PRESS RELEASE IN ETHICAL COMMUNICATION

Press Release in Ethical Communication

Press Release in Ethical Communication

Facts 

The Company conducted a number of property disposals and fund raising activities from May to August 2010 raising net proceeds of $287 million between May and August 2007, and by November 2007, a further $365 million.

 In late May/early June 2007, the Company began investing in listed securities. The Company had not made any securities investment before, and had not disclosed its plan to commence securities investment to shareholders or the market.  By 31 July 2007, the Company had committed over $111 million to securities investment.  This amount increased to over $259 million by 30 September 2007.

 In early November 2007, (a) the Company calculated that the "rough figure" loss attributable to securities investment during the six months up to 30 September 2007 to be $46.9 million ("Interim Investment Loss"), and (b) Ms Chan, Mr Au Yeung and Ms Wong were aware of this piece of information.

 

The Company did not disclose the securities investment or the Interim Investment Loss until 28 December 2007, when the Interim Results for the six months ended 30 September 2007 ("2008 Interim Results") were announced.  The 2008 Interim Results disclosed that the realised and unrealised loss on financial assets at fair value through profit and loss for the period was $47 million, and the Company's loss for the period was $32 million (cf $9.6 million profit in the corresponding period in FY 2007).  The Company's annual profit for the preceding four financial years 2004 to 2007 averaged around $12.25 million.

 

Applicable Listing Rules and breaches

 

Rule 13.09 requires issuers to disclose, as soon as reasonably practicable, any information which (a) is necessary to enable shareholders and the public to appraise the position of the group; (b) is necessary to avoid the establishment of a false market in the Company's securities; or (c) which might be reasonably expected materially to affect market activity in and the price of its securities.

 

Note 11 to Rule 13.09 states that the obligation must be discharged without delay where (a) there is such a change in the Company's financial condition or the performance of its business or the expectation of its performance that knowledge of the change is likely to lead to substantial price movement (Note 11 (ii)), or (b) the Company has committed significant resources to an activity which is non-core business and this has not previously been disclosed (Note 11 (iii)).

 

Breach 1

As at 31 July 2007, the Company had committed over $111 million to securities investment.  This amount increased to over $259 million by 30 September 2007.  Such amount must be seen as significant viewed against the Company's historical profit and loss and its financial position at the time.  The Company has never conducted this activity before.  No disclosure had been made to shareholders and the market of this new activity and of the amount of the Company's resources committed to this activity.

The Exchange has considered the facts and submissions presented to it and is of the view that the Company was required ...