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FINAL RESULTS FOR THE YEAR ENDED 31ST MARCH, 1999
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, 1999 together with comparative figures for the year ended 31st March, 1998 as follows:
1999 1998
NOTES HK$'000 HK$'000
TURNOVER 686,127 663,681
=========== ===========
OPERATING PROFIT 94,728 151,618
SHARE OF RESULTS OF JOINTLY
CONTROLLED ENTITIES 22 (3,692)
SHARE OF RESULTS OF
ASSOCIATED COMPANIES (288) (694)
----------- -----------
PROFIT FROM ORDINARY ACTIVITIES
BEFORE TAXATION 94,462 147,232
TAXATION (1) (11,450) (16,242)
----------- -----------
PROFIT BEFORE MINORITY INTERESTS 83,012 130,990
MINORITY INTERESTS (16,643) (27,511)
----------- -----------
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 66,369 103,479
=========== ===========
DIVIDENDS (2) 37,956 60,916
=========== ===========
EARNINGS PER SHARE (3)
Basic 17.49 cents 27.41 cents
=========== ===========
Diluted 17.40 cents 27.28 cents
=========== ===========
NOTES:
(1) TAXATION
1999 1998
HK$'000 HK$'000
The charge comprises:
Hong Kong Profits Tax 11,316 16,272
Taxation in jurisdictions outside Hong Kong 2,000 ---
Share of taxation on results of a
jointly controlled entity --- (30)
------- -------
13,316 16,242
Deferred taxation (1,866) ---
------- -------
11,450 16,242
======= =======
Hong Kong Profits Tax is calculated at 16% (1998: 16.5%) 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
1999 1998
HK$'000 HK$'000
Interim dividend of 3 cents (1998: 6 cents)
per share paid to the Company's shareholders 11,387 22,774
Proposed final dividend of 7 cents
(1998: 10 cents) per share payable to the
Company's shareholders 26,569 37,956
Final and special dividends underprovided for
previous year --- 186
------- -------
37,956 60,916
======= =======
(3) EARNINGS PER SHARE
The calculation of basic earnings per share is based on the profit for the year of HK$66,368,855 (1998: HK$103,478,810) and on the weighted average of 379,559,375 shares (1998: 377,523,185 shares) in issue during the year.
The calculation of diluted earnings per share is based on the adjusted profit for the year of HK$66,053,855 (1998: HK$103,358,810) and on the weighted average of 379,571,652 Shares (1998: 378,877,136 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 1999 Annual General Meeting the payment of a final dividend of 7 cents per share for the year ended 31st March, 1999 to shareholders whose names appear on the Register of Members on 23rd July, 1999. Subject to the approval by shareholders at the forthcoming 1999 Annual General Meeting, the proposed final dividend will be despatched to shareholders on or about 19th August, 1999.
BUSINESS REVIEW
As the Asian financial turmoil continually hit against each and every Asian company, some customers of the Group were unavoidably affected. In order to help them tide over difficulties, the Group adjusted its product prices downwards accordingly to reduce their production costs. This accounted for the Group's fall in profits for the year.
In view of recent signs of improvement in the overall economy, the Group believed that the worst days have been over and that our product prices as well as profits should presumably stabilize.
With respect to the mould base market, exports to Singapore, Malaysia, Europe and Japan will improve. At the same time, sales to Chinese provinces other than Guangdong are gradually looking up, which in the long run will help reduce our reliance on the Guangdong market.
The plant in Malaysia, the associated company in Japan, and the plants in Shanghai and Guangzhou are getting onto the right track. They are likely to begin making contributions to the Group.
The mould steel trading suffered a downward pressure on prices too. However, through the introduction of a greater variety in mould steel products, and the expansion in the scope of service, the business managed to maintain sustained growth.
PROSPECTS
The plant in Heyuan, the PRC, has partially gone into operation, and is expected to be fully operational by the end of this year. Specializing on the production of standard mould bases, the plant will help reduce costs on the one hand, and boost output and sales on the other hand.
The Group has made every effort to increase its sales in the European and American markets. The PRC market will grow upon increased sales outlets. It is expected that these new markets will contribute to further growth of the Group.
Although adverse economic conditions have begun to subside, the Group will continue to adopt a cautious attitude towards the prospects of an economic recovery. We anticipate that the year ahead will still be a difficult one.
Now that the Group has managed to get through the hurdles of the Asian financial turbulence, the Group will work in concert with its staff to forge ahead and continue to consolidate its leadership in the Asian market.
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 cores 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.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members of the Company will be closed from 19th July, 1999, to 23rd July, 1999, both days inclusive during which period no share transfers will be effected.
In order to qualify for the proposed final dividend, 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 16th July, 1999.
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, 25th June, 1999
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