins, whileThe Guangzhou Coil Centre which is 70% owned by the VSC Group andwas acquired in late March 2004 achieved a total sales tonnage of23,707 metric tons which is 8% less than the same period of last year.Sales decreased from HK$185 million to HK$161 million as a result

offocusing on major key accounts, hence
offocusing on major key accounts, hence forgoing orders from certainminor customers. Despite a softened steel price during the six monthsperiod and drop in sales revenue, Guangzhou Coil Centre maintained astable gross margin.36Dongguan Coil Centre, mainly serving OEM manufacturers of electricalappliances in Pearl River Delta Region. For the first six months of theyear, customers adopted a prudent approach in placing new orders, dueto a hike in prices of raw materials & energy. To address this challenge,Dongguan Coil Centre focused more on higher-end customers who weremore stable with their demands and less price sensitive hence offeredhigher margin. Dongguan Coil Centre sold 35,798 metric tons ofproducts in the first six months, a 5% decrease from that of last year.Sales decreased from HK$266 million to HK$230 million. Compared withthat of the same period of last year, in general, we experienced a drop of7% in price on electro galvanized steel sheets and a drop of 11% oncold rolled steel sheets. Despite the drop in sales a

s a result of the lowersteel prices, Don
s a result of the lowersteel prices, Dongguan Coil Centres gross margin was higher than thatof the same period of last year, mainly due to better product mix andoperational efficiency.In April 2006, the VSC Group incorporated a new wholly ownedsubsidiary in Kunshan, located in Jiangsu Province of China. It isstrategically located in the booming Yangtze River Delta region withclose proximity to many multinational companies. It is a greenfieldproject and construction works have been progressed according toorder to build up market presence and its customer base, the Kunshanteam had already started toll processing business shortly after theircompliance with business and tax registration requirements.37Enclosure Systems Manufacturing (Van Jia Yuen ÒVJYÓ)VJY enclosure systems manufacturing (VJY) set up four years ago is acontract manufacturer for leading high-tech equipment providers/manufacturers such as Huawei, Zhongxing and Emerson. It adds value tocustomers by providing comprehensive steel processing services andsolution to c

ustomer including punching, bending, sta
ustomer including punching, bending, stamping, coating,assembly, technical design and quality control. For the first six months,its sales was HK$99 million, as compared with HK$57 million for thesame period of last year. The segment results contributed to the VSCGroup was better than that of the same period of last year, partly due toits effort in streamlining the operation process and better control of theoperating expenses. VJY offers a higher degree of intensified processingoffering a higher add value to its customers. Such processing requires ahigher degree of technical skill on production process and qualityassurance. We will continue to invest in new technology for broadeningWith the soaring crude oil price, the average selling price of plastic resinsDepartment increases by 35% and segment results contributed to theVSC Group is HK$8 million, a 19% increase over that of the same periodof last year. The department sells a wide range of engineering plasticresins from reputable suppliers such as Samsung Total, Samsung Cheil

,penetrated into the local markets aroun
,penetrated into the local markets around the Pearl River Delta. Arepresentative office in Shanghai was set up to tap into the surgingdemand in the booming Eastern China Region. The Plastic Departmentmain target markets include home appliance, electronics and electrical,health care and medical products market.˜àº¬à¾—๕™€àº¬à¾—๕Þ‰É“࢕ΥߒႡிਠd˴ࠅމ৷౤Զᄿعʘ፻ҿ̋ʈ؂ਕʿ༆Ӕ˙ࣩணࠇʿۜሯછՓÞ‰Ü„˒ᄣ࠽f׵࠯ʬࡈ38(2)Construction Materials Group (The businesses of CMG operations of the VSC Group include distributionof steel and building products in both Hong Kong and Mainland China,decline in sales of CMG for the period by 3% to HK$1,567 million, thedepartment reported a segment results of HK$62 million, whichrepresented a 87% increase over last yearThe major business unit of the VSC Grouprebars, structural steel and engineering products in Hong Kong,distribution of imported steel products in Mainland China anddistribution of domestic steel products through Shan

ghai Bao Shun), a joint venture with Bao
ghai Bao Shun), a joint venture with Bao Steel, in which VSC holds66.7% equity interest.As a result of the VSC Groups determined efforts to modify its businessmodel to create higher shareholders value, the Hong Kong SteelDepartment continued to achieve encouraging operating profit in thefirst six months ended 30th September 2006. Despite a 10% decrease insales to approximately HK$504 million for the first six months of theyear, the department achieved a segment profit of HK$53 million ascompared to HK$32 million in the same period of last year. The HongKong Steel Department implemented a series of risk managementmeasures that include the leveling of the risk of price fluctuation withcustomers and suppliers, exercising its best effort to avoid entering fixedadjustment with a delivery period of over one year. In addition to thesemeasures, we also implemented measures to reduce our operating costas well as to improve our operating efficiency. Our inventory level ofrebars was kept at optimised level. Costs of warehousing operatio

n andreduced.ΥᐄΆุÑɪऎᘒන׹&#
n andreduced.ΥᐄΆุÑɪऎᘒන׹˜á˜’න׹™dຬනᛆूÊ±á‰–΢ᗳ਷ʫ፻ҿପ39The department also diversified its product range and successfullyentered into sales contracts with main contractors and consultants toprovide products such as wide range flange beams and steel plate.beginning of 2006. Our strategies to turnaround the loss position of lastyear including rearrangement of our product offering, focus on endusers instead of distributor, and resource realignment. During the first sixmonths, we closed our Shanghai flat product distributions operation andopened up Guangzhou facility, focusing on high market demandproducts. Sales remained at the same level as that of last year but therewas substantial improvement in the gross profit. For the first six months,the segment result turnaround from a loss of HK$4 million to a profit ofSales of the Building Products Department increased by 18% to HK$103million as compared to the same period of last year. The distributionbusiness in Shenzhen has beco

me matured. For the period under review,
me matured. For the period under review,sales of distribution in Shenzhen tripled as compared to last years resultand amounted to about HK$25 million. Our strategy is to continue toGuangzhou as these cities are experiencing unprecedent growth leadingto an increase of consumer spendings. The VSC Group will continue itsdistribution of TOTO sanitary wares in Shanghai, Shenzhen andGuangzhou through wholesale, channel sales and project sales. Thedepartment has formed VANYEE, a joint venture in Macau to capture thebusiness opportunity in the prospering casino business in the comingyears. VANYEE has outstanding contracts on hand amounting to overexpect the department to contribute operating profit to the VSC Groupin the second half of the fiscal year.Ոf༈௅ژʊίዦژϓͭΥᐄΆุd˸Ҵၡራఙุਕጳ׶ί͊Ը̈ତʘਠዚf׵Ϋᚥಂʫd˜àº¬à»ˆ™Ë“᎘֠͊ҁ40Due to recent price softening in the international market and the growingovercapacity situation in China, we expect domestic steel prices to decline inthe 1st

quarter of 2007. We also anticipate ste
quarter of 2007. We also anticipate steel export to be morechallenging, partly because of the trade surplus of China increasing tradeFor CAMP, we have just announced our co-operations with Ryerson inSeptember of which Ryerson LLC, a wholly-owned subsidiary of Ryerson,subscribed for 600 new shares of VSC-Ryerson China. The transaction wascompleted at the end of October 2006, VSC holds a 60% equity interest inVSC-Ryerson China, with the remaining 40% equity held by Ryerson LLC. Thesynergy offered by this transaction would allow VSC-Ryerson China toshareholders to achieve the leadership position in the vast PRC market. Theproceeds from the subscription of shares by Ryerson LLC will be used for therepayment of trade related debts incurred by the coil centres, and futureexpansions and investment opportunities of VSC-Ryerson China in China.After we went through some usual issues for any new business,the VSC Group will look for opportunities that will better enhance thesynergies between VSC Groups other CAMP operations (e.g. VJY,

plastics)and VSC-Ryerson China with the
plastics)and VSC-Ryerson China with the intention to provide better returns to theVSC Groups shareholders with a more streamlined and better marketڝ᙮ʮ̡à¸¸à¨•€Ô·Î½àº¬à¾—๕e෧ᇭá¾41Steel Department. We will continue to avoid entering into fixed price salescontracts exceeding two years and to manage customers for sharing thepricing risks. To reduce operating cost and improve efficiency, we willcontinue to operate direct pier-to-site delivery, control the lead time on goodsordering and improve the accuracy of demand forecast and inventoryposition. Based on the committed sales contracts on hand, we expect thedepartment to continue to be successful in the second half of the year. ForChina steel distribution, we expect the PRC Government to continue hermacro-economic management policies to limit excessive investment in realestate and automobile sector. To face these challenges, we will continue to doresource realignment and will focus our resource on products with highmarket demand hence better marg

ins. In addition, the VSC Group will als
ins. In addition, the VSC Group will alsocontinue to fuel its supply chain management service offerings and toenhance its technical capability on steel quality control in order to meet therapid demand of local sourcing and export of products through MetalChina,an investment of VSC Group. Our Building Product Department will continueto collaborate with TOTO to focus on growing its market in Great China inparticular Macau, a growing region with strong demand.To maintain a more diversified income source, the VSC Group is looking forother investment opportunities in China particularly in those industries withstrong market demand, steady income and cash flow. Currently, we areexploring opportunities for interest in which include a small hotel chain, andoffice building space to house the VSC Groupstaff in China, as well as to generate a steady rental income and cash flow.The VSC Group will continue to partner with its global and local customers tocreate competitive advantage for them by providing value-added processing,supply chain

management and total solution services.
management and total solution services. We will continue toinvest in our human resources to enhance our expertise and experience to42The Directors have declared an interim dividend of 2.2 Hong Kong cents perordinary share for the six months ended 30th September 2006 payable toshareholders whose names appear on the Register of Members of VSC at theclose of business on 9th February 2007. Dividend warrants are expected to bedespatched on or before 15th February 2007.The Register of Members of VSC will be closed from 7th February 2007 to 9thFebruary 2007 (both dates inclusive) during which period no transfers ofshares will be registered. In order to qualify for the interim dividend, alltransfers of shares accompanied by the relevant share certificates and transfers Registrars in Hong Kong, Computershareɚ˜ɘ˚€à ¯ÒˆÕ‡Ë‚ܼ̍ίʫà²‚ගᅲ৾፬ଣٰࣸ௰፰඲׵ɚཧཧɖϋɚ˜ʬ˚ɨʹ̬ࣛಥतйБ݁ਜࣛගà§”תຬන׹׵࠰ಥʘٰ΅43 INTERESTS AND SHORT POSITIONS IN SHARES,UNDERLYING SHARES AND D

EBENTURESAs at 30th September 2006, the
EBENTURESAs at 30th September 2006, the interests and short positions of the Directorsand chief executives of VSC in the shares of HK$0.10 each in the capital ofShares), underlying shares and debentures of VSC or any of itsassociated corporations (within the meaning of Part XV of the Securities andFutures Ordinance (the )) which (a) were required to be notified to VSCpursuant to Divisions 7 and 8 of Part XV of the SFO (including interests andshort positions which they were taken or deemed to have under suchprovisions of the SFO); or (b) were required pursuant to Section 352 of theSFO to be entered in the register referred to therein; or (c) were requiredpursuant to the Model Code for Securities Transactions by Directors of Listedwere as follows:(i)Long positions in Shares and options of VSCinterest toNumber ofApproximateNumber ofAggregateNameNature of interestthe DirectorSharespercentageshare optionsinterest֑Τᛆू׌ሯ໨ԫᏐЦᛆूٰ΅ᅰͦ฿ߒϵʱˢᒅٰᛆᅰͦଢ଼ࠇᛆूMr. Andrew Corporate interestdeemed interes

t173,424,00047.05%Cho Fai Yaoheld by Hug
t173,424,00047.05%Cho Fai Yaoheld by Huge(indirectly)Huge Top Personal interest100% (directly)1,614,0000.44%1,500,0003,114,000€ÙœàªŸ175,038,00047.49%1,500,000176,538,000৷Б݁ɛࡰՉ׵ຬන׹אՉ΂О޴ᑌجྠ່ԈᗇՎʿಂ஬ૢԷ˜á—‡ÕŽÊ¿à²‚஬ૢԷ™Ê˜àº¬à¶±×¹Ù°Í‰Ê•ÓŠÙ°à ¦à ½˜Ù°Î…™e޴ᗫٰ΅ʿවᛆᗇʕኹϞʘᛆूϞࠢʮ̡˜á‘ŒÍ´×”™€ÌÜ¼à£¬áŠ½á—‡ÕŽÊ¿à²‚஬ૢБɛ໨ԫආБᗇՎʹ׸ٙᅺ๟ςۆ˜á…ºà¹ŸÏ‚̀඲ٝึຬන׹ʿᑌʹהʘᛆूʿ૱ࡑ༱44 INTERESTS AND SHORT POSITIONS IN SHARES,UNDERLYING SHARES AND DEBENTURES (i)Long positions in Shares and options of VSC interest toNumber ofApproximateNumber ofAggregateNameNature of interestthe DirectorSharespercentageshare optionsinterest֑Τᛆू׌ሯ໨ԫᏐЦᛆूٰ΅ᅰͦ฿ߒϵʱˢᒅٰᛆᅰͦଢ଼ࠇᛆूMr. Fernando Personal interest100% (directly)342,0000.09%500,000842,000Sai Ming Dong€ÙœàªŸMr. Harold Personal interest100% (directly)66,0000.02%Richard Kahler€ÙœàªŸ&#

x0081;Harold Richarda.As at 30th Septem
x0081;Harold Richarda.As at 30th September 2006, Huge Top Industrial Ltd. (Huge Top173,424,000 Shares. Mr. Andrew Cho Fai Yao is one of the two directors ofHuge Top. Mr. Andrew Cho Fai Yao directly holds approximately 11.91%and indirectly through Perfect Capital International Corp. () owns approximately 42.86% of the issued shares of Huge Top andis entitled to exercise more than one-third of the voting power at generalmeetings of Huge Top. Mr. Andrew Cho Fai Yao owns the entire issuedshare capital of Perfect Capital. These interests of the aforesaid Director inthe Shares were corporate interests.b.The interests of the Director in the share options of VSC are separatelyShare Option Scheme below.€ášƒÜµÏžà¶œàªŸáŠ¹Ïž˜á’…ٰᛆࠇྌ™×žáš£f45 INTERESTS AND SHORT POSITIONS IN SHARES,UNDERLYING SHARES AND DEBENTURES (ii)Long positions in associated corporation Huge TopAttributable interestNumber ofApproximateNameNature of interestto the Directorsharespercentage֑Τᛆू׌ሯ໨ԫᏐЦᛆूٰ

΅ᅰͦ฿ߒϵʱˢMr. Andrew Cho Fai Ya
΅ᅰͦ฿ߒϵʱˢMr. Andrew Cho Fai Yao Corporate interestdeemed interest (indirectly)3642.86%(Refer to Note aheld by Perfectin (i) above)Capitalۼख़ሾ΋͛ÑPerfect Capital€áˆ—ቡɪ˖cהܵʘʮ̡ᛆू Personal interest100% (directly)1011.91%€ÙœàªŸ4654.77%Mr. Fernando Personal interest100% (directly)55.95%Sai Ming Dong€ÙœàªŸDirectors, chief executives of VSC and their associates had any personal,family, corporate or other interests or short positions in the shares,underlying shares or debentures of VSC or any of its associatedcorporations (within the meaning of Part XV of the SFO) which (a) wererequired to be notified to VSC and the Stock Exchange pursuant toDivisions 7 and 8 of Part XV of the SFO (include interests and shortpositions which they are taken or deemed to have under such provisionsof SFO); or (b) were required pursuant to section 352 of the SFO to beentered in the register referred to therein; or (c) were required pursuantto the Model Code to be notified to VSC a

nd the Stock Exchange.Apart from the for
nd the Stock Exchange.Apart from the foregoing, at no time during the period was VSC or anyof its subsidiaries a party to any arrangements to enable the Directors orany of their spouses or children under the 18 years of age to acquirebenefits by means of the acquisition of shares in or debentures of VSC orany other body corporate, and no Directors or chief executives or theirrespective spouses or children under 18 years of age had been grantedany right to subscribe for equity or debt securities of VSC nor exercisedany such right.௅̀඲ٝึຬන׹ʿᑌʹה€ÌÜ¼à£¬áŠ½á—‡ÕŽÊ¿×à«±à¡‘46PERSONS WHO HAVE INTERESTS OR SHORT POSITIONS WHICHARE DISCLOSEABLE UNDER DIVISIONS 2 AND 3 OF PART XV OFOther than interests disclosed in the section headed Directors Interests andShort Positions in Shares, Underlying Shares and Debentures above, as at30th September 2006, according to the register of interests kept by VSCunder section 336 of the SFO, the following entities have interests or shortpositions in the shares and und

erlying Shares of VSC which fall to beNu
erlying Shares of VSC which fall to beNumberApproximateNumber ofAggregateNameNature of interestof Sharespercentageshare optionsinterest֑Τᛆू׌ሯٰ΅ᅰͦ฿ߒϵʱˢᒅٰᛆᅰͦଢ଼ࠇᛆूHuge Top Industrial Ltd.Directly173,424,00047.05%Ms. Miriam Che Li YaoCorporate173,424,00047.05%ۼᆎ஁ɾɻʮ̡ᛆू€Úàµ—Personal2,000,0000.54%1,000,0003,000,000175,424,00047.59%1,000,000176,424,000As at 30th September 2006, Huge Top held 173,424,000 Shares. Ms. Miriam CheLi Yao is one of the two directors of Huge Top while the remaining director ofHuge Top is Mr. Andrew Cho Fai Yao who is the brother of Ms. Miriam Che Li Yaoand therefore is deemed to be interested in these Shares through Huge Top.Save as disclosed above, as at 30th September 2006, the Directors are notaware of any other persons (other than Directors or chief executives of VSC)who have interests or short positions in the shares, underlying shares ordebentures of VSC or any associated corporations (within the meaning of Part˜à»¨Ô«×µÙ°Î…eÞ´

ᗫٰ΅ʿවᛆᗇʘᛆूʿ૱ࡑ
ᗫٰ΅ʿවᛆᗇʘᛆूʿ૱ࡑ™É“ືהמᚣʘᛆू̮d׵ɚཧཧʬۼख़ሾ΋͛€É—ۼᆎ஁ɾɻʘҔdΪϤீཀ˚d໨ԫԨʔٝ઄Ϟ΂ОՉ˼ɛɻ€à»¨Ô«×àº¬à¶±×¹à¯°à§·Ð‘݁ɛࡰৰ̮×µàº¬à¶±×¹×Î‚О޴ᗫ€Ö›à»ˆÔˆá—‡ÕŽÊ¿à²‚஬ૢԷୋʘٰ΅e47A share option scheme has been adopted by VSC since 12th November 2001Share Option Schemeas set out in the Share Option Scheme. The terms of the Share Option Schemeare contained in a circular sent to shareholders of VSC in October 2001 andthe shareholders have also approved the refreshment of Share Option Schememandate limit at the annual general meeting of VSC held on 31st August). The share options outstanding under the Share OptionScheme during the period were as follows:Number of share optionsExerciseGrantedLapsedName or categoryprice perBeginningduringduringEnd ofof participantDate of grantExercise periodShareof periodthe periodthe periodperiodਞၾ٫֑Τאᗳйબʚ˚ಂБԴಂӊٰБԴᄆಂڋಂʫબʚಂʫ̰ࣖಂ͋ɷ΅ɷ΅ɷ΅ɷ΅Direc

tors:Mr. Andrew13th September13th Septem
tors:Mr. Andrew13th September13th September 2007 toHK$0.90Cho Fai Yao200612th September 20160.90ۼख़ሾ΋͛ɚཧཧʬϋɚཧཧɖϋɘ˜ɤɧ˚Їcɘ˜ɤɧ˚cɚཧɓʬϋɘ˜ɤɚ˚Mr. Fernando19th September19th September 2005 toHK$1.418300Sai Ming Dong200318th September 2013ࡥ˰თ΋͛ɚཧཧɧϋɚཧཧʞϋɘ˜ɤɘ˚Їcɘ˜ɤɘ˚cɚཧɓɧϋɘ˜ɤɞ˚13th September13th September 2007 toHK$0.90200612th September 20160.90ɚཧཧʬϋɚཧཧɖϋɘ˜ɤɧ˚Їcɘ˜ɤɧ˚cɚཧɓʬϋɘ˜ɤɚ˚3001,700ᒅٰᛆࠇྌ˜á’…ٰᛆࠇྌ™dϾຬන׹̙νᒅɓ˚ʘຬන׹ٰ؇඄ϋɽึ˜Éšà½§à½§Ê¬Ï‹Ù°Ø‡à¶„ϋɽึ™ÉªÒ­à¡˜Ò»à¸­á’…ٰᛆࠇྌબᛆࠢᕘf48Number of share optionsExerciseGrantedLapsedName or categoryprice perBeginningduringduringEnd ofof participantDate of grantExercise periodShareof periodthe periodthe periodperiodਞၾ٫֑Τאᗳйબʚ˚ಂБԴಂӊٰБԴᄆಂڋಂʫબʚಂʫ̰ࣖಂ͋ɷ΅ɷ΅ɷ΅ɷ΅In aggregate2nd May 20032nd May 2003 toHK$0.98250΍ࠇɚཧཧɧϋ1st May 20130.98cʞ˜ɚ˚

ɚཧཧɧϋʞ˜ɚ˚ЇIn aggregate7th Ma
ɚཧཧɧϋʞ˜ɚ˚ЇIn aggregate7th May 20037th May 2005 toHK$0.975,100(495)4,605΍ࠇɚཧཧɧϋcʞ˜ɖ˚ɚཧཧʞϋʞ˜ɖ˚Ї€Úàµ—In aggregate19th September19th September 2005 toHK$1.4181,000200318th September 20131.418ɚཧཧɧϋɚཧཧʞϋɘ˜ɤɘ˚Їcɘ˜ɤɘ˚cɚཧɓɧϋɘ˜ɤɞ˚In aggregate13th September13th September 2007 toHK$0.90200612th September 20160.90΍ࠇɚཧཧʬϋɚཧཧɖϋɘ˜ɤɧ˚Їcɘ˜ɤɧ˚cɚཧɓʬϋɘ˜ɤɚ˚6,3507,100(495)12,95549Number of share optionsExerciseGrantedLapsedName or categoryprice perBeginningduringduringEnd ofof participantDate of grantExercise periodShareof periodthe periodthe periodperiodਞၾ٫֑Τאᗳйબʚ˚ಂБԴಂӊٰБԴᄆಂڋಂʫબʚಂʫ̰ࣖಂ͋ɷ΅ɷ΅ɷ΅ɷ΅In aggregate2nd May 20032nd May 2003 toHK$0.987,000΍ࠇɚཧཧɧϋcʞ˜ɚ˚ɚཧཧɧϋʞ˜ɚ˚ЇTotal of Share13,6508,800(495)21,9551For the Share Option Scheme, the vesting period of the share options is from thedate of the grant until the commencement of the exercise period.2.

The options to subscribe for Shares at a
The options to subscribe for Shares at a price of HK$0.97 per Share are to beexercisable in whole or in part in the following manner:(i)During the period starting from 7th May 2005 to 6th May 2006, the optionmay be exercised up to 30% of such Shares.(ii)During the period starting from 7th May 2006 to 6th May 2007, the optionmay (to the extent not exercised in accordance with (i) above) be exercisedup to 70% of such Shares.(iii)During the period starting from 7th May 2007 to 6th May 2013, the optionmay (to the extent not exercised in accordance with (i) and (ii) above) beexercised in full.Save as disclosed above, no share options were granted, exercised, lapsed or΅ٙᒅٰᛆ€Ë¸Ü²à¹«ÉªË–ಂගdܵϞɛ̙઄ᅰБԴᒅٰᛆ€Ë¸Ü²à¹«ÉªË–ݬ˸֠͊БԴ٫މࠢ50PURCHASE, SALE OR REDEMPTION OF SHARESNeither VSC nor any of its subsidiaries has purchased, sold or redeemed anyof shares of VSC during the six months ended 30th September 2006.CODE ON CORPORATE GOVERNANCE PRACTICESVSC has applied the principles and compl

ied with all the applicable codeprovisio
ied with all the applicable codeprovisions of the Code on Corporate Governance Practices (set out in Appendix 14 of the Rules Governing the Listing of Securities on Theended 30th September 2006, except for the deviations herein below1.The CG Code provision A.2.1 stipulates that the roles of the chairmanand the chief executive officer should be separated and should not beperformed by the same individual. VSC does not have a separatechairman and chief executive officer and Mr. Andrew Cho Fai Yaocurrently holds both positions. The Board believes that vesting the rolesof both chairman and chief executive officer in the same person providesthe VSC Group with strong and consistent leadership, efficiency usage ofresources and allows for effective planning, formulation andGroup to sustain the development of the VSC Groupefficiently.ɪ̹஝ۆ˜ÉªÌ¹à®Û†™à©¬à®Ï‚Û†˜Î†à¸¸áØ·Ï‚Û†™Ê˜à¡¡Û†dԨ፭ςɓ512.The CG Code provisions A.4.1 and A.4.2 stipulates that (1) the non-executive directors should be appointed f

or a specific term, subject to re-electi
or a specific term, subject to re-election and (2) all directors, including those appointed for a specificterm, should be subject to retirement by rotation at least once everythree years. VSCs non-executive Directors are not appointed for aspecific term. Before the amendment of the Bye-Laws of VSC at the2006 AGM, the chairman and the managing director of VSC are notsubject to retirement by rotation or be taken into account in determiningthe number of Directors to retire in each year. To comply with the CGCode provision A.4.2, a resolution has been approved by theshareholders of VSC in the 2006 AGM to amend the Bye-Laws of VSC sothat every Director is required to retire by rotation at least once everythree years.The Audit Committee has been set up since December 1998 and now consistsof four independent non-executive Directors with Mr. Kenny King Ching Tamas chairman and Dr. Chow Yei Ching, Mr. Harold Richard Kahler and Mr. XuLin Bao as members. Mr. Kenny King Ching Tam who is an independent non-executive Director with appropri

ate professional accounting expertise as
ate professional accounting expertise asrequired under Rule 3.10 of the Listing Rules. Scope of the work of the AuditCommittee is defined and approved by the Board in relation to variousinternal control and audit issues with a view to further improving ourcorporate governance. The Audit Committee has adopted its terms ofreference, which is in line with the CG Code was posted to VSChttp://www.vschk.com. The VSC Groupnow reported on have been reviewed by the Audit Committee.הϞ໨ԫ€ÌÜ¼ÏžÜ¸Ö›Î‚ಂٙ໨ԫáá‰ƒà ½Ñ“ৗdЇˇӊɧ52Rules as its own code of conduct regarding securities transactions by theDirectors on 31st March 2004. Having made specific enquiry of all Directors,they all confirmed that they have complied with the required standard set out9th March 2006, the Board has approved that the Model Code also applies toother specified relevant employees of the VSC Group in respect of theirOn behalf of the BoardAndrew Cho Fai YaoAs at the date of this report, the Board comprised Andrew Cho Fai YaoYei Ching,

Harold Richard Kahler, Kenny King Ching
Harold Richard Kahler, Kenny King Ching Tam, Xu Lin Bao (beingthe independent non-executive Directors).http://www.vschk.com׵͉జѓ˚ಂd໨ԫึܼ̍ۼख़ሾ€Ë´à¢©à¡¥Ë°áƒ—€Þ‰à©‚Б໨ԫdմ͵ࡠeeᗈᘩ͍eࢱ؍ᘒ€Þ‰á‹¹Í­Ú¢à©‚Б໨ԫ1UNAUDITED INTERIM RESULTSThe Board of Directors (the ÒBoardÓ) of Van Shung Chong Holdings Limited(ÒVSCÓ or the ÒCompanyÓ) hereby announces the unaudited condensedconsolidated interim financial information of VSC and its subsidiaries (theÒVSC GroupÓ) as at and for the six months ended 30th September 2006,together with comparative figures, as follows:CONDENSED CONSOLIDATED INCOME STATEMENTGross profit(18,284)(14,325)Operating profit(18,082)(20,968)Profit before income taxProfit for the periodEquity holders of the CompanyMinority interestsEarnings per share for profitattributable to the equityÐ DilutedHK11.3 centsHK6.0 centsfinancial Information.ຬන׹ණྠϞࠢʮ̡˜àº¬à¶±×¹™˜Í‰Ê®Ì¡™ !+,-