RESULTS AND FINANCIAL POSITION
The Group suffered a loss of HK$44 Million compare with a profit of HK$15 Million in 1998. The reasons for the loss despite an increased turnover were:
(1) Increased cost of borrowing as a result of the high interest rates which prevailed in the first three quarters of the financial year and the relatively high level of borrowing at the beginning of the financial year. The resultant interest expenses that charged to the consolidated profit and loss account of the year amounted to HK$12.9 Million compare to HK$6.5 Million in 1998.
(2) Further provision of HK$8.4 Million has been made for loss on revaluation of the Group's investment properties.
(3) A provision of HK$6.8 Million on the retention money receivable under a private sector contract undertook by the Group between 1993 and 1995. The provision is considered necessary because the maintenance certificate has not been issued by the employer of the contract despite the expiry of the maintenance period two years ago.
(4) A loss of HK$50 Million as a result of the cost and time overrun of the Homantin South Phase I project undertaken by the Group. The project was completed in May 1999. Unexpected technical difficulties were faced by the Group in the course of completing the contract and resulted in additional costs and time requirement. The management believes the provision made is adequate base on its current knowledge of the situation.
If the above factors are excluded, the Group's profit for the year will be around HK$28 Million.
The Group has also made efforts to reduce its financing costs during the year. The balance of short-term bank loan and overdrafts at 31st March, 1999 was HK$377.4 Million which has decreased by 147 Million compare with balance of HK$524.4 Million at 31st March, 1998. Correspondingly, the gearing ratio of the Group was significantly reduced from 0.57 to 0.35. The improved liquidity was the combined results of more effective receivables management (hence increasing the cash generated from operation) and the rights issue exercise during the year. The balances of progress billings receivable and retention money receivable at 31st March, 1999 were HK$ 179.7 Million and HK$105.8 Million respectively compare with the 1998 balances of HK$286.3 Million and HK$182.2 Million respectively. The net proceeds of the rights issue of 393,552,089 shares at HK$0.076 each were approximately HK$26 Million.
The Group has achieved a record value of contract on hand and record value of contract secured in one financial year. The list of contracts are listed in pages 10 to 12.
VALUE OF CONTRACTS ON HAND AS AT YEAR END
EMPLOYEES
The Group employs about 800 people in Hong Kong and about 500 people in the Mainland China.
Employees in Hong Kong are either paid on a monthly salary basis or on daily wages basis. Salaried employees are entitled to benefit such as performance related year end bonus, medical insurance, provident fund, company sponsored training courses, paid leave for attending professional examinations, etc.
Certain employees are granted options to subscribe for shares in the Company in 1997. The adjusted exercise price is HK$0.3328 per share.
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