HALF YEAR RESULTS TO 30 JUNE 1999
| +8.5% to HK$6.6 billion | ||
| +23% to HK$193 million | ||
| +21% to 30 cents | ||
| +20% to 18 cents per share |
HIGHLIGHTS
1999 INTERIM RESULTS (UNAUDITED)
Six months ended 30 June
1999 1998
HK$'000 HK$'000
------------------------------------------------------------------------
Turnover 6,583,730 6,067,348
========================================================================
Operating profit 202,007 160,867
Share of profits less losses of
associated companies 6,929 5,898
------------------------------------------------------------------------
Profit before taxation 208,936 166,765
Taxation (note 1) (14,536) (11,675)
------------------------------------------------------------------------
Profit after taxation 194,400 155,090
Interests of minority shareholders (1,272) 1,478
------------------------------------------------------------------------
Profit attributable to shareholders 193,128 156,568
========================================================================
Earnings per share (note 2) 30.2 cents 24.9 cents
========================================================================
NOTES:
1. TAXATION
Six months ended 30 June
1999 1998
HK$'000 HK$'000
The taxation charges comprise:
Hong Kong profits tax 10,059 6,115
Overseas taxation 3,280 3,760
Share of taxation attributable
to associated companies
- Hong Kong 286 220
- Overseas 911 1,580
-------------------
14,536 11,675
===================
Hong Kong profits tax is calculated at the rate of 16% on the estimated assessable profits for the periods. Overseas taxation is calculated on the estimated assessable profits for the periods at the rates of taxation prevailing in the countries in which the Group operates.
2. EARNINGS PER SHARE
The calculation of basic earnings per share is based on the profit after taxation and minority interests of HK$193,128,000 (1998: HK$156,568,000) and on the weighted average number of 638,787,000 (1998: 629,435,000) shares in issue during the period. In the event that share options outstanding at 30 June 1999 were exercised in full, the diluted earnings per share would not be significantly different from the basic earnings per share as disclosed in the above interim results.
INTERIM DIVIDEND
The Board of Directors has resolved to declare an interim dividend of 18 cents (1998: 15 cents) per share for the six months ended 30 June 1999 absorbing a total of HK$116 million (1998: HK$94.9 million).
PROPOSED SUBDIVISION OF SHARES
Subject to the conditions mentioned below, the Board of Directors propose that each of the existing issued and unissued shares of HK$0.10 each ("Share") in the share capital of the Company be subdivided into two shares of HK$0.05 each ("Subdivided Shares") in order to improve market circulation of the Subdivided Shares ("Share Subdivision").
The Share Subdivision will be made on the basis that every Share will be subdivided into 2 Subdivided Shares. As at the date of this announcement, there are 644,298,000 Shares in issue. There will be 1,288,596,000 Subdivided Shares in issue following the Share Subdivision. Accordingly, the issued and paid up share capital of the Company will remain unchanged.
The Subdivided Shares will be traded in board lots of 2,000 Subdivided Shares and will rank pari passu to each other.
The Share Subdivision is conditional upon:-
(a) the passing of an ordinary resolution by the shareholders of the Company at the Special General Meeting ("SGM"); and
(b) the Listing Committee of The Stock Exchange of Hong Kong Limited ("Stock Exchange") granting the listing of and permission to deal in the Subdivided Shares.
An application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Subdivided Shares.
A circular setting out the details of the proposed Share Subdivision together with a notice of the SGM will be despatched to the shareholders of the Company as soon as practicable.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members will be closed from 2 September 1999 to 3 September 1999, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Hong Kong branch registrars, Abacus Share Registrars Limited at Caroline Centre, 10th Floor, 28 Yun Ping Road, Causeway Bay, Hong Kong not later than 4:00 p.m. on 1 September 1999. Dividend warrants will be despatched on 10 September 1999.
BUSINESS REVIEW AND PROSPECTS
The first half of 1999 signaled the start of the Group's new 3 year plan spanning the Millennium from 1999-2001.
Buoyant market sentiments in the U.S. led growth in exports to the Group's biggest market. Key new customers developed in the last two years contributed significantly in the first half especially in the hardgoods area.
Despite initial expectations of the advent of the Euro, its low subsequent value to the US$ and generally poor market conditions contributed to a lack lustre performance in sales to the EU.
Barring a severe stock market downturn in the U.S., the Group expects to maintain a high overall growth rate in turnover for the rest of the year.
On the sourcing side, the Group continues to add to its network of offices with new operations coming on stream in Cambodia, South Africa, Tai Chung, Canada and Italy in this year.
The fundamentals of the export trading business remain in the Group's favour throughout the first half. Although exchange rates in several of the Group's sourcing countries in Asia have increased, the stabilization of general economic conditions accompanying the rebound has actually facilitated sourcing from those countries.
Taking advantage of this period of relative strength, the Group is embarking on major investments in the information technology area and the use of the internet in the Group's business with its customers and suppliers.
APPOINTMENT OF DIRECTORS
In addition to the appointment of Mr. Allan Wong Chi Yun, the chairman and chief executive of VTech Holdings Limited, to the Board in March this year, the Board of Directors announced that Professor Franklin Warren McFarlan has been appointed an independent non-executive director of the Company with effect from 19 August 1999. Professor McFarlan is Senior Associate Dean, External Relations, of Harvard University.
CORPORATE GOVERNANCE
The Board of Directors is committed to principles of corporate governance consistent with prudent enhancement and management of shareholder value. The accounting systems and internal controls of the Group are designed to provide reasonable assurance that assets are safeguarded against losses from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and that the financial records are reliable for preparing financial statements and maintaining accountability for assets. Qualified personnel throughout the Group maintain and monitor these internal accounting controls on an ongoing basis, and the Group's Corporate Governance Division systematically reviews these controls, evaluates their adequacy and compliance and reports thereon.
The Audit Committee has conducted two meetings this year to review the accounting principles and practices adopted by the Group and to discuss auditing, internal control and financial reporting matters. The Audit Committee is chaired by the Group's non-executive Chairman and includes two independent non-executive directors and one non-executive director.
YEAR 2000 COMPLIANCE
A task force has been formed to deal with the Year 2000 problem and to ensure Year 2000 compliance. The Group has installed or replaced with Year 2000 compliant software and hardware elements within its systems, which are ready for Year 2000. As at 30 June 1999, the actual capital investment with respect to Year 2000 compliance was about HK$5 million.
The Group has also developed contingency plans including the provision of back-up systems and equipment which are Year 2000 compliant.
The Group has sent out questionnaires to all the suppliers to promote the Year 2000 awareness and compliance. The Group and its overseas customers may adopt a policy of discrimination against non Year 2000 compliant suppliers. The Group has also been performing co-testing with its key customers and suppliers who are Year 2000 compliant.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the period, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities.
By Order of the Board
VICTOR FUNG KWOK KING
Chairman
Hong Kong, 18 August 1999
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