(Incorporated in the Cayman Islands with limited liability)




                                                 2000    1999 Percentage

 Turnover (HK$M)                              2,039   1,841      10.8

 Pretax profit from operation (HK$M)*            78      64      22.0

 Profit attributable to shareholders (HK$M)      71      69       3.4

 Basic earnings per share (HK cents)           12.6    12.2       3.3

 Total dividend paid and payable (HK$M)          31      26      18.1

* Pretax profit from operation has excluded the net exchange gain from forward exchange contracts previously shown as exceptional item (see note 1 below)

The directors ("Directors") of Tonic Industries Holdings Limited (the "Company") are pleased to announce the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 31 March 2000, together with the comparative figures for the previous year, as follows:

                                                     2000           1999
                                                  HK$'000        HK$'000

TURNOVER                                        2,038,700      1,840,799

Cost of sales                                  (1,847,347)    (1,669,672)
                                             ------------   ------------
Gross profit                                      191,353        171,127

Other revenue (Note 1)                             21,380         32,949
Selling and distribution costs                    (37,595)       (29,602)
Administrative expenses                           (83,034)       (82,982)
                                             ------------   ------------
PROFIT FROM OPERATING ACTIVITIES                   92,104         91,492
Finance costs                                     (14,143)       (15,520)
                                             ------------   ------------
PROFIT BEFORE TAX                                  77,961         75,972
Tax (Note 2)                                       (6,663)        (7,027)
                                             ------------   ------------
PROFIT BEFORE MINORITY INTERESTS                   71,298         68,945
Minority interests                                      2              -
                                             ------------   ------------
  SHAREHOLDERS                                     71,300         68,945
                                             ============   ============
DIVIDENDS (Note 3)                                 30,982         26,240
                                             ============   ============
  - Basic                                      12.6 cents     12.2 cents
                                             ============   ============
  - Diluted                                    11.9 cents     12.0 cents
                                             ============   ============


1. Other revenue

Included in the other revenue was a net exchange gain from forward exchange contracts for hedging of the Group's sales receipts of HK$211,000 (1999: HK$12,221,000). The 1999 amount was disclosed as exceptional item in the prior year and reclassified to be included in arriving at the Group's profit from operating activities this year to comply with the disclosure requirements of the revised Statement of Standard Accounting Practices of Hong Kong.

2. Tax

Hong Kong profits tax has been provided at the rate of 16% (1999: 16%) on the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable in the PRC have been provided at the rates of taxation prevailing in the PRC based on existing legislations, interpretations and practices in respect thereof.

Deferred tax has been provided under the liability method at the rate of 16% (1999: 16%) on all significant timing differences to the extent it is probable that the liability will crystallise in the foreseeable future.

Taxation charged to the Group's profit and loss account comprises:

                                                     2000           1999
                                                  HK$'000        HK$'000

Hong Kong
  Provision for the year                            5,410          3,949
  (Over)/Underprovision in prior years             (2,598)            82
  Deferred                                          2,933          2,806
                                             ------------   ------------
                                                    5,745          6,837
  Provision for the year                              918            190
                                             ------------   ------------
Tax charge for the year                             6,663          7,027
                                             ============   ============

3. Dividends

                                                     2000           1999
                                                  HK$'000        HK$'000
Interim - HK1.5 cents per
  ordinary share (1999: HK1.5 cents)                8,592          6,048
Proposed final - HK3.8 cents per
  ordinary share (1999: HK5 cents)                 22,390         20,192
                                             ------------   ------------
                                                   30,982         26,240
                                             ============   ============

The comparative interim dividend and proposed final dividend per ordinary share would be HK1.1 cents and HK3.6 cents, respectively, on the basis as if the bonus issue of shares of two bonus shares for every five ordinary shares then held by shareholders on 28 September 1999 had been completed during the year ended 31 March 1999.

4. Earnings per share

The calculation of earnings per share is based on the net profit attributable to shareholders of HK$71,300,000 (1999: HK$68,945,000) and the weighted average of 567,266,794 shares (1999: 564,558,732 shares) in issue during the year.

The comparative weighted average number of shares in issue and earnings per share have been adjusted to reflect the bonus issue of shares on the basis of two bonus shares for every five ordinary shares then held by shareholders on 28 September 1999.

The calculation of diluted earnings per share is based on the net profit attributable to shareholders of HK$71,300,000 (1999: HK$68,945,000) and the weighted average of 597,391,291 (1999: 576,926,135) shares in issue, adjusted to reflect the effects of all dilutive potential ordinary shares during the year.

A reconciliation of the weighted average number of shares used in the basic earnings per share calculation for the year ended 31 March 2000 to that used in the diluted earnings per share calculation is as follows:

                                                     2000           1999

Weighted average number of shares used in the
  basic earnings per share calculation        567,266,794    564,558,732

Weighted average number of shares assumed to
  have been issued at no consideration on the
  deemed exercise of all warrants outstanding
  during the year                              30,124,497     12,367,403
                                             ------------   ------------
Weighted average number of shares used in the
  diluted earnings per share calculation      597,391,291   576,926,135
                                             ============   ============


The Directors have recommended the payment of a final dividend of HK3.8 cents per share for the year ended 31 March 2000 to shareholders whose names appear on the Company's Register of Members on 26 September 2000 (the "Proposed Final Dividend"). Subject to the approval of the Company's Members at the forthcoming Annual General Meeting, the final dividend will be paid on or before 18 October 2000.


The Register of Members of the Company will be closed from 22 September 2000 to 26 September 2000, both days inclusive, during which period no transfer of shares will be effected. All transfer documents accompanied by the relevant share certificates must be lodged with the Company's Branch Registrar in Hong Kong, Tengis Limited at 4th Floor Hutchison House, 10 Harcourt Road, Central, Hong Kong not later than 4:00 p.m. on 21 September 2000 in order to qualify for the Proposed Final Dividend.


The Group continues to achieve promising result for the year ended 31 March 2000. Gross profit was HK$191,353,000, an increase of 12% from 1999. Net Profit attributable to shareholders for the year amounted to HK$71,300,000, represented an increase of 3%. Despite the general decrease in selling price of the products, the Group maintains a healthy growth of Turnover of 11%.

Generally the export market for the consumer electronic products is still very strong, the economy of the European countries continue to grow which benefit the Group. Sales to the United States decreased by approximately 20% as a result of severe competition in the region. However our sales in Japan increase significantly due to popularity of our high end CD and MD products.

This year we saw the successful launch of the MD Hi-Fi products for our OEM customer, the products contribute to more than 19% of the total turnover of the Group. We will extend our sales of MD to our ODM customers in 2000 and expect continue growth in the coming years. New audio products are being developed which include MP3 Discman, CD-RW and DVD, will be launched later this year. Initial market responses are tremendous and we believe there is a potentially huge market for these products.

While we have sufficiently vertically integrated our manufacturing process, we have plans to diversify our sales to different products. Our home appliances division, Tonic Appliances Limited, has its innovated 3 in 1 coffee making machine successfully launched earlier this year and subsequent models are being developed. Sales have already covered the United States and Europe. With the subsequent launch of new models and new products later this year, contribution from this division will become much more significant.

Another new division Tonic Technology Limited, which focuses on the development of advance technology products, will have its digital satellite receivers and internet set top box ready for production in the last quarter of the year. Television broadcast is undergoing its transition to digital signaling and demand for digital signal enabling satellite receivers is expected to be huge. Internet set top box already has its market in the developed countries, its presence is gradually became known to other countries for its lower cost vehicle to access the World Wide Web.

The way businesses are transacted on the Internet has greatly affected the manufacturing industry, in particular the way Company could potentially save costs over the purchases on Internet. The Group is currently studying the possibility of transforming its traditional procurement system into e-procurement with a B2B platform and logistics system. A B2B procurement platform could help the Company to lower its procurement transaction costs and open opportunity for the Company to obtain the cheapest components. It is expected that Egana.Com Inc of Egana Goldfeil (Holdings) Ltd (a substantial shareholder of the company) would be of direct contribution in this regard.

The latest factory block of the Group (the Block number 8) was put into use in June this year. This factory block provides an additional production space of more than 350,000 square feet complementing the existing 1,000,000 square feet production area. Production capacity is expected to increase by 40% this year. Total investment for the new factory block, automated machinery and production lines are budgeted at HK$100 million, and will be financed by term loans from the existing bankers of the Group.

Capitalising on our proven management expertise in the industry and the pioneer technology knowhow, we are well positioned to develop our extensive range of highest quality products to the satisfaction of our business associates, with a continuous enhancement of the shareholder value going forward.


The Group has adopted Y2K conformity requirements issued by the British Standards Institution as the definition of Y2K compliance for the computers and the embedded systems. Over the millennium change period, the Group carried out relevant testing and checking on systems and equipment, and as part of the overall program, the Group also tested various dates in 2000 that might cause systems and equipment problem. The result is satisfactory and no disruption to the business process was discovered due to any Y2K problem. The new manufacture resources planning system used by the Group has proven to be fully Y2K compliant.


Pursuant to the requirements of the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules"), an audit committee comprising all the Company's non-executive directors was established on 1 April 1999. References have been made to "A Guide for the Formation of an Audit Committee" issued by the Hong Kong Society of Accountants in terms of its formation and duties. The Committee has held regular meetings since its establishment and three meetings are planned to be held each year.


During the year ended 31 March 2000, there was no purchase, sale or redemption of the shares by the Company or any of its subsidiaries.


In the opinion of the Directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 to the Listing Rules throughout the accounting period under review.

On behalf of the Board
Simon Ling Siu Man
Chairman & Managing Director

Hong Kong, 8 August 2000

Source: Tonic Industries Holdings Limited
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