| For Immediate Release | July 19, 2000 |
ANNOUNCES 1999/2000 ANNUAL RESULTS
AUDITED PROFIT INCREASED 78% TO REACH APPROXIMATELY
HK$32 MILLION
* * *
STRENGHTENS BUSINESSES IN BROADBAND ARENA TO EMBRACE NEW ECONOMY OPPORTUNITIES
(Hong Kong, July 19, 2000) - Shun Cheong Holdings Limited ("Shun Cheong") (Stock Code: 650) today announced its annual results for the year ended March 31, 2000.
The Group achieved an increase of 16% in turnover to HK$699,967,000, as compared to last year's turnover of HK$602,346,000. The audited profit attributable to shareholders was approximately HK$32 million, representing a strong increase of 78%. Basic earnings per share was HK 9.63 cents. The Board of Directors recommended a final dividend of HK1.75 cents per share.
Mr. George Kwok, Managing Director of Shun Cheong Holdings Ltd., said: "Despite the depressed property market in the private sector and the fierce competition amongst the building services contracting business, selective tendering and specialized experience in the industry has led the Group to achieve a satisfactory result in 1999/2000. The Group's strong profit growth is mainly due to our selective tendering and diversification of services and business."
"Last year, the Group was contracted to provide building services for several public hospitals and government buildings, to improve their power efficiency, security system and safety standard. The rising awareness of energy conservation also gave rise to a large number of energy retrofit work in both the private and public sectors, where we are also a major benefactor," said Mr. Kwok.
Mr. Kwok noted that approximately 80% of the contracts of the Group was related to the public sector. "This highlights the Group's sound management and strong financial position which enables us to fulfil the stringent requirement of government work. It also points to our excellent quality of services and renowned reputation in the industry."
The trading business of the Group, which represented around 15% of the Group's turnover, also enjoyed a good year with the sales and installation of ultra low and medium voltage generators progressed steadily. This business was given a further boost with the forge of an exclusive distributorship with Mitsubishi Heavy Industries on its high voltage generator sets for Hong Kong and Macau.
Mr. Kwok said the demand for these high voltage generators were very encouraging, particularly from the IT and Internet-related sectors. To date, Shun Cheong has secured over 20 contracts and 40 generator sets have been installed with a total contract value of over HK$50 million.
"This distributorship fits in well with our business strategy of providing broadband solutions to the market and will allow us to penetrate the Internet-centric community," he said.
Shun Cheong launched into broadband services provision last year with the introduction of First MileTM service under which Shun Cheong will install in-building broadband wiring and systems for Internet connection, serving building owners and tenants.
First MileTM service is now undertaken by Shun Cheong's subsidiary - Speedlink Limited, which is responsible for the design and installation of the fibre-optic network with direct access to individual households or commercial units in the building.
"The Group is aggressively strengthening its presence and penetration into the Internet arena, seeking higher returns to our shareholders. The installation of broadband wiring within buildings is an logical progression from our in-building services, enabling us to capture increased business opportunities in the Internet age," said Mr. Kwok.
The Group has currently signed up with 30-40 buildings to install the First MileTM solution. In view of the growing demand for broadband access, the Group expects the number of buildings signed up for installation will reach 150-200 by the end of year 2000.
Last year also saw the Group engaging in strategic investment activities. Shun Cheong invested in quamnet.com, a well-known financial portal which has recently been voted by Alexa.com, a leading US-based net ratings company, as the most viewed web site in Hong Kong. In addition, the Group had also invested in Diyixian.com Limited which is a specialized internet service provider. "The investment in both quam.net and Diyixian.com reflects our objective to identify and seize new opportunities in the new economy to provide higher returns to our shareholders," Mr. Kwok noted.
In addition, Shun Cheong has recently joined forces with a Taiwan company and independent investors to form a joint venture acquiring a 57.2% stake in Binary KOD Limited. Its main business is to design, supply, install and maintain interactive digital broadcast system with karaoke applications. Shun Cheong has invested over HK$16 million in this joint venture
"This new venture is a major step of the Group to develop into an all-rounded broadband service provider, utilising the latest broadband technologies," said Mr. Kwok.
The KOD system will modernise the karaoke industry by enabling karaoke operators to access musical works recorded in digital format via a broadband network, thereby reducing their labour costs and improve the audio and visual quality of the songs. To date, the Group has signed an agreement with four leading karaoke operators to install this system at over 30 karaoke centres. Discussions with other leading chains are making good progress.
"We are very confident that this new business will enlarge our revenue base of the Group. In addition to rental income, the system can offer other value added services, such as advertising and other promotional activities that would generate a solid revenue stream. We expect this service to be breaking-even within three years," he said.
Looking ahead, Mr. Kwok noted the Group will continue to grow its core business in building services engineering and equipment trading while leveraging on its existing business relationship with building developers and owners to make further inroads into the Internet and broadband arena.
"The Group is determined to develop the First MileTM broadband solutions and other high-value Internet-related business to cater to the flourishing demand in the new economy. Capitalising on our solid business foundation and expertise in the broadband industry, we will explore new source of business income and will enjoy sustainable earnings growth in the years ahead," concluded Mr. Kwok.
About Shun Cheong Holdings Limited
Shun Cheong Holdings Limited is the only building services engineering company listed on the Stock Exchange of Hong Kong (SEHK code: 650). It designs, installs and manages in-building services systems as well as broadband solutions for the property sector and uses broadband applications to help building owners with their First MileTM needs.
Under the First MileTM solution, Shun Cheong, through its subsidiary Speedlink Limited, acts as an independent facilities and service provider, working directly with building owners to install Internet broadband networks that would accommodate multiple network operators and service providers to offer services within the building.
Established in 1959, Shun Cheong employs 220 members of staff, half of whom have an engineering background. The turnover of the Group for 1999-2000 was approximately HK$699 million.
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