10. FIXED ASSETS
The investment properties of the Company were revalued at 31st March, 1999 on an open market value basis by Chung Sen Surveyors Limited, a firm of independent professional valuers. The deficit arising on revaluation of HK$2,855,913 has been charged to the profit and loss account.
The net book value of investment properties and land and buildings shown above comprises:
The properties under construction are situated outside Hong Kong and are held under medium-term leases of less than fifty years.
At 31st March, 1999, one of the Group's freehold properties with a net book value of HK$1,373,527 (1998: nil) was pledged to a bank as security for general banking facilities granted to the Group. None of the facilities was utilised as at the balance sheet date.
At 31st March, 1998, one of the Group's leasehold properties with a net book value of HK$1,726,516 had been pledged to a bank as security for the mortgage loan facilities granted to the Group. The mortgage loan was fully repaid during the year.
The net book value of fixed assets included an amount of HK$3,190,548 (1998: HK$4,897,844) in respect of assets held under finance leases.
The carrying value of the unlisted shares is based on the book values of the underlying net assets of the subsidiaries attributable to the Group as at the date on which the Company became the ultimate holding company of the Group under the group reorganisation in 1993.
The amount due from a subsidiary is unsecured, non-interest bearing and has no fixed repayment terms.
Loans to subsidiaries are unsecured, interest bearing at Hong Kong prime rate and have no fixed repayment terms.
Details of the Company's subsidiaries at 31st March, 1999 are set out in note 30.
None of the subsidiaries had any loan capital outstanding at the end of the year or at any time during the year.
At 31st March, 1999, the Group had a 37.5% equity interest in Lung Kee Metal Japan Co., Ltd., a company incorporated in Japan and is engaged in the manufacturing and marketing of mould bases. As Lung Kee Metal Japan Co., Ltd. had net liabilities at 31st March, 1999, the Group's interests in this company were fully provided.
At 31st March, 1998, the Company also had interests in the following companies:
Notes:
a. On 1st April, 1998, Lung Kee International Limited ("Lung Kee International"), a 75% owned subsidiary, entered into various arrangements with the remaining shareholder of Lung Kee Malaysia pursuant to which the 50% economic interest in Lung Kee Malaysia not registered in the name of Lung Kee International was effectively surrendered to Lung Kee International. As the Group also had management control over this company, Lung Kee Malaysia was accounted for as a subsidiary for accounting purposes from 1st April, 1998 onwards.
b. Lung Kee Japan Co. Ltd. was liquidated and the Group's interests in this company was fully written off.
The amounts due from jointly controlled entities are unsecured, non-interest bearing and have no fixed repayment terms.
The Group had a 15% equity interest in Fu Yu Moulding and Tooling (Dongguan) Co. Ltd. ("Fu Yu"), a company established in the PRC and engaged in the marketing of plastic products. The Group ceased to be in a position to exercise significant influence over this company during the year and on 27th May, 1999 the Group entered into an agreement with the remaining shareholder of Fu Yu to dispose of its entire interest for HK$3,187,498. The Group's interest in this company at 31st March, 1999 was reclassified as other investment under current assets (note 15) and was stated at the net realisable value of HK$3,187,498.
The amount due from an associated company was unsecured, non-interest bearing and was repaid during the year.
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.
The cost of inventories recognised as an expense during the year was HK$432,304,909 (1998: HK$386,589,621).
(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.
Details of the movements in the number of share options granted under the Scheme during the year are as follows:
No significant consideration was received by the Company for options granted during the year.
(ii) A subsidiary of the Company, 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 three 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 exercisable for a period of 4 years commencing on the expiry of 12 months after the date the options are granted.
Details of the movements in the number of share options granted under the LKMH Scheme during the year are as follows:
No significant consideration was received by LKMH for options granted during the year.
Included in the above are the Group's share of post acquisition reserves of jointly controlled entities and associated company:
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, 1999 represent its retained profits of HK$20,735,582 (1998: HK$8,636,248).
Furniture, Properties
Investment Land and fixtures and Plant and Motor under
properties buildings fittings machinery vehicles construction Total
HK$ HK$ HK$ HK$ HK$ HK$ HK$
THE GROUP
AT COST OR VALUATION
At 1st April, 1998 - 117,299,800 61,662,218 307,604,013 20,336,258 37,524,602 544,426,891
Currency realignment - 27,049 (92,905) (269,861) (53,964) 57,616 (332,065)
Reclassification 8,113,140 12,352,507 - - - (20,465,647) -
On acquisition of a subsidiary - 1,429,883 994,673 10,030,181 1,400,582 - 13,855,319
Additions - 3,582,733 2,927,996 32,387,138 5,681,384 42,565,684 87,144,935
Disposals - (1,868,187) (451,401) (179,800) (3,632,168) - (6,131,556)
Deficit arising on revaluation (3,613,140) - - - - - (3,613,140)
---------- ----------- ---------- ----------- ---------- ----------- -----------
At 31st March, 1999 4,500,000 132,823,785 65,040,581 349,571,671 23,732,092 59,682,255 635,350,384
---------- ----------- ---------- ----------- ---------- ----------- -----------
Comprising:
At valuation 1999 4,500,000 - - - - - 4,500,000
At cost - 132,823,785 65,040,581 349,571,671 23,732,092 59,682,255 630,850,384
---------- ----------- ---------- ----------- ---------- ----------- -----------
4,500,000 132,823,785 65,040,581 349,571,671 23,732,092 59,682,255 635,350,384
========== =========== ========== =========== ========== =========== ===========
DEPRECIATION AND AMORTISATION
At 1st April, 1998 - 9,173,823 29,670,998 155,940,265 13,635,591 - 208,420,677
Currency realignment - (58,219) (66,989) (375,314) (11,049) - (511,571)
Reclassification 757,227 (757,227) - - - - -
On acquisition of a subsidiary - - 265,089 1,594,268 421,695 - 2,281,052
Provided for the year - 2,535,320 8,347,692 48,454,444 5,046,141 - 64,383,597
Eliminated on disposals - (141,671) (357,007) (177,820) (2,906,309) - (3,582,807)
Deficit arising on revaluation (757,227) - - - - - (757,227)
---------- ----------- ---------- ----------- ---------- ----------- -----------
At 31st March, 1999 - 10,752,026 37,859,783 205,435,843 16,186,069 - 270,233,721
---------- ----------- ---------- ----------- ---------- ----------- -----------
NET BOOK VALUE
At 31st March, 1999 4,500,000 122,071,759 27,180,798 144,135,828 7,546,023 59,682,255 365,116,663
========== =========== ========== =========== ========== =========== ===========
At 31st March, 1998 - 108,125,977 31,991,220 151,663,748 6,700,667 37,524,602 336,006,214
========== =========== ========== =========== ========== =========== ===========
1999 1998
HK$ HK$
Properties in Hong Kong held under
medium-term leases 41,216,346 46,745,955
Properties outside Hong Kong:
-- freehold 6,138,872 5,252,281
-- held under medium-term leases of
less than fifty year 79,216,541 56,127,741
----------- -----------
126,571,759 108,125,977
=========== ===========
11. INTERESTS IN SUBSIDIARIES
THE COMPANY
1999 1998
HK$ HK$
Unlisted shares, at cost 55,856,000 55,856,000
Amount due from a subsidiary 118,497,853 134,798,527
Loans to subsidiaries 17,000,000 -
----------- -----------
191,353,853 190,654,527
=========== ===========
12. INTERESTS IN JOINTLY CONTROLLED ENTITIES
THE GROUP
1999 1998
HK$ HK$
Share of net liabilities (1,337,304) (1,577,736)
Amounts due from jointly controlled entities 4,242,128 11,238,876
---------- ----------
2,904,824 9,661,140
Less: Provision (2,904,824) -
---------- ----------
- 9,661,140
========== ==========
Proportion of
nominal value of
issued capital
Country of held by the Principal
Name of company incorporation Group activities
Lung Kee (Metal) Malaysia Malaysia 37.5% Manufacturing
Sdn. Bhd. ("Lung Kee and marketing
Malaysia" formerly known as of mould
United Challenge Sdn. Bhd.) bases and
(note a) related
products
Lung Kee Japan Co., Ltd. Japan 37.5% Inactive
(note b)
13. INTERESTS IN AN ASSOCIATED COMPANY
THE GROUP
1999 1998
HK$ HK$
Share of net assets - 3,475,495
Amount due from an associated company - 3,186,852
---------- ----------
- 6,662,347
========== ==========
14. LONG-TERM INVESTMENT
THE GROUP
1999 1998
HK$ HK$
Unlisted shares, at cost 50,000 50,000
========== ==========
15. NET CURRENT ASSETS (LIABILITIES)
THE GROUP THE COMPANY
1999 1998 1999 1998
HK$ HK$ HK$ HK$
CURRENT ASSETS
Inventories (note 16) 207,340,327 225,123,281 - -
Debtors, deposits
and prepayments 176,274,188 207,315,315 255,610 167,221
Bills receivable 2,284,838 5,311,552 - -
Other investment
(note 13) 3,187,498 - - -
Amounts due from jointly
controlled entities - 12,418,894 - 59,915
Taxation recoverable 2,710,696 - - -
Bank balances, deposits
and cash 121,168,763 118,560,941 21,250 20,297
----------- ----------- ----------- -----------
512,966,310 568,729,983 276,860 247,433
----------- ----------- ----------- -----------
CURRENT LIABILITIES
Creditors and
accrued charges 62,034,226 61,472,290 268,989 252,789
Taxation payable 3,815,229 9,718,666 - -
Proposed dividend 26,569,157 37,955,938 26,569,157 37,955,938
Borrowings --
due within one year 24,713,329 17,438,335 - -
(note 21)
Obligations under
finance leases --
due within one year
(note 22) 2,227,236 2,391,904 - -
----------- ----------- ----------- -----------
119,359,177 128,977,133 26,838,146 38,208,727
----------- ----------- ----------- -----------
NET CURRENT ASSETS
(LIABILITIES) 393,607,133 439,752,850 (26,561,286) (37,961,294)
=========== =========== =========== ===========
16. INVENTORIES
THE GROUP
1999 1998
HK$ HK$
Raw materials 177,797,237 169,819,251
Work in progress 18,154,203 39,510,491
Finished goods 11,388,887 15,793,539
----------- -----------
207,340,327 225,123,281
=========== ===========
17. SHARE CAPITAL
1999 & 1998
HK$
Shares of HK$0.10 each
Authorised 60,000,000
===========
Issued and fully paid 37,955,938
===========
18. SHARE OPTIONS
Number of share options
---------------------------------
Exercise price At Granted At
per share 1st April, during 31st March,
HK$ 1998 the year 1999 Exercisable period
1.440 225,000 - 225,000 21st September, 1997 to
20th September, 2000
1.865 4,000,000 - 4,000,000 1st May, 1998 to
30th April, 2001
1.205 4,200,000 - 4,200,000 3rd September, 1998 to
2nd September, 2001
0.550 - 3,910,000 3,910,000 29th September, 1999 to
28th September, 2002
---------- --------- ----------
8,425,000 3,910,000 12,335,000
========== ========= ==========
Number of share options
---------------------------------
Exercise price At Granted At
per share 1st April, during 31st March,
US$ 1998 the year 1999 Exercisable period
0.42 3,000,000 - 3,000,000 15th January, 1999 to
14th January, 2003
0.13 - 3,500,000 3,500,000 14th August, 1999 to
13th August, 2003
---------- --------- ----------
3,000,000 3,500,000 6,500,000
========== ========= ==========
19. RESERVES
Retained
Share Capital profits Translation
premium reserve (deficit) reserve Total
HK$ HK$ HK$ HK$ HK$
THE GROUP
At 1st April, 1998 106,101,047 11,801,902 351,074,323 426,193 469,403,465
Realised on liquidation
of a subsidiary - (151,827) - - (151,827)
Goodwill on acquisition
of a subsidiary - (1,710,850) - - (1,710,850)
Exchange differences
arising from
translation of
foreign currency
financial statements - - - 427,777 427,777
Profit for the year - - 66,368,855 - 66,368,855
Dividends (note 8) - - (37,955,938) - (37,955,938)
----------- ---------- ----------- ---------- -----------
At 31st March, 1999 106,101,047 9,939,225 379,487,240 853,970 496,381,482
=========== ========== =========== ========== ===========
Attributable to:
The Company
and subsidiaries 106,101,047 9,939,225 382,731,384 853,970 499,625,626
Jointly controlled
entity - - (3,244,144) - (3,244,144)
----------- ---------- ----------- ---------- -----------
At 31st March, 1999 106,101,047 9,939,225 379,487,240 853,970 496,381,482
=========== ========== =========== ========== ===========
At 1st April, 1998 - - (6,973,781) 508,957 (6,464,824)
Share of results
for the year - - (199,323) - (199,323)
Transferred to
group reserves - - 3,928,960 (508,957) 3,420,003
----------- ---------- ----------- ---------- -----------
At 31st March, 1999 - - (3,244,144) - (3,244,144)
=========== ========== =========== ========== ===========
Share premium Retained profits Total
HK$ HK$ HK$
THE COMPANY
At 1st April, 1998 106,101,047 8,636,248 114,737,295
Profit for the year (note 7) - 50,055,272 50,055,272
Dividends (note 8) - (37,955,938) (37,955,938)
----------- ----------- -----------
At 31st March, 1999 106,101,047 20,735,582 126,836,629
=========== =========== ===========
Source: Lung Kee (Bermuda) Holdings Limited
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