(Incorporated in the Cayman Islands with limited liability)




  • Turnover (HK$M)
  • 2,6262,039
  • EBITDA (HK$M)*
  • 92137
  • Net profit for the year (HK$M)
  • 1371
  • Basic earnings per share (HK cents)
  • 212.6
  • Total dividend paid and payable (HK$M)
  • 1131

    * EBITDA represents profit before interest, tax, depreciation and amortization

    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 2001, together with the comparative figures for the previous year, as follows:

                                                            2001         2000
                                                         HK$'000      HK$'000
    Turnover (note 1)                                  2,625,533    2,038,700
    Cost of Sales                                     (2,482,576)  (1,847,347)
                                                      ----------   ----------
    Gross Profit                                         142,957      191,353
    Other Revenue                                         20,534       21,380
                                                      ----------   ----------
    Total Income                                         163,491      212,733
    Administration Expenses                              (90,463)     (83,034)
    Selling and Distribution Expenses                    (38,411)     (37,595)
                                                      ----------   ----------
    Profit from operating activities                      34,617       92,104
    Finance Costs                                        (20,104)     (14,143)
                                                      ----------   ----------
    Profit Before Tax                                     14,513       77,961
    Taxation (note 2)                                     (1,979)      (6,663)
                                                      ----------   ----------
    Profit before minority interests                      12,534       71,298
    Minority interests                                         -            2
                                                      ----------   ----------
    Net profit for the year                               12,534       71,300
    Dividends (note 3)                                   (10,514)     (30,982)
                                                      ----------   ----------
    Retained profit for the year                           2,020       40,318
                                                      ==========   ==========
    Earnings per share (note 4)
      - Basic                                          2.0 cents   12.6 cents
                                                      ==========   ==========
      - Diluted                                              N/A   11.9 cents
                                                      ==========   ==========


    1. Turnover and Contribution

    The Group is principally engaged in the manufacture of consumer audio and video products. An analysis of the Group's turnover and contribution to operating profit is as follows:

                                                              to operating
                                             Turnover         profit (loss)
                                          2001       2000     2001     2000
                                       HK$'000    HK$'000  HK$'000  HK$'000
    Principal activities:
      Audio products                 2,396,459  2,033,424   51,257   92,730
      Video products                   169,491          -  (21,170)       -
      Others                            59,583      5,276    4,530     (626)
                                    ---------- ---------- -------- --------
                                     2,625,533  2,038,700   34,617   92,104
                                    ========== ========== ======== ========
    Principal markets:
      The United States of America     789,115    757,991
      Europe                           765,938    523,576
      Asia Pacific Countries         1,069,758    683,546
      Others                               722     73,587
                                    ---------- ----------
                                     2,625,533  2,038,700
                                    ========== ==========

    The contribution to profit from operating activities by geographical area of markets is not presented as the contribution from each market is substantially in line with the overall rate of profit from operating activities to turnover of the Group.

    2. Tax

    Hong Kong profits tax has been provided at the rate of 16% (2000: 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 tax 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% (2000: 16%) on all significant timing differences to the extent it is probable that the liability will crystallise in the foreseeable future.

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

                                                            2001         2000
                                                         HK$'000      HK$'000
    Hong Kong
      Provision for the year                                   -        5,410
      Under/(Over) provision in prior years                   54       (2,598)
      Deferred                                             1,331        2,933
                                                      ----------   ----------
                                                           1,385        5,745
    The PRC
      Provision for the year                                 594          918
                                                      ----------   ----------
    Tax charge for the year                                1,979        6,663
                                                      ==========   ==========

    3. Dividends

                                                            2001         2000
                                                         HK$'000      HK$'000
    Interim - HK1 cent (2000: HK1.5 cents)
      per ordinary share                                   6,353        8,592
    Underprovision of prior year dividends                   985            -
    Proposed final - HK0.5 cent (2000: HK3.8 cents)
      per ordinary share                                   3,176       22,390
                                                      ----------   ----------
                                                          10,514       30,982
                                                      ==========   ==========

    4. Earnings per share

    The calculation of earnings per share is based on the net profit attributable to shareholders of HK$12,534,000 (2000: HK$71,300,000) and the weighted average of 614,281,357 shares (2000: 567,266,794 shares) in issue during the year.

    Diluted earnings per share for the year ended 31 March 2001 has not been shown because the effects arising from the exercise of the potential ordinary shares would be anti-dilutive. The calculation of diluted earnings per share for the year ended 31 March 2000 was based on the net profit attributable to shareholders of HK$71,300,000 and the weighted average of 597,391,291 shares in issue, ajusted to reflect the effects of all dilutive potential ordinary shares.


    For the year ended 31 March 2001, the Group recorded a turnover of HK$2,626 million, representing a 29% growth compared to HK$2,039 million in the previous year. Profit before interest and depreciation (EBITDA) was HK$92 million, against the previous year's figure of HK$137 million. Basic earnings per share were HK2 cents for the year.


    The Board has recommended the payment of a final dividend of HK0.5 cent (year ended 31 March 2000: HK3.8 cents) per share. Together with the interim dividend of HK1 cent per share paid in January 2001, total dividend for the year will amount to HK1.5 cents per share. Subject to the approval of the Company's Members at the forthcoming Annual General Meeting, the final dividend will be paid on or before 8 October 2001 to registered shareholders.


    The Register of Members of the Company will be closed from 10 September 2001 to 12 September 2001, 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 7 September 2001 in order to qualify for the Proposed Final Dividend.


    Business Review

    The turnover of the Group increased satisfactorily during the year. The Group successfully increased its product range, secured new orders from existing and new customers and enhanced production capacity via the Group's investment in advanced automation machines and new factory blocks.

    Profit for the year did not show a corresponding growth due to reductions in profit margins. This was attributable to the abnormal increase and fluctuation in the cost of raw materials such as integrated circuits, RAM and plastic materials. The significant expenditure in research and development, and other start up costs for new products launched in the second half of the year and heavy capital investments also contributed to a lower bottom line. In addition, the markets in Europe and Japan have been affected by the currency depreciation and continue to be very competitive.

    For Tonic, the fiscal year 2000/2001 was a year of challenge. Tonic has focused on the manufacturing of consumer audio products for many years. Realizing the world trend towards the digital era, we have taken the necessary steps in preparing the changes. As the next generation of digital products require more precision and accurate manufacturing processes, the Group has invested heavily in automated machinery eg. IC insertion machines and SMT machines from 1999 onward. We now have 18 automated machinery lines which not only reduce the processing time but also improve the product quality. Following the openings of our new factory buildings number 8 and 9 in 2000 and 2001 respectively, the factory production capacity has now been doubled. Production capacity is now able to meet the production demand for the next three years.

    Factory Block 8, was inaugurated in June 2000, providing an additional 40% in production area. Factory Block 9, capable of installing 8 production lines was completed in June 2001 and has bolstered the production area by a further 20%. Total production area for the Group now exceeds 1,500,000 square feet.

    To maintain its role as one of the leading manufacturers of audio-visual products, Tonic has further strengthened its existing business into a more diversified, technology advanced and value driven business. During the year, new products were being developed. These include CD-RW, DVD, MP3, digital satellite receiver and Internet set-top box and most of these products have been successfully launched in the market this year. These products have a higher unit selling price and generally have a higher profit margins. Consistent with previous years, the research and development costs for the new products were written off in the profit and loss account.

    Future Plans and Prospects

    One of our prestigious Japanese OEM customers, Pioneer Electronics, has contracted the Group to manufacture three new models for them. These include high value DVD and MD products with total turnover exceeding HK$600 million. We have also secured a new customer from the United States to manufacture Internet-DVD products with quantity forecasted at more than 500,000 sets per year. Together with the sales of our general audio products to other customers, we believe our business will sustain further growth in the coming years.

    The business development of our home appliances company, Tonic Appliances Limited progressed smoothly during the year. The Group made good use of its existing production facilities, expertise in design and technology, as well as its quality control systems to produce quality products at a competitive price. Although this division contributed less than 5% to the Group's turnover this year, we believe that contributions from this division will increase rapidly in the next few years. Apart from our innovative 3 in 1 coffee making machine, new products such as air purifiers, ovens and industrial irons were introduced this year.

    To seize opportunities arising out of the e-commerce era, the Group is planning to empower its B2B platform by implementing payment gateways and other value added services e.g. logistics, insurance, quality control and credit checking facilities among others, in our next stage of development. Upon completion, the platform will enable suppliers and customers to search for products, negotiate terms, place orders, arrange delivery and make payment in one easy stop.

    2000/01 was a period of investments, consolidation and repositioning for the Group. Acknowledging the swift development of the digital technology, the Group has prepared itself well ahead of the trend. Without the needs of further heavy investment, we expect fruitful returns to be generated from the new products and increased business. We are very confident that the Group's performance will significantly improve in the years ahead.


    During the year ended 31 March 2001, 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.


    A detailed announcement of annual results of the Group for the year ended 31 March 2001, containing all the information required by paragraphs 45(1) to 45(3) inclusive of Appendix 16 of the Listing Rules of The Stock Exchange of Hong Kong Limited, will be published on the website of the Stock Exchange in due course.


    The Directors propose to adopt "", the Chinese translation of the Company's existing English name, as its Chinese name for the purpose of registration in Hong Kong. Completion of the adoption of the Chinese name is subject to the passing of a special resolution by the shareholders at the Company's forthcoming Annual General Meeting and the approval of the Registrar of Companies in Hong Kong. Details of the aforesaid special resolution are contained in the notice convening the 2001 Annual General Meeting of the Company.

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

    Hong Kong, 17 July 2001

    Source: Tonic Industries Holdings Limited
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