Interim Report For Nine Months Ended September 30, 1996.TORONTO--(BUSINESS WIRE)--Nov. 21, 1996--Noble China Inc. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). NMO NMO Normal Moveout NMO Neuromyelitis Optica NMO New Motorola (antenna mounting) NMO National Member Organisation NMO NASA Management Office (JPL) NMO Network Mode of Operation .) Operating Results Noble had net income on a consolidated basis of $637,422 or $0.04 per share for the three months ended September 30, 1996 (compared to $1,167,825 or $0.07 per share for the same period in 1995) and $1,682,227 or $0.10 per share for the nine months ended the same date (compared to $5,313,781 or $0.32 per share for the same period in 1995.) Sales on a consolidated basis, net of value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. and consumption taxes during the third quarter in 1996 were $15,935,947 compared with $18,649,913 for the same period in 1995 and for the nine month period were $49,912,225 compared with $54,755,135 for the same period in 1995. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. decreased to 29.1 percent in the first nine months of 1996 from 32.9 percent in 1995 but the decrease in gross profit margin was partly offset by a corresponding saving in selling, general & administrative expenses of $1,785,217. This major saving is a result of the establishment of a marketing company in July 1995 which acts as sales agent for Noble and covers all the marketing and promotional expenses Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade on behalf of Noble. The results for the nine months ended September 30, 1996 also reflect $2,210,455 ($0.13 per share) of interest expenses on the outstanding 9 percent convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. and amortization of deferred financing costs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc financing expenses. The funds from this issue of debentures were used to acquire the Shanhaiguan Brewery, with no corresponding contribution to income reported from this Brewery or the Shouguang Brewery. Another major factor affecting the profit in 1996 is the provision for PRC income tax of $1,280,326 ($0.08 per share.) In 1995, Noble was fully exempted from income tax in the PRC. The consolidated financial results include only Noble's proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share (60 percent) of the results of operations of the Zhaoqing Noble Brewery for the three and nine month periods ended September 30, 1996 and do not include the results of Noble's other two breweries, namely its 70 percent interest in the Shouguang Brewery and its 60 percent interest in the Shanhaiguan Brewery (collectively the "Northern Breweries Northern Breweries was a Canadian brewery, with facilities in Sudbury and Sault Ste. Marie, Ontario. The company was established in Sudbury in 1907 as Sudbury Brewing and Malting Co. by J. J. Doran, a hotelier. ".) Sales of Pabst Blue Ribbon blue ribbon denotes highest honor. [Western Folklore: Brewer Dictionary, 127] See : Prize Beer The sales of Pabst Blue Ribbon beer at the Zhaoqing Noble Brewery were 42,000 tonnes (420,000 hectolitres) for the three months ended September 30, 1996 and 120,000 tonnes (1,200,000 hectolitres) for the nine months ended September 30, 1996 compared to 130,000 tonnes (1,300,000 hectolitres) for the same period in 1995. This decrease is due to increased competition in the PRC beer market and as a result of the production of Pabst Blue Ribbon beer by a neighbouring brewery which is owned in part by the Municipality MUNICIPALITY. The body of officers, taken collectively, belonging to a city, who are appointed to manage its affairs and defend its interests. of Zhaoqing. The Municipality of Zhaoqing is one of our partners in the Zhaoqing Noble Brewery. Under the terms of settlement agreement signed by Noble on May 10, 1995, this brewery is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to produce up to 100,000 tonnes (1 million hectolitres) of Pabst Blue Ribbon per year. Noble does not expect any growth in volume from its Zhaoqing Noble Brewery this year as this additional production comes on stream. A resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of growth is expected in early 1997 once the additional production has been fully absorbed by the market. The total sales of Pabst Blue Ribbon beer from both breweries for the first nine months of this year were 180,000 tonnes (1,800,000 hectolitres). This represents a 14 percent increase in total sales of Pabst Blue Ribbon over the same period last year. Pabst Blue Ribbon continues to be the largest selling foreign brand in China and one of the largest selling brands overall behind Tsing Tao. A new 946 ml. packaging line is being purchased for the Zhaoqing Noble Brewery which will significantly increase the bottling capacity of the Brewery. Negotiations with respect to potential transactions which will strengthen and improve the value of Noble's investment in the Pabst Blue Ribbon business in China are continuing. Northern Breweries The non-consolidation of the two Northern Breweries reflects the fact that the Company's control and influence over the Northern Breweries has been interrupted as a result of the claims against Noble's former Chairman which are described below. On July 20, 1996 Noble signed an agreement with the Shanhaiguan Brewery which confirmed Noble's 60 percent interest in the brewery, provided for the resumption of a normal relationship by the parties and would have permitted Noble to commence its audit of the accounts of the Shanhaiguan Brewery. This agreement was subject to approval by the Municipality of Shanhaiguan which has not yet been given. The Municipality now appears to want to renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. a number of fundamental terms of the agreement before allowing an audit to be commenced. With respect to the Shouguang Brewery, there has not been any progress towards the resumption of a normal relationship in spite of repeated attempts by the Company. Management has concluded that it is unlikely that the Company will be able to reestablish control and influence over the Northern Breweries until the claims against Noble's former Chairman are resolved. Claims Against Noble's Former Chairman Noble's claims against its former Chairman, Lei Kat Cheong, will be determined by a three person arbitration panel arbitration panel A group of individuals charged with resolving a dispute between individuals and/or organizations. Arbitration panels to resolve investment disputes are sponsored by self-regulatory organizations such as NASD. . It is expected that the arbitration will be completed towards the end of 1997. The decision of the arbitration panel will be final and binding on the parties. Noble is holding Lei's 5,442,263 common shares of Noble as security for any liability of Lei to Noble under the terms of a trust agreement and the settlement agreement made between Noble and Lei. Until the claims with Lei are resolved, Noble's directors have the right to vote and deal with these shares. Noble's directors have voted these shares without challenge at the last two annual meetings. Noble's claims exceed by many times the current market value of Lei's 5,442,263 common shares. Subsequent to the end of the third quarter a Delaware company named CATIC-Pacus Investment Corporation, Limited ("CATIC CATIC China National Aero-Technology Import and Export Corporation CATIC Connecticut Attorneys Title Insurance Company ") publicly announced that it had purchased Lei's interest in his 5,442,263 common shares of Noble. CATIC has refused to disclose to Noble the terms of any agreement it has with Lei and Noble is unaware of the circumstances surrounding the purported sale of Lei's shares. Noble has informed CATIC that it could acquire nothing other than a residual interest Residual Interest A type of interest payment received by investors in a real estate mortgage investment conduit (REMIC). Notes: Investors receive interest payments after all required regular interest has been paid to investors within higher priority tranches. in the shares that Lei may have after Noble's claims are satisfied. Management Changes On November 21, 1996, John Pennal was appointed President and Chief Executive Officer of Noble in place of Douglas Babcook who resigned those offices on the same date. Mr. Babcook, who has over 30 years experience in the brewing industry, has been retained by the Company as a consultant under a consulting agreement dated November 21, 1996. His primary responsibility will be to oversee and advise the Company on its brewery operations in China. Mr. Babcook remains a director of the Company. CONTACT: Noble China Inc. John D. Pennal, 416/956-4906 |
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