During the year, the Group continued to focus on the manufacture and sale of mould bases and trading of special mould steel and related products.

The Group has established a strong foothold in the PRC and Southeast Asia, whilst actively explores the Japanese and European markets.

The Group's turnover in 1999 was HK$686 million, which represented an increase of 3.38% when compared with HK$664 million in 1998. Profit attributable to shareholders in 1999 was about HK$66 million, which represented a decrease of 35.86% compared with HK$103 million in 1998. Earnings per share was 17.49 cents, which represented a decrease of 36.19% when compared with 27.41 cents in 1998.

Mould Base Manufacturing and Marketing

The plant in Dongguan, the PRC continued to contribute to the Group this year. It currently fulfilled the requirement of the Guangdong Province.

The plant in Shanghai, the PRC was getting onto the right track, and served to open up the mould bases market for the Group in the Eastern PRC.

The plant in Guangzhou, the PRC committed itself to fulfill the orders of the European and American markets. The Group's share in these markets were gradually expanding.

With respect to the Japanese market, awareness of the Group's brand name was increased among its clients. Its share in the market would increase accordingly.

In view of the ongoing disappointing economic conditions, and that some customers of the Group were adversely affected by the Asia financial turmoil, the Group adjusted its product prices downwards to satisfy the requirements of its customers and the market. This also accounted for the Group's fall in profits for the year. However, with the signs of improvement in the overall economy, such trend will be reversed. It is considered that the conditions will tend to stabilize over time.

Trading of Mould Steel

The Group continued to focus on the trading of special steel for moulds. The profits of this business also declined upon the ongoing disappointing economic environment. However, overall sales increased on the efforts to introduce a greater variety in products, and to expand in the scope of related service.

Liquidity and Capital Resources

After a year of assiduous operations, the financial position of the Group still demonstrated improvement, with a net borrowing of HK$50,000,000 for the previous year to a net cash surplus of HK$13,000,000 for this year.

Year 2000 Compliance

The Group recognizes the Year 2000 problem as a global problem and places the highest priority towards the task of ensuring conformity. The Directors not only have a keen interest in the project but also play an active role in its development.

The Group's conformity guidelines follows the British Standards Institutes DISC PD2000-1 definition and only gives compliance rating to systems which conform to the rules specified by the above standard. The primary goal of the Year 2000 task force is to ensure that all the Group's core business system will perform date related calculations and comparisons without errors, before, on and after 1st January, 2000.

The project started in January 1998 and headed by the MIS manager leading a group of Systems analyst, Programmers and Technical support staff. This task force has conducted testing of not just computers hardware and software but also all other affected equipment which uses dates including embedded microchip systems, telecommunications equipment, time card systems and alarm systems. The Group has also ensured all products it supply to its customers are Year 2000 compliant.

The MIS department has already allocated over 40% of its resources towards the Year 2000 project and a budget of HK$450,000. The majority of the cost is derived from human resources with a small percentage for the replacement, upgrade and modification of all non-compliant equipment (most equipment was found to be compliant).

On 30th April, 1999, the Group completed the upgrade of our entire core business systems, and removal of non-compliant equipment. To ensure smooth operation during the affected periods, the Group is monitoring the operation performance of all its new systems. The project is estimated at 90% complete and scheduled for completion before July 1999.

The Group is in the process of formulating performing risk assessment based on their questionnaire replies from its financial partners, suppliers, customers and other business associates. Contingency plans for all its core systems have also been designed and tested; these plans include the use of backup systems and substitute systems, all of which have been tested.

With regards to external influence, the Group does not outsource its development, nor does it rely on external data processing facilities, impact from this category can be considered as minimal. However taking into consideration of public facilities and their compliance conformity, the Group takes a passive role and relies on the assurances from the organization in some form of official written.

All the Group's critical business systems are Year 2000 compliance and it is currently in the monitoring stage; the amount of resources allocated has been reduced to about 10% and an estimated budget of HK$100,000.

In the current and previous financial year, the Group has spent insignificant amounts on new equipment and software, and therefore have all been charged to the respective year's profit and loss accounts, in respect of Year 2000 costs. Such method has been made in accordance with the generally accepted accounting standards.

The Group will ensure that the Year 2000 will cause minimum to no impact on its business and its business partners, and continue to provide the quality it always has both in service and the products it manufacture.

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