RESULTS
The Directors of Yue Yuen Industrial (Holdings) Limited (the "Company") are pleased to announce the unaudited results of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 31st March, 2000 with comparative figures for the corresponding period in 1999 as follows:
Six months ended
31st March,
2000 1999
US$'000 US$'000
Turnover 823,403 715,768
Cost of sales (604,135) (519,903)
----------- -----------
Gross Profit 219,268 195,865
=========== ===========
Operating Profit 107,483 96,072
Share of Results of Associated
Companies 3,339 -
Share of Results of Jointly
Controlled Entities 1,093 1,869
----------- -----------
Profit from Ordinary Activities
before Taxation 111,915 97,941
Taxation (Note 1) (2,575) (2,250)
----------- -----------
Profit before Minority Interests 109,340 95,691
Minority Interests 137 (73)
----------- -----------
Profit Attributable to Shareholders 109,477 95,618
Dividends (Note 2) (36,795) (21,659)
----------- -----------
Profit for the period, retained 72,682 73,959
=========== ===========
Earnings per share (Note 3)
- Basic 15.5 cents 14.3 cents
=========== ===========
- Diluted 14.9 cents 13.8 cents
=========== ===========
Notes:
1. TAXATION
Six months ended
31st March,
2000 1999
US$'000 US$'000
The charge comprises:
Hong Kong Profits Tax calculated
at 16% of the estimated
assessable profit for the period 45 50
Overseas taxation 2,440 2,200
Share of Taxation of
Associated Companies 90 -
-------- --------
2,575 2,250
======== ========
A substantial portion of the Group's profits neither arose in, nor was derived from, Hong Kong and therefore is not subject to Hong Kong Profits Tax.
Overseas taxation is calculated at the rates prevailing in the respective jurisdictions.
2. DIVIDENDS
Six months ended
31st March,
2000 1999
US$'000 US$'000
Interim dividend of 40 Hong
Kong cents per share
(1999: 25 Hong Kong cents
per share) 36,251 21,659
Additional final dividend for
prior year due to exercise of
share options during the period 544 -
-------- --------
36,795 21,659
======== ========
INTERIM DIVIDEND
The Directors are pleased to declare an interim dividend of 40 Hong Kong cents per share for the six months ended 31st March, 2000 to members whose names appear on the Registrar of Members on 14th July, 2000. The dividend will be paid on or before 20th July, 2000.
3. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share for the period is based on the following data:
Six months ended
31st March,
2000 1999
Earnings:
Profits attributable to shareholders
and earnings for the purposes of
basic and diluted earnings
per share US$109,477,000 US$95,618,000
=============== ===============
Number of shares:
Weighted average number of
ordinary shares for the
purposes of basic
earnings per share 706,220,882 670,382,953
Effect of dilutive potential
ordinary shares
- share options 28,131,866 20,110,943
--------------- ---------------
Weighted average number of
ordinary shares for the
purposes of diluted
earnings per share 734,352,748 690,493,896
=============== ===============
CLOSURE OF REGISTER OF MEMBERS
The Register of Members of the Company will be closed from 10th July to 14th July, 2000, both days inclusive, during which period no transfer of shares will be effected. All transfers, accompanied by the relevant share certificates, must be lodged with the Company's Branch Share Registrars, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not later than 4:00 p.m. on 7th July, 2000 in order to qualify for the interim dividend mentioned above.
REVIEW AND PROSPECTS
Result
The Group registered strong growth for the six months to 31st March, 2000. During this period, overall turnover rose by 15.0%, compared to the previous corresponding period. The total number of shoes produced during the period reached 50.8 million pairs, an increase of 21.0% against 1999. Growth was driven by several factors, primarily an increase in orders from existing customers and the addition of several casual shoe brand customers. This was assisted by a rebound in the global branded athletic shoe wholesale market, which registered positive growth in 1999, and a 8.9% rise in the global casual/outdoor shoe wholesale market (figures supplied by Sporting Goods Intelligence (SGI)).
Profit attributable to shareholders during the six-month period was US$109.5 million, an increase of 14.5% compared with last corresponding period. Cost of sales increased by 16.2% against a 15.0% increase in turnover; this was primarily due to an increase in manufacturing labor expenses.
Operations
As of March 2000, the Group operated 198 production lines (March 1999: 178 lines) located in China, Indonesia, and Vietnam. During the six-month period, 16 lines were added.
With the future entry of China into the WTO, Yue Yuen sees increased investment opportunities and a more open and favorable business environment in China. Thus, we expect the Group's operations in China to continue to play an important role. In the meantime, the Group's operations in Vietnam have become more mature and are now in a position to take advantage of future growth opportunities. The Group's factory in Indonesia also continues to operate smoothly and is consistently enhancing production quality.
Financial Position
The Group maintains a strong financial position derived from the steady growth of its business, together with the net proceeds of US$85 million raised from a private placement of 35.3 million new shares last October. As at 31st March, 2000, the Group had cash on hand of US$122 million and total borrowing of US$209 million, representing a net debt to equity ratio of approximately 9.3% (March 1999: 23%).
Growth Strategy
The Group is vigorously pursuing its growth strategy as planned. Besides recently investing US$16 million in a joint venture with a vulcanized shoe factory in Indonesia to expand its product base horizontally, the Group has commenced work on several projects that will further the vertical integration of its business to upstream footwear material production. The Group will team up with leading material manufacturers from Taiwan to establish facilities in China to produce Polyurethane (PU) resin and synthetic leather, and facilities in Vietnam that will produce cloth and synthetic fabric for making shoes and sportswear. The Group's initial investment in these projects will be approximately US$50 million, to be financed by the proceeds of the private placement mentioned above.
These new investments will enable the Group to procure the upstream shoe material locally on a just-in-time basis and shorten the production cycle. We believe the trend towards such supply chain systems provides a good opportunity for major material suppliers to link up with large manufacturers, distributors and retailers to achieve shorter lead-time in product delivery and better control of the flow of goods. We hope we can further develop our business in this area to better serve our customers and create new sources of growth in the future.
Industry Review
The athletic footwear market continues to demonstrate a constant demand for quality brand-named products that display high standards of innovation, fashion and performance. The latest available data compiled by Sporting Goods Intelligence (SGI) indicated that the global branded athletic shoe wholesale market rose 1% to US$16.3 billion in 1999 after an 8.4% decline from 1998. These data also show an improvement in the wholesale segment of the industry.
Sales of casual and outdoor shoes, as reported by the same source, rose 8.9% to US$5.7 billion in wholesale amount, which is approximately a third of the total athletic footwear market.
Corporate Responsibility
As an integral part of our manufacturing operations, corporate responsibility (CR) addresses the issues of workers' rights, benefits and opportunities; health and safety in the workplace; environmental concerns and community involvement, etc. The Group has been constantly working with our blue-chip customers to address these issues and considerable progress throughout the years have been made. We have set up an internal system and organizational team involving the Board to factory units to plan, implement and evaluate various programs from time to time. During the period under review, we focused on managing the length of working hours, improving air quality, counseling and education for our workers, representation and participation in the union, and developing group CR policies and internal audit systems. We firmly believe in developing and putting in place a pro-active and long-term CR program for the ongoing benefit of the Group.
Looking Forward
Building on the strong operating results of the first half, and riding on the continued buoyancy of the economic conditions of the major export markets, the Directors are confident that the Group will record satisfactory results for the rest of the year.
AUDIT COMMITTEE
Pursuant to the Rules Governing the Listing of Securities of The Stock Exchange of Hong Kong Limited, an audit committee (the "Committee") was established on 28th January, 1999. Our two independent non-executive directors, namely Mr. John J.D. Sy (Chairman of the Committee) and Mr. Shih Hung, were appointed the members of the Committee. Written terms of reference specifying the Committee's authority, responsibilities and specific duties were also approved and adopted on the same date.
YEAR 2000 COMPLIANCE
From 1998, the Group operated an internal Y2K Committee to lead the Year 2000 compliance program. We did not experience any Year 2000 problem and all computer systems functioned properly without disruption.
The total cost incurred for the Year 2000 compliance program was US$1.4 million and there is no further commitment in respect of the Year 2000 issue.
DIRECTORS' INTERESTS IN SECURITIES
As at 31st March, 2000, the interests of directors in the ordinary shares of the Company as recorded in the register maintained by the Company pursuant to Section 29 of the Hong Kong's Securities (Disclosure of Interests) Ordinance (the "SDI Ordinance") were as follows:
Number of ordinary shares held
Personal Family Corporate Other
Name of director interest interest interest interest
Tsai Chi Neng - - - 177,390,095(a)
David N.F. Tsai - - - 177,390,095(a)
Li I Nan, Steve - - - -
Kung Sung Yen - - - -
Lu Chin Chu - - - -
Kuo Tai Yu - - - -
Lu Shang Ping - - - 177,390,095(a)
Edward Y. Ku - - - -
Choi Kwok Keung - - - 21,020,560(b)
Yang Xiang-Dong - - - -
Shih Hung - - - -
John J.D. Sy - - - -
Notes:
(a) 89,747,411, 76,233,720 and 11,408,964 ordinary shares were held by Quicksilver Profits Limited, Red Hot Investments Limited and Moby Dick Enterprises Limited respectively, all of which were held by HSBC International Trustee Limited as trustee for The Tsai Family Trusts, two discretionary trusts the discretionary objects of which include Messrs. Tsai Chi Neng, David N.F. Tsai and Lu Shang Ping and their respective family members.
(b) 15,180,000, 2,920,280 and 2,920,280 ordinary shares were held by Hearty Choice Limited, Golden Path Company Limited and Grand Scope Company Limited respectively, all of which were ultimately held by HSBC International Trustee Limited as trustee for a discretionary trust. The discretionary objects of the trust include children of Mr. Choi Kwok Keung.
Save as disclosed above and other than certain nominee shares in subsidiaries held by Mr. Choi Kwok Keung in trust for the Group, none of the directors or any of their associates had any interest as at 31st March, 2000 in the securities of the Company or any of its associated corporations as defined in the SDI Ordinance.
DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
Under the Company's share option scheme, certain directors of the Company have personal interests in share options to subscribe for shares in the Company as follows:
Number of
share options
outstanding at
Exercise price 1.10.1999 and
Name of director Date of grant per share 31.3.2000
HK$
Tsai Chi Neng 28.4.1993 6.35 7,700,000
David N.F. Tsai 12.12.1996 10.22 6,000,000
Li I Nan, Steve 28.4.1993 6.35 1,466,666
Kung Sung Yen 12.12.1996 10.22 2,500,000
Lu Chin Chu 12.12.1996 10.22 2,500,000
Kuo Tai Yu 12.12.1996 10.22 2,500,000
No share option was granted to or exercised by the directors of the Company during the six months ended 31st March, 2000.
Save as disclosed above, at no time during the period was the Company or any of its subsidiaries a party to any arrangements to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debt securities (including debentures) of, the Company or any other body corporate. Similarly, none of the spouses or children under the age of 18, had any rights to subscribe for securities of the Company or had exercised any such rights during the period.
SUBSTANTIAL SHAREHOLDERS
As at 31st March, 2000, the register of substantial shareholders maintained under Section 16(1) of the SDI Ordinance showed that the following persons, in addition to the directors as stated under "Directors' interests in securities", are interested in 10% or more of the nominal value of the issued ordinary shares of the Company:
Number of ordinary
Name of sharehoshares shares beneficially held
Pou Chen Corporation ("PCC") (note) 283,951,350
Wealthplus Holdings Limited ("Wealthplus") 257,942,581
Note: Of the 283,951,350 ordinary shares beneficially owned by PCC, 257,942,581 ordinary shares were held by Wealthplus as listed above, 23,911,169 ordinary shares were held by Win Fortune Investments Limited ("Win Fortune") and 2,097,600 ordinary shares were held by Top Score Investments Limited ("Top Score"). Both Wealthplus and Win Fortune are wholly-owned subsidiaries of PCC and Top Score is a 97.63% owned subsidiary of PCC.
Other than the interests disclosed above, the Company has not been notified of any other interests as at 31st March, 2000 representing 10% or more of the issued share capital of the Company.
CORPORATE GOVERNANCE
During the six months ended 31st March, 2000, the directors were not aware of any information that would indicate that the Company was not in compliance with those paragraphs of 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.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the six months period ended 31st March, 2000, the Company made the following repurchase of its own shares on The Stock Exchange of Hong Kong Limited for the purpose of enhancing the net assets per share:
Number Average of Shares Price per Total Month Repurchased Share Consideration March 2000 2,598,000 HK$17.66 HK$45,892,250
Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the period.
ACKNOWLEDGEMENT
I would like to take this opportunity to express our sincere appreciation of the support from our customers, suppliers and shareholders. I would also like to thank my fellow directors for their valuable contribution and the staff members of the Group for their commitment and dedicated services throughout the year.
By the Order of the Board
Tsai Chi Neng
Chairman
Hong Kong, 20th June, 2000
Web site: http://www.irasia.com/listco/hk/yueyuen
| © Copyright 1996-2008 irasia.com Ltd. All rights reserved. |
|
DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any
information provided on this website. Under no circumstances shall irasia.com Ltd be liable
for damages resulting from the use of the information provided on this website.
TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website. |