RESULTS
The Directors are pleased to announce that the unaudited condensed consolidated income statement of the Company and its subsidiaries (the "Group") for the six months ended September 30, 2000 (the "period") and the unaudited condensed consolidated balance sheet as at September 30, 2000 are as follows:
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended September 30, 2000
Six months ended
September 30
2000 1999
(UNAUDITED) (UNAUDITED)
Notes HK$'000 HK$'000
Turnover 2 742,198 610,508
Cost of sales (576,799) (467,613)
------------ ------------
Gross profit 165,399 142,895
Other revenue 6,715 7,566
Selling and distribution
expenses (17,699) (17,725)
Administrative expenses (104,150) (90,728)
------------ ------------
Profit from operations 50,265 42,008
Finance costs (1,365) (613)
Share of results of
associates 673 517
------------ ------------
Profit before taxation 3 49,573 41,912
Taxation 4 (5,667) (4,572)
------------ ------------
Profit before minority
interest 43,906 37,340
Minority interest (5,283) (2,002)
------------ ------------
Profit attributable to
shareholders 38,623 35,338
Interim dividend (19,368) (17,607)
------------ ------------
Profit for the period, retained 19,255 17,731
============ ============
Earnings per share 5 11 cents 10 cents
============ ============
CONDENSED CONSOLIDATED BALANCE SHEET
At September 30, 2000
September 30, March 31,
2000 2000
(UNAUDITED) (AUDITED)
Notes HK$'000 HK$'000
Non-current assets
Investment properties 13,300 13,300
Property, plant and
equipment 184,193 191,160
Investments in associates 4,394 3,726
Investments in securities 4,451 4,451
------------ ------------
206,338 212,637
------------ ------------
Current assets
Inventories 125,468 105,887
Trade and other
receivables 6 222,210 230,574
Trade receivables from
associates 4,746 718
Taxation recoverable 617 1,641
Bank balances and cash 207,377 199,368
------------ ------------
560,418 538,188
------------ ------------
Current liabilities
Trade and other payables 7 241,106 214,740
Taxation payable 7,177 3,848
Proposed dividend 19,368 52,821
Obligations under finance
leases and hire purchase
contracts - due within
one year 69 94
Bank borrowings - due
within one year 15,328 20,009
------------ ------------
283,048 291,512
------------ ------------
Net current assets 277,370 246,676
------------ ------------
483,708 459,313
============ ============
Capital and reserves
Share capital 70,428 70,428
Reserves 366,025 346,718
------------ ------------
Shareholders' funds 436,453 417,146
------------ ------------
Minority interests 44,356 39,022
------------ ------------
Non-current liabilities
Obligations under finance
leases and hire purchase
contracts - due after
one year - 27
Deferred taxation 2,899 3,118
------------ ------------
2,899 3,145
------------ ------------
483,708 459,313
============ ============
Notes:
1. Significant accounting policies
The unaudited interim financial statements of the Group, which are not statutory financial statements, have been prepared in compliance with Statement of Standard Accounting Practice ("SSAP") 25 "Interim financial reporting", and on a basis consistent with the accounting policies adopted in the preparation of the Group's financial statements for the year ended March 31, 2000.
Comparative figures in the condensed income statement have been restated in order to conform with the requirements of SSAP 1 (revised) "Presentation of financial statements" and SSAP 2 (revised) "Net profit or loss for the period, fundamental errors and changes in accounting policies".
2. Segmental information
The Group operates principally in the manufacture and sale of garments, which accounted for more than 90% of the Group's turnover and operating profit for the period. The Group's turnover and contribution to profit before taxation analysed by geographical market are as follows:
Contribution to
Turnover profit before taxation
Six months ended Six months ended
September 30 September 30
2000 1999 2000 1999
HK$'000 HK$'000 HK$'000 HK$'000
By geographical market:
U.S.A. 671,355 546,215 38,042 28,255
Canada 5,159 4,223 210 285
---------- ---------- ---------- ----------
North America 676,514 550,438 38,252 28,540
Asia 54,822 34,084 4,459 3,401
Europe and others 10,862 25,986 839 2,501
---------- ---------- ---------- ----------
742,198 610,508 43,550 34,442
========== ==========
Finance costs (1,365) (613)
Share of results of
associates 673 517
Other revenue 6,715 7,566
---------- ----------
49,573 41,912
========== ==========
3. Profit before taxation
Six months ended
September 30
2000 1999
HK$'000 HK$'000
Profit before taxation has been
arrived at after charging:
Depreciation and amortisation 10,307 8,106
Interest on borrowings wholly
repayable within five years 1,365 613
============ ============
4. Taxation
Six months ended
September 30
2000 1999
HK$'000 HK$'000
The charge comprises:
Hong Kong Profits Tax 4,774 2,916
Taxation in other jurisdictions 1,107 1,704
Share of tax on results of
associates 5 -
------------ ------------
5,886 4,620
Deferred taxation (219) (48)
------------ ------------
5,667 4,572
============ ============
Hong Kong Profits Tax is calculated at 16% of the estimated assessable profit for the period. Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.
5. Earnings per Share
The calculation of the basic earnings per share is based on the profit attributable to shareholders of HK$38,623,000 (1999: HK$35,338,000) and on the number of 352,137,298 shares (1999: 352,137,298 shares) in issue during the period.
6. Trade and other receivables
The Group allows an average credit period of 30 days to its trade customers.
Included in trade and other receivables are trade receivables with the following ageing analysis:
September 30, March 31,
2000 2000
HK$'000 HK$'000
0 - 30 days 151,145 157,142
31 - 60 days 33,009 31,323
61 - 90 days - 1,698
------------ ------------
184,154 190,163
============ ============
7. Trade and other payables
Included in trade and other payables are trade payables with the following ageing analysis:
September 30, March 31,
2000 2000
HK$'000 HK$'000
0 - 30 days 83,664 63,085
31 - 60 days 26,321 26,520
61 - 90 days 7,931 9,449
over 90 days 4,306 3,068
------------ ------------
122,222 102,122
============ ============
INTERIM DIVIDEND
The Directors have declared an interim dividend of 5.5 cents per share (1999: 5 cents per share) payable on January 19, 2001 to shareholders whose names appear on the Register of Members on January 12, 2001.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members will be closed from January 9, 2001 to January 12, 2001, both days inclusive, during which no share transfer will be effected. To qualify for the interim dividend, transfers must be lodged with the Company's Registrar, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, not later than 4:00 p.m. on January 8, 2001.
MANAGEMENT DISCUSSION AND ANALYSIS
Operating results and financial position
The Group's unaudited consolidated results for the first half of the year was satisfactory. Total turnover grew by 22% to HK$742 million. Profit before taxation and minority interests rose by 18% to HK$50 million. Profit attributable to shareholders was HK$39 million, representing an earnings per share of 11 cents, an increase of 9%. After a declaration of interim dividend of 5.5 cents, the shareholders' funds of the Group were HK$436 million or HK$ 1.24 per share at the period end date.
Cash balance, net of bank borrowings, increased by 38% to HK$ 192 million This improvement was partly attributed to the much reduced spending of capital expenditures of HK$ 6 million on property, plant and equipment compared to HK$ 32 million in the same period last year.
Business review
The Group's core operation of apparel manufacture and export continued to perform well. During the period, the prevailing economy in the United States was still very solid. Total export sales to the North America market posted a strong growth of 23% to HK$677 million, accounting for 91% of the Group's turnover. Production capacities expanded last year were on track and provided a good support to such export growth. In China, the domestic demand and the economy continued to pick up and the retail market in China gradually recovered. The Group opened 11 more shops during the period and achieved an increase of 35% in retail sales in China. Coupled with the rebounded export sales to Japan, total sales in Asia market recorded a rapid rise of 61% to HK$ 55 million.
Prospects
The Group foresees that China's economic growth will be accelerated after its imminent entry into the World Trade Organisation. Meanwhile, this would lead to immense business opportunities and, on the other hand, new challenges to the Group. The Group ensures to be ever-upgrading in all aspects to meet such challenges and ever-ready in capturing opportunities.
In the future, competition in China's retail market will be further stimulated and more keen. Tariffs and other trade regulations, however, are expected to be gradually lowered and simplified which favours import cost reduction. The Group is positive in the long term and has been increasing the number of retail shops in an appropriate pace. As of today, the Group is operating 36 retail shops in the major cities including Shanghai, Beijing, Guangzhou, Shenzhen, Hangzhou, Wuhan and Chengdu, and will open 2 additional shops in the balance of the year.
Based on the support of our strong and effective production capacities spread over China and Asia, the Group's apparel products are always highly competitive amongst the rival exporters. Nevertheless, in anticipation of a slowdown in the economic growth in the United States, the Group is to maintain a prudent outlook of the export business growth.
PURCHASE, SALE OR REDEMPTION OF SHARES
During the period, there was no purchase, sale or redemption of the Company's shares by the Company or any of its subsidiaries.
AUDIT COMMITTEE
The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed internal control and financial reporting matters including the review of the unaudited interim financial statements.
CORPORATE GOVERNANCE
None of the Directors is aware of information that would reasonably indicate that the Company is not, or was not during the period, in compliance with the Code of Best Practice, as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
Benson Tung Wah Wing
Chairman
Hong Kong, December 15, 2000
Website: http://www.irasia.com/listco/hk/tungtex
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