ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 31ST MARCH, 2000
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Year ended 31st March,
2000 1999 %
HK$'000 HK$'000 Change
Turnover 699,967 602,346 16%
Profit attributable to shareholders 32,028 18,025 78%
Total shareholders' funds 194,332 132,837 46%
Per Share Data
Basic earnings per share (cents) 9.63 5.55 74%
Cash dividends per share (cents) 1.75 1.50 17%
Key Financial Ratios
Return on total shareholders' funds (%) 16.48 13.57 21%
Return on turnover (%) 4.58 2.99 53%
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The Board of Directors of Shun Cheong Holdings Limited (the "Company") announces the audited consolidated results of the Company and its subsidiaries (together, the "Group") for the year ended 31st March, 2000 which are summarised as below:
RESULTS
Year ended 31st March,
2000 1999
Note HK$'000 HK$'000
Turnover 1 699,967 602,346
Cost of installation and cost of sales (609,676) (528,337)
---------- ----------
Gross profit 90,291 74,009
Other revenue 14,916 7,482
General and administrative expenses (64,093) (55,776)
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Operating profit 41,114 25,715
Finance cost (3,562) (4,262)
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Profit before share of (loss) profit
of associated companies 37,552 21,453
Share of (loss) profit of
associated companies (158) 4
---------- ----------
Profit before taxation 37,394 21,457
Taxation 2 (6,267) (3,399)
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Profit after taxation 31,127 18,058
Minority interests 901 (33)
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Profit attributable to shareholders 32,028 18,025
Dividend 3 (6,793) (4,906)
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Profit for the year retained 25,235 13,119
========== ==========
Earnings per share 4
Basic 9.63 cents 5.55 cents
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Diluted 9.54 cents 5.55 cents
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Notes:
1. Turnover
Turnover comprises (i) the value of revenue certified under long-term installation contracts, (ii) the entire billings of maintenance work orders completed during the year, and (iii) the value of sales of goods in the normal course of business.
2. Taxation
The Company is exempted from taxation in Bermuda until 2016. Hong Kong profits tax has been provided at the rate of 16% (1999 - 16%) on the estimated assessable profit arising in or derived from Hong Kong.
Deferred taxation is provided for under the liability method, at the current tax rate, in respect of the timing differences between profit as computed for taxation purposes and profit as stated in the financial statements, except where it is considered that no liability will arise in the foreseeable future. A deferred tax asset is not recognised unless the related benefits are expected to crystallize in the foreseeable future.
Taxation (charge) credit comprised:
Year ended 31st March,
2000 1999
HK$'000 HK$'000
Company and subsidiaries
Hong Kong profits tax
- Current year (6,946) (1,255)
- Over-provision in prior year 5 176
Deferred taxation 674 (2,320)
Share of taxation of associated company - -
----------- -----------
(6,267) (3,399)
=========== ===========
3. Dividend
Year ended 31st March,
2000 1999
HK$'000 HK$'000
Proposed final dividend of HK$1.75 cent
(1999 - HK$1.5 cent) per share 6,779 4,906
Additional final dividend for the prior
year due to exercise of share option 14 -
----------- -----------
6,793 4,906
=========== ===========
The above final dividend is calculated on the basis of 387,371,600 shares of the Company in issue.
4. Earnings per share
Year ended 31st March,
2000 1999
HK$'000 HK$'000
Earnings
Earnings for the purposes of basic
and diluted earnings per share 32,028 18,025
=========== ===========
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 332,445,350 325,041,600
Effect of dilutive potential
ordinary shares:
Share option 3,384,281 -
----------- -----------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 335,829,631 325,041,600
=========== ===========
5. Movements in retained profit
Year ended 31st March,
2000 1999
HK$'000 HK$'000
Balance at the beginning of year 27,465 14,346
Profit retained for the year 25,235 13,119
Goodwill arising from acquisition of an
interest in a subsidiary (77) -
----------- -----------
Balance at the end of year 52,623 27,465
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6. Comparative Figures
The Group has adopted the following Statement of Standard of Accounting Practice ("SSAP") issued by the Hong Kong Society of Accountants which became effective in the year.
SSAP 1 (Revised) Presentation of Financial Statements
SSAP 1 (Revised) is concerned with the presentation of financial information. The presentation of financial statements in the current year has been modified in order to conform with the requirements of this standard. Comparative figures have been restated to achieve a consistent presentation. None of the amendments has affected the results in the current or prior years.
DIVIDEND
The Directors will recommend the payment of a final dividend of HK$1.75 cent per share (1999 - HK$1.5 cent) for the year ended 31st March, 2000 be payable on or before Friday, 29th September, 2000 to the shareholders whose names appear on the register of members of the Company on Monday, 11th September, 2000, subject to the approval of the shareholders at the forthcoming Annual General Meeting.
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from Wednesday, 6th September, 2000 to Monday, 11th September, 2000, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the proposed final dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's share registrars in Hong Kong, Central Registration Hong Kong Limited, at 17/F., Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:00 p.m. on Tuesday, 5th September, 2000.
OPERATION REVIEW
The Group's turnover for the financial year 1999/2000 amounted to HK$699,967,000 representing an increase of 16% over the same period last year. The audited profit attributable to shareholders for the year was HK$32,028,000, an increase of 78%. Basic earnings per share were HK$9.63 cents, a significant increase of 74% over the corresponding period last year.
To most contractors in the construction industry, the 1999/2000 financial year remained a difficult year. Inspite of this, your Company was able to achieve a satisfactory result. The reasons behind the Group's strong profit growth were mainly due to selective tendering and diversification of services.
As at 31st March, 2000, the Group's uncompleted contract on hand was approximately HK$824 million as compared to last year's approximately HK$870 million. Major contracts awarded since the announcement of interim results on 7th December, 1999 were:
| - | Building Services Installation for Castle Peak Hospital Redevelopment Phase II stage I. |
| - | Electrical Installation for Redevelopment of Yau Tong Estate Phase 3. |
| - | Rewiring of Electrical Installation Ma Tau Wai Estate. |
| - | Building Services Installation for Construction of Tactical Training Complex at the Police Training School, Aberdeen, Hong Kong. |
| - | Electrical Installation for Cheung Sha Wan West Phase 3. |
| - | Building Services Installation for the Construction of a New Acute Block at Caritas Medical Centre, Shumshuipo, Kowloon. |
On 18th February, 2000, the Group successfully placed 45,000,000 shares at HK$0.72 per share to private investors generating total net proceeds of approximately HK$31.4 million. The proceeds were used in part to fund the Group's investments in newly developed businesses using the Internet as a platform to provide commercial applications to domestic households.
BUSINESS PROSPECTS
Building Services Engineering
In view of the depressed property market in the private sector and the government's recent decision to defer or curb the developments of some housing schemes, the reduced market pool created fierce competition. However, the Group will continue to be prudent in selecting projects that utilize the Group's specialist skills. For example, fire services improvements, provision of stand-by generators, energy retrofit and security system.
Additionally, the Group has now diversified into the following two businesses.
Broadband Connectivity: Speedlink
In view of the high demand of broadband Internet services in the market, the Group decided to address this need by providing broadband connections for building owners in Hong Kong. Under this strategy, the Group's subsidiary, Speedlink Limited, will act as an independent facilities and services provider, working directly with building owners to install its "First Mile" Internet Broadband connections which would accommodate multiple network operators and services providers. It is expected that the Group will gain revenues from fees levied on managing these facilities and from set-up and connectively.
Broadband Content: Karaoke on Demand
On 25th April, 2000, the Group announced a series of Discloseable Transactions in which the Group together with other independent third parties acquired a 57.20% interest in Binary KOD Limited. Binary KOD Limited together with its subsidiaries ("Binary KOD Group") engages in designing, supplying, installing and maintaining Karaoke hardware and control systems to Karaoke in Hong Kong, Macau and the Mainland China. A detailed circular concerning the Discloseable Transactions was dispatched to all shareholders on 12th May, 2000. The technologies provided by Binary KOD Group will add value to the business of broadband connectivity.
The Board remains confident that the Group will operate profitability in its core business of building service engineering in the coming 2000/2001 fiscal year, and expects satisfactory development in the Group's new businesses.
CODE OF BEST PRACTICE
In the opinion of the directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Listing Rules of The Stock Exchange of Hong Kong Limited (the "Listing Rules") throughout the accounting year covered by the final report except that two independent non-executive directors are not appointed for a specific term as they are subject to retirement by rotation and re-election at Annual General Meetings in accordance with the Company's Bye-law 99(A).
AUDIT COMMITTEE
In compliance with the Code of Best Practice as set out in Appendix 14 of the Listing Rules, the Company established an Audit Committee comprising two independent non-executive directors and one executive director and adopted the terms of reference governing the authority and duties of the Audit Committee in December 1999. The present members of the Audit Committee are Messrs. James BLAKE and Bernard POULIOT, the independent non-executive directors, upon the resignation of Mr. Yu Wing Sang as executive director on 19th July, 2000.
THE YEAR 2000 ISSUE
The Group has adopted the Year 2000 ("Y2K") conformity requirements issued by the British Standards Institute as its definition of Y2K compliance, and has carefully evaluated the risks and uncertainties associated with non-compliance.
Other than minor inconvenience caused by some of the office equipment, such as facsimile machines, telephone PABX systems etc., which are not Y2K compliant, no business disruption has been encountered by the Group before, during and after the millennium change.
In the past two years, the Group has taken Y2K compliance issues into consideration when upgrading or enhancing its computer hardware and software The costs would be recorded either as assets and amortised or as operating expenses according to the Group's underlying accounting policies.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the year.
APPOINTMENT AND RESIGNATION OF DIRECTORS
The Board is pleased to announce that Mr. Barry Buttifant is appointed as Executive Director of the Company effective from 19th July, 2000.
The Board also gives notice that Mr. Yu Wing Sang, Johnny resigned as Executive Director of the Company with effect from 19th July, 2000.
We would like to take this opportunity to extend our welcome to Mr. Barry Buttifant on his appointment and to thank Mr. Yu Wing Sang, Johnny for his valuable contribution to the Company during the period of his services.
By order of the Board
James Sai Wing Wong
Chairman
Hong Kong SAR, 19th July, 2000
website: http://www.irasia.com/listco/hk/shuncheong
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