The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
ANNOUNCEMENT OF INTERIM RESULTS
SIX MONTHS ENDED 30TH SEPTEMBER, 1999
INTERIM RESULTS
The directors (the "Directors") of Lung Kee (Bermuda) Holdings Limited (the "Company") are pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30th September, 1999 as follows:
Six months ended
30th September,
1999 1998
Notes HK$'000 HK$'000
Turnover 404,136 344,163
======== ========
Operating profit 76,713 45,519
Share of result of
a jointly controlled entity 168 108
Share of result of an associated company - (332)
-------- --------
Profit before taxation 76,881 45,295
Hong Kong Taxation (1) (9,046) (6,918)
Taxation in jurisdictions outside Hong Kong (1) (4,000) -
-------- --------
Profit before minority interests 63,835 38,377
Minority interests (13,150) (7,158)
-------- --------
Profit attributable to shareholders 50,685 31,219
======== ========
Dividends (2) 22,923 11,387
======== ========
Earnings per share (3)
Basic 13.35 cents 8.23 cents
=========== ==========
Diluted 13.10 cents 8.19 cents
=========== ==========
Notes:
(1) Taxation
Hong Kong Profits Tax is calculated at the rate of 16% (1998: 16%) of the estimated assessable profit for the period. There was no significant unprovided deferred taxation for the period.
Taxation in jurisdictions outside Hong Kong is calculated based on the applicable rates in those jurisdictions.
(2) Dividends
Six months ended
30th September,
1999 1998
HK$'000 HK$'000
Interim dividend declared by the Company -
HK$6 cents per share
(1998: HK$3 cents per share) 22,923 11,387
========= =========
(3) Earnings Per Share
The calculation of the basic and diluted earnings per share for the six months ended 30th September, 1999 is based on the following data:
Six months ended
30th September,
1999 1998
HK$'000 HK$'000
Earnings
Earnings for the purpose of
basic earnings per share 50,685 31,219
Effect of dilutive potential ordinary shares:
Adjustment to the share of result
of subsidiary based on
dilution of its earnings per share (555) (60)
----------- -----------
Earnings for the purpose
of diluted earnings per share 50,130 31,159
=========== ===========
Number of shares
Weighted average number of ordinary shares
for the purpose of basic earnings per share 379,559,375 379,559,375
Effect of dilutive potential ordinary shares;
options 3,024,211 721,171
----------- -----------
Weighted average number of ordinary shares
for the prupose of diluted earnings per share 382,583,586 380,280,546
=========== ===========
INTERIM DIVIDEND
The Directors have declared an interim dividend of 6 cents (1998: 3 cents) per share in respect of the six months ended 30th September, 1999 to be payable on 22nd December, 1999 to shareholders whose names are on the Register of Members on 21st December, 1999.
BUSINESS REVIEW AND PROSPECTS
The Group enjoyed continuous growth in turnover and profit for the first half year. For the six months ended 30th September, 1999, the Group has achieved a turnover amounting to HK$404 million, representing a growth of 17.43 per cent as compared with HK$344 million for the same period in previous year. Profit attributable to shareholders for the six months ended 30th September, 1999 amounted to HK$51 million, representing a growth of 62.35 per cent as compared with HK$31 million for the same period in the previous year.
The sales and profit of the Group had gradually returned to normal in the wake of the stabilization of the overall economy. As prices had started to stabilize, profit also increased accordingly.
The Group's business of mould base kept growing. The plants in Hong Kong, Dongguan and Shanghai in the People's Republic of China ("PRC") continued to produce quality mould base for the Group.
The new plant in Heyuan, PRC was successfully put into operation. With the gradual decrease in the cost of production, it will make positive contribution to the profit of the Group in the future. The plant in Dongguan, PRC has started to increase production of high value-added products. As for the plant in Guangzhou, PRC, the export of high quality products continued to increase by virtue of its smooth production. The business in Shanghai, PRC, Malaysia, Singapore and Japan also increased steadily.
The Group's business of mould steel trading continued to maintain steady growth. Prices are steady and the varieties of products have been extended to include, for example, the Alcoa aluminium alloy products from the United States. The Group will continue to upgrade its services and provide comprehensive technical support with a view to increasing market share.
The extension project of the plant in Heyuan, PRC will commence construction next year. It is expected that the extension part will be put into use one year thereafter, by which time the productivity will be further enhanced.
Having stood the severe test of the recent financial turmoil and with the concerted effort of all staff, the Group has succeeded in saving costs, controlling credit, improving inventory level and reducing financial expenses so that its profit can return to the former level.
The Group will continue to be a market leader in the mould industry and its business will have a more steady development.
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 expensed 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).
The Group completed the upgrade of its 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 Group has formulated 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 statement.
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 years, 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 20th December, 1999 to 21st December, 1999, both days inclusive, during which period no share transfers will be effected.
In order to qualify for the abovementioned 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, 183 Queen's Road East, Hong Kong for registration not later than 4:00 p.m. on 17th December, 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 six months ended 30th September, 1999.
On behalf of the Board
Siu Yuk Lung
Managing Director
Hong Kong, 3rd December, 1999
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