The Group holds 16.7% of the ordinary share capital of Jetlink (H.K.) Limited, a private company incorporated in Hong Kong which was inactive during the year. In the opinion of the directors, the unlisted shares are worth at least cost.

Note:

At the 1997 annual general meeting held on 31st July, 1997, it was resolved that a bonus issue of 75,316,880 of the Company's shares, credited as fully paid by way of capitalisation of part of the Company's share premium account, on the basis of one bonus share for four existing shares then held by the shareholders, be issued to the Company's shareholders ("Bonus Share Issue"). These shares rank pari passu in all respects with the then existing shares except that they did not rank for the special and final dividends of 4 cents and 9.6 cents per share (after adjusting for the Bonus Share Issue), respectively, for the year ended 31st March, 1997.

(i) The Company has a share option scheme (the "Scheme") under which the Board of Directors of the Company may grant options to eligible employees, including executive directors, of the Company and its subsidiaries, to subscribe for shares in the Company at a price equal to the higher of the nominal value of the shares and 80% of the average of the closing prices of the shares on the Stock Exchange on the five trading days immediately preceding the date of the grant of the options. The maximum number of shares in respect of which options may be granted under the Scheme shall not exceed 10% of the issued share capital of the Company from time to time.

Options granted are exercisable for a period of 3 years commencing on the expiry of 6 months after the date the options are granted.

Movements in the number of share options granted under the Scheme during the year are as follows:

* The original exercise price at date of grant was HK$1.80 per share. The current exercise price of HK$1.44 per share is after adjusting for the Bonus Share Issue.

No significant consideration was received by the Company for options granted during the year.

(ii) A subsidiary of the Company, Lung Kee Metal Holdings Limited ("LKMH") also has a share option scheme (the "LKMH Scheme") under which the Board of Directors of LKMH may grant options to eligible employees, including executive directors, of LKMH and its subsidiaries, to subscribe for shares in LKMH at a price equal to the higher of the nominal value of the shares and 80% of the average of the closing prices of the shares on the Main Board of the Stock Exchange of Singapore Limited on the five trading days immediately preceding the date of the grant of the options. The maximum number of shares in respect of which options may be granted under the LKMH Scheme shall not exceed 10% of the share capital of LKMH from time to time.

Options granted are exerciseable for a period of 4 years commencing on the expiry of 12 months after the date the options are granted.

On 15th January, 1998, 900,000 and 2,100,000 share options were granted to directors and employees of LKMH, respectively, at an exercise price of US$0.42 for each share. At the balance sheet date, there was no exercise of the share options granted.

No significant consideration was received by LKMH for options granted during the year.

The capital reserve of the Group includes an amount of HK$11,870,047 arising from the reorganisation of the Group, representing the aggregate of (i) the deferred shares of Lung Kee International Limited and Lung Kee Metal Limited; and (ii) the difference between the nominal amount of the share capital issued by the Company in exchange for the nominal amount of the share capital of its subsidiaries acquired at the date of the group reorganisation.

The Company's reserves available for distribution to shareholders at 31st March, 1998 represent its retained profits of HK$8,636,248 (1997: HK$71,182,937).

The major components of the provision for deferred taxation at the balance sheet date are as follows:

Neither the Group nor the Company had any significant unprovided deferred taxation for the year or at the balance sheet date.

The Company had no borrowings at the balance sheet date.

The Company had no obligations under finance leases at the balance sheet date.