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FINANCIAL HIGHLIGHTS
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RESULTS
The Directors of Lung Kee (Bermuda) Holdings Limited (the "Company") have pleasure in submitting the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 31st March, 2000 together with comparative figures for the year ended 31st March, 1999 as follows:
2000 1999
NOTES HK$'000 HK$'000
Turnover 889,542 686,127
Other revenue 6,032 5,243
Changes in inventories of
finished goods and work
in progress 10,842 (28,886)
Raw materials and consumables
used (429,281) (278,211)
Staff costs (125,483) (106,694)
Depreciation and amortisation (69,718) (64,384)
Other operating expenses (109,320) (114,598)
----------- -----------
Profit from operations 172,614 98,597
Finance costs (6,793) (10,060)
Interest income 5,628 6,191
Loss on deemed disposal of a
subsidiary (2,381) ---
Share of result of a jointly
controlled entity 168 22
Share of result of an associate --- (288)
----------- -----------
Profit before tax 169,236 94,462
Taxation 1 (27,122) (11,450)
----------- -----------
Profit after tax 142,114 83,012
Minority interests (32,109) (16,643)
----------- -----------
Profit attributable to shareholders 110,005 66,369
=========== ===========
Dividends 2 61,534 37,956
=========== ===========
Earnings per share
--- Basis 3 28.84 cents 17.49 cents
=========== ===========
--- Diluted 3 28.39 cents 17.40 cents
=========== ===========
NOTES:
(1) Taxation
2000 1999
HK$'000 HK$'000
The charge comprises:
Hong Kong Profits Tax 19,708 11,316
Taxation in jurisdictions outside
Hong Kong 12,127 2,000
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31,835 13,316
Deferred taxation (4,713) (1,866)
----------- -----------
27,122 11,450
=========== ===========
Hong Kong Profits Tax is calculated at 16% (1999: 16%) of the estimated assessable profit for the year.
Taxation in jurisdictions outside Hong Kong is calculated based on the applicable rates.
There was no significant unprovided deferred taxation for the year or at the balance sheet date.
(2) Dividends
2000 1999
HK$'000 HK$'000
Interim dividend of 6 cents (1999: 3 cents)
per share paid to the Company's
shareholders 23,065 11,387
Proposed final dividend of 10 cents
(1999: 7 cents) per share payable to the
Company's shareholders 38,469 26,569
----------- -----------
61,534 37,956
=========== ===========
(3) Earnings per share
The calculation of basic earnings per share is based on the profit for the year of HK$110,004,670 (1999: HK$66,368,855) and on the weighted average of 381,429,225 shares (1999: 379,559,375 shares) in issue during the year.
The calculation of diluted earnings per share is based on the adjusted profit for the year of HK$108,999,670 (1999: HK$66,053,855) and on the weighted average of 383,951,493 Shares (1999: 379,571,652 share) in issue for the purposes of diluted earnings per share during the year.
FINAL DIVIDEND
The Directors have resolved to recommend to shareholders at the forthcoming 2000 Annual General Meeting the payment of a final dividend of 10 cents per share for the year ended 31st March, 2000 to shareholders whose names appear on the Register of Members on 1st September, 2000. Subject to the approval by shareholders at the forthcoming 2000 Annual General Meeting, the proposed final dividend will be despatched to shareholders on or about 7th September, 2000.
BONUS ISSUE OF SHARES
The Directors also recommend a bonus issue of shares ("Bonus Issue") credited as fully paid to shareholders whose names appear on the Register of Members of the Company on Friday, 1st September, 2000 on the basis of one new share for every four existing shares then held. The bonus shares will not rank for the proposed final dividend for the year ended 31st March, 2000 but will rank pari passu in all other respects with the existing issued shares.
No fractional shares shall be alloted and distributed as aforesaid, but shares representing fractional entitlements shall be aggregated and sold for the benefit of the Company.
The Bonus Issue is conditional upon (i) approval of the shareholders at the forthcoming Annual General Meeting of the Company and (ii) the Listing Committee of The Stock Exchange of Hong Kong Limited grating listing of and permission to deal in the bonus shares. A circular giving, inter alia, details of the Bonus Issue will be sent to shareholders of the Company in due course. The proposed share certificates of bonus shares will be despatched to shareholders on or about 7th September, 2000.
BUSINESS REVIEW
The economy obviously turned better this year but still had not recovered to the status before the Asian financial turmoil. The prices, in particular, were still at a lower level than before.
In line with the gradual improvement in the overall economy, the Group's sales business of moulds continued to achieve growth and the plants in China continued to manufacture high quality products for the Group.
During the year, the operation of the plant in Heyuan, China had got onto the right track. Both quality and production capacity had achieved the targets. Production was smooth with the cost of production gradually decreasing. The plant mainly produces standard mould bases at present. With a continuously expanding market share, the plant had made significant contribution to the Group.
The plant in Dongguan, China mainly produces highly quality tailor-made mould bases to meet the customers' increasingly demanding requirements for quality and quick delivery.
The plant in Guangzhou, China continued to export high quality mould bases this year and achieved satisfactory sales results. Both productivity and number of customers were continuously on the increase. Moreover, the demand for mould bases in eastern China continued to increase in the past year, resulting in the continued growth in sales in Shanghai, China.
Since the mould bases manufactured by the Group were well received by the Japanese market and the turnover had increased substantially, the leased warehouses were inadequate to meet the demand. As a result, the Group had acquired warehouses in Japan to serve as the sales base for acceptance of orders.
In Singapore and Malaysia, the sales continued to achieve growth in line with the economic recovery in both countries last year.
By virtue of the continuous growth maintained in the sales of mould steel and the continuously expanding product range, the market share also increased significantly.
PROSPECTS
The extension of the plant in Heyuan, China will be completed by the end of this year and production of medium-sized, tailor-made mould bases will commence early next year.
The plant in Guangzhou, China will also develop, mainly for export, spare parts of high quality mould bases. It can strengthen the horizontal development of the Group in the mould industry, bring more comprehensive product range, higher competitiveness and new contribution for the Group.
Demand for mould has been gradually increasing in eastern China, either from local manufacturers or manufacturers from other provinces. The Group's plant in Shanghai, China is just in time to meet this trend. We shall install more machines and equipment and improve our productivity to satisfy the need of the market.
With the enter of China to the WTO, our customers' demand for moulds of high quality is increasing, especially the significant increase of demand for mould in automobile industry. Thus, our plant in Dongguan will actively enhance its capability in computer-aided drawing and design and improve its capacity in the production of high standard, large-sized and tailor-made mould bases to satisfy the need of our customers for such products.
As competition among domestic enterprises (including individual producers) has been keener and keener, demand for moulds of high quality is increasing. The Group's selling point in Dongguan, China will aggressively build up business relationship with domestic enterprises and individual producers in southern China to expand the Group's customer base.
The Group's mould steel product division will install vacuum furnace and nitrating heat treatment equipment in order to provide more value-added service to our customers. In addition, the Group also purchased several quality assurance equipment for steel products, and physico-chemical analysis equipment to strictly inspect incoming material for the maintenance of the quality of our mould steel products. On the other hand, the Group has also done our best to introduce more quality steel products and technology material to satisfy different need of various customers.
With regard to the internet, a trend in the new economy, the Group will also make use of this new and high technology to develop on-line trading which will allow customers around the world to place orders on our products more conveniently and directly and facilitate us to expand our market in various parts of the world.
Notwithstanding of the keen competition, the market share of the Group still continued to increase and outpaced our competitors. Our success depends on our staff's concerted efforts to maintain "Lung Kee" in the leading position in mould industry.
THE YEAR 2000 COMPLIANCE
The Year 2000 problem arises from the practice of using 2-digit year in computer systems. When 21st century comes, all computer systems working in this manner will misinterpret the year.
The modification and replacement of the computer hardware and software for Year 2000 compliance have been completed on schedule in Year 1999. No material adverse impact in relation to the Year 2000 on the business has been occurred.
The total costs for the modification and replacement is approximately HK$500,000. These expenses have been charged to the respective year's profit and loss accounts. At the moment, the Group does not expect any further expenses in relation to this issue.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members of the Company will be closed from 28th August, 2000 to 1st September, 2000, both days inclusive during which period no share transfers will be effected.
In order to qualify for the proposed final dividend and bonus shares, all share certificates accompanied by the completed transfer forms either overleaf or separate or Standard Transfer Form must be lodged with the Hong Kong Branch Registrars of the Company, Central Registration Hong Kong Limited of 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong for registration not later than 4:00 p.m. on 25th August, 2000.
PURCHASE, SALE OR REDEMPTION OF SECURITIES
There was no purchase, sale or redemption of shares or other securities of the Company by the Company or any of its subsidiaries during the year.
By Order of the Board
Siu Tit Lung
Chairman
Hong Kong, 30th June, 2000
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